Economic impact of illegal immigrants in the United States

The economic impact of illegal immigration to the United States is a matter of study and debate relating to the nation's economy and politics. As a result the 1994 North American Free Trade Agreement (NAFTA) between the US and Mexico, which eliminated tariffs on US corn exports, it's estimated that 500,000 Indigenous farmers each year were driven from their lands by the flooding of US corn exports, forcing many to immigrate illegally to the US. Illegal immigrants purchase goods and services, plus contribute labor and taxes, while requiring social services such as healthcare, education and law enforcement. They also affect wages for lower-skilled workers and prices.

Overall effects

During 2007, the nonpartisan Congressional Budget Office reviewed 29 reports published over 15 years on the impact of unauthorized immigrants on the budgets of state and local governments. While cautioning that the reports are not a suitable basis for developing an aggregate national effect across all states, they concluded that:

• State and local governments incur costs for providing services to unauthorized immigrants and have limited options for avoiding or minimizing those costs;
• The amount that state and local governments spend on services for unauthorized immigrants represents a small percentage of the total amount spent by those governments to provide such services to residents in their jurisdictions;
• The tax revenues that unauthorized immigrants generate for state and local governments do not offset the total cost of services provided to those immigrants, although the impact is most likely modest; and
• Federal aid programs offer resources to state and local governments that provide services to unauthorized immigrants, but those funds do not fully cover the costs incurred by those governments.

Professor of Law Francine Lipman writes that the belief that illegal migrants are exploiting the US economy and that they cost more in services than they contribute to the economy is "undeniably false". Lipman asserts that "undocumented immigrants actually contribute more to public coffers in taxes than they cost in social services" and "contribute to the U.S. economy through their investments and consumption of goods and services; filling of millions of essential worker positions resulting in subsidiary job creation, increased productivity and lower costs of goods and services; and unrequited contributions to Social Security, Medicare and unemployment insurance programs."

Aviva Chomsky, a professor at Salem State College, states that "Early studies in California and in the Southwest and in the Southeast...have come to the same conclusions. Immigrants, documented and undocumented, are more likely to pay taxes than they are to use public services. Illegal immigrants aren't eligible for most public services and live in fear of revealing themselves to government authorities. Households headed by undocumented immigrants use less than half the amount of federal services that households headed by documented immigrants or citizens make use of."

Editorialist Robert Samuelson points out that poor immigrants strain public services such as local schools and health care. He points out that "from 2000 to 2006, 41 percent of the increase in people without health insurance occurred among Hispanics", although he makes clear that these facts are true of legal as well as illegal immigrants.

According to a 1998 article in The National Academies Press, "many [previous studies] represented not science but advocacy from both sides of the immigration debate...often offered an incomplete accounting of either the full list of taxpayer costs and benefits by ignoring some programs and taxes while including others," and that "the conceptual foundation of this research was rarely explicitly stated, offering opportunities to tilt the research toward the desired result." One survey conducted in the 1980s (before the current wave of illegal immigration) found that 76 percent of economists felt recent illegal immigration had a positive effect on the economy.

National Public Radio (NPR) wrote in 2006: "Supporters of a crackdown argue that the U.S. economy would benefit if illegal immigrants were to leave, because U.S. employers would be forced to raise wages to attract American workers. Critics of this approach say the loss of illegal immigrants would stall the U.S. economy, saying illegal workers do many jobs few native-born Americans will do."

The Center for Immigration Studies reported in 2004: "Households headed by illegal aliens imposed more than $26.3 billion in costs on the federal government in 2002 and paid only $16 billion in taxes, creating a net fiscal deficit of almost $10.4 billion, or $2,700 per illegal household." Research by the center has been called dubious and faulty. A report released by the Heritage Foundation in March 2009 regarding immigrants was called into question for its faulty logic. The Urban Institute also criticized the methodology used by the Center for Immigration Studies stating that is erroneous research lead to misleading conclusions. In addition, the Public Religion Research Institute criticized an immigration-related poll released by the Center for Immigration Studies in December 2009, stating "the poll has serious methodological shortcomings, and results should be viewed with considerable caution." The Mexican American Legal Defense Fund (MALDEF) says that the Center has a history of distorting facts about immigrants and Latinos. In response to a study released by the center, US Census spokesman Stephen Buckner said "the Census Bureau does not produce estimates or counts of illegal immigrants living in the United States."

Most economists, including Economics Professor William Ford of Middle Tennessee State University, conclude that illegal immigrants are a net gain to the economy. Ford estimates that illegal immigrants contributed $428 billion dollars to the nation's $13.6 trillion gross domestic product in 2006.

Number of unauthorized immigrants

The Pew Hispanic Center reported in 2008 that 11.9 million unauthorized immigrants lived in the United States; it concluded that the illegal immigrant population grew rapidly from 1990 to 2006 but has since stabilized. The Center estimated that the rapid growth of unauthorized immigrant workers also has halted; it found that there were 8.3 million illegal immigrants in the U.S. labor force in March 2008. Based on March 2008 data collected by the Census Bureau, the Center estimated that unauthorized immigrants were 4% of the nation's population and accounted for 5.4% of the workforce. Their children, both those who are unauthorized immigrants themselves and those who are U.S. citizens, make up 6.8% of the students enrolled in the nation's elementary and secondary schools. About three-quarters (76%) of the nation's unauthorized immigrants are Hispanic. The majority of illegal immigrants (59%) are from Mexico. Significant regional sources of unauthorized immigrants include Asia (11%), Central America (11%), South America (7%), the Caribbean (4%) and the Middle East (less than 2%).

