Politics

Immigrants Cost Taxpayers Up to $299 Billion

New report also suggests assimilation is slowing among new waves of migrants

Immigrants cost U.S. taxpayers as much as nearly $300 billion more in government services than they pay in taxes — and recent arrivals are assimilating more slowly than earlier waves, according to a massive study released Thursday.

The report by the National Academy of Sciences, Engineering, and Medicine totals nearly 300,000 words. Researchers ran eight different scenarios and concluded that the 55.5 million first-generation immigrants and their minor children imposed a net taxpayer burden ranging from $43.4 billion to $298.8 billion in 2013.

“That’s just the way the welfare state works … It’s almost inevitable that people with lower skills and education are a net burden.”

Harvard University economics professor George Borjas, who participated in the research, said the fiscal drain at all levels of government is the predictable result of large numbers of immigrants earning low salaries that qualify them for a range of government-assistance programs.

“That’s just the way the welfare state works,” he said. “I was never surprised by it … It’s almost inevitable that people with lower skills and education are a net burden. That’s true of immigrants. That’s true of natives.”

Steven Camarota, director of research at the Center for Immigration Studies, said the report is in line with numerous other studies that point to the same general conclusions.

“It told us a lot of things we already knew,” said Camarota, who did not participate in the project but was one of the experts tapped to review the research.

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Robert Rector, a senior fellow at The Heritage Foundation, said the study is noteworthy because it concludes that the positive fiscal impact of the typical immigrant with a college degree is smaller than the negative effect of the average immigrant who did not go beyond high school.

“They’re more than canceling the others out,” he said.

Using data in the report, Rector estimated the average immigrant without a college degree and his children would cost about $640,000 over the next 75 years. He noted some 4 million of those immigrants have come into the country since 2000 and continue to live here. The net cost of the entire group would be $920 billion, meaning the government would have to put aside $920 billion and put it in an account earning 3 percent annual interest to cover the future costs.

“It’s very, very costly,” he said.

Benefits Mostly Go to Business Owners
Immigration advocates often argue that new arrivals breathe vitality into the country by increasing economic activity. And, indeed, the study concludes that immigrants do make the pie bigger — to the tune of tune of some $2 trillion.

But Brojas said a bigger economy is not necessarily a better one. Researchers determined that the increased labor reduces wages by as much as $493.9 billion. Business owners enjoyed a windfall as a result, receiving gains totaling $548.1 billion.

“The money is transferred to owners of capital,” Rector said.

Rector said it is an obvious truth that a larger population leads to a larger economy. The relevant question, he added, is whether it improves living standards overall. And the study “undermines rather strongly the open-borders ideology” of immigration advocates, he said.

The difference between the gains to business and the lower wages, the so-called “immigration surplus,” is $54.2 billion. Borjas noted that figure roughly equals the low-end estimate of the fiscal burden of immigration.

“The best you can say is that we break even,” he said.

[lz_table title=”Cost of Immigrants” source=”National Academy of Sciences”]Immigrants & Their Children
|Low estimate (2013)
,Net Cost
Federal,$53.4 billion
State & local,-$96.9 billion
Total,-$43.4 billion
|High estimate (2013)
,Net Cost
Federal,-$150.8 billion
State & local,-$14.8 billion
Total,-$298.8 billion
[/lz_table]

While the study found that the overall impact on wages over a 10-year period is small, Borjas said that low-skilled American workers are most negatively affected. That is because they are most likely to be competing for jobs with immigrants who have similar skill and education levels.

The study also calls into question the oft-repeated claim of advocates that recent immigrants are assimilating as quickly and smoothly as past generations of newcomers. The report shows that immigrants who came in the 1970s learned English at a faster pace than immigrants who arrived in the 1980s and 1990s.

That may explain why immigrants seem to be climbing the economic ladder more slowly than previous immigrants. Ten years after coming to the United States, men who immigrated from 1965 through 1969 had cut their wage deficit with American men in half. But the wage gap for immigrants who came from 1995 to 1999 had barely budged 10 years later. The cohort made 27.3 percent less than natives when they first arrived, and immigrants were making 26.9 percent less than natives 10 years later.

Ethnic Enclaves Stifle Americanization? 
Borjas speculated the number of immigrants has become so large that new arrivals can get by without learning English.

[lz_table title=”Slower Assimilation” source=”National Academy of Sciences”]Male Immigrant-Native Wage Gap
|Arrival years,Gap after 10 years
1965-69,-12%
1975-79,-18.5%
1985-89,-26.9%
1995-99,-26.9%
[/lz_table]

“More likely than not, immigrants are now being met by really huge ethnic enclaves, so there is less pressure to assimilate,” he said. “You can pretty much live your whole life in a self-contained enclave where there is less need to invest in English.”

The report does suggest that immigration of high-skill, high-education immigrants could increase economic innovation. Researches measured that by looking at patents and finding that immigrants with college degrees are twice as likely to be awarded patents as natives with college degrees.

Camarota said part of the reason for that is that immigrant college graduates are more likely to have science, technology, engineering, and math degrees. And Rector said that is “completely irrelevant to the overwhelming bulk of the million immigrants who are coming into the country every year,” since most immigrants do not gone beyond high school.

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Camarota also said that using patent data is an imperfect proxy for innovation.

“All patents are not the same,” he said. “Some patents are useless.”

Camarota noted the current immigration system gives preference to the relatives of immigrants, which results in a greater proportion of immigrants who are less likely to produce new inventions and technological breakthroughs.

“This is not the system if you want to get innovation out of immigrants,” he said.

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