Analysts at Standard & Poor's estimated in April 2006 that the U.S. has 11 million illegal immigrants, 55% from Mexico and 22% from other Latin American countries. Approximately two-thirds have been in the U.S. for 10 years or fewer. Recent statistics from the Pew Hispanic Research Center indicate that illegal immigrants account for about 4.9% of the civilian labor force, or 7.2 million workers out of a total U.S. labor force of 148 million.

Labor is a mobile economic factor of production and Peter Andreas asserts that illegal immigration is spurred on by periods of high demand for labor.

Taxes

The IRS estimates that about 6 million unauthorized immigrants file individual income tax returns each year. Research reviewed by the nonpartisan Congressional Budget Office indicates that between 50 percent and 75 percent of unauthorized immigrants pay federal, state, and local taxes. Illegal immigrants are estimated to pay in about $7 billion per year into Social Security.

Ernesto Zedillo, former President of Mexico and current Director of the Yale Center for the Study of Globalization, asserts that illegal immigrants are only a drain on government services when they are incapable of paying taxes; and that this incapacity is the result of restrictive federal policies that require proof of citizenship. He further argues that the US economy has "crucial" need for migrant workers, and that the current debate must acknowledge this rather than just focus on enforcement.

The Internal Revenue Service issues an Individual Taxpayer Identification Number (ITIN) regardless of immigration status because both resident and nonresident aliens may have Federal tax return and payment responsibilities under the Internal Revenue Code. Federal tax law prohibits the IRS from sharing data with other government agencies including the INS. In 2006 1.4 million people used ITIN when filing taxes, of which more than half were illegal immigrants.

Social security

Illegal immigrants pay social security payroll taxes but are not eligible for benefits. During 2006, Standard & Poor's analysts wrote: "Each year, for example, the U.S. Social Security Administration maintains roughly $6 billion to $7 billion of Social Security contributions in an "earnings suspense file" -- an account for W-2 tax forms that cannot be matched to the correct Social Security number. The vast majority of these numbers are attributable to undocumented workers who will never claim their benefits."

The Social Security Administration has stated that it believes unauthorized work by non-citizens is a major cause of wage items being posted as erroneous wage reports instead of on an individual's earnings record. When Social Security numbers are already in use; names do not match the numbers or the numbers are fake, or the person of record is too old, young, dead etc., the earnings reported to the Social Security Agency are put in an Earnings Suspense file [ESF]. The Social Security spends about $100 million a year and corrects all but about 2% of these. From Tax Years (TY) 1937 through 2003 the ESF had accumulated about 255 million mismatched wage reports, representing $520 billion in wages and about $75 billion in employment taxes paid into the over $1.5 trillion in the Social Security Trust funds. As of October 2005, approximately 8.8 million wage reports, representing $57.8 billion in wages remained unresolved in the suspense file for TY 2003.

Wages and poverty

National Public Radio (NPR) reported in March 2006 that: "...overall, illegal immigrants don't have a big impact on U.S. wage rates. The most respected recent studies show that most Americans would notice little difference in their paychecks if illegal immigrants suddenly disappeared from the United States. That's because most Americans don't directly compete with illegal immigrants for jobs. There is one group of Americans that would benefit from a dramatic cut in illegal immigration: high-school dropouts. Most economists agree that the wages of low-skill high-school dropouts are suppressed by somewhere between 3 percent and 8 percent because of competition from immigrants, both legal and illegal. Economists speculate that for the average high-school dropout, that would mean about a $25 a week raise if there were no job competition from immigrants. Illegal immigrants seem to have very little impact on unemployment rates. Undocumented workers certainly do take jobs that would otherwise go to legal workers. But undocumented workers also create demand that leads to new jobs. They buy food and cars and cell phones, they get haircuts and go to restaurants. On average, there is close to no net impact on the unemployment rate."

Research by George Borjas (Robert W. Scrivner Professor of Economics and Social Policy at Harvard University) found that the influx of immigrants (both legal and illegal) from Mexico and Central American from 1980 to 2000 accounted for a 3.7% wage loss for American workers (4.5% for black Americans and 5% for Hispanic Americans). Borjas found that wage depression was greatest for workers without a high school diploma (a 7.4% reduction) because these workers face the most direct competition with immigrants, legal and illegal.. In contrast, a study by Economist Giovanni Peri, "How Immigrants Affect California Employment and Wages" concluded that immigrant workers raised the wages of native born workers by 4%.

According to the Center for Immigration Studies, in March 2000, 25.8% of Mexican immigrants lived in poverty — more than double the rate for natives in 1999. In another report, The Heritage Foundation notes that from 1990 to 2006, the number of poor Hispanics increased 3.2 million, from 6 million to 9.2 million.. Research by the Center for Immigration Studies and the Heritage Foundation has been called dubious and faulty. A report released by the Heritage Foundation in March 2009 regarding immigrants was called into question for its faulty logic. In addition, the Public Religion Research Institute criticized an immigration-related poll released by the Center for Immigration Studies in December 2009, stating "the poll has serious methodological shortcomings, and results should be viewed with considerable caution." The Mexican American Legal Defense Fund (MALDEF) says that the Center has a history of distorting facts about immigrants and Latinos. In response to a study released by the center, US Census spokesman Stephen Buckner said "the Census Bureau does not produce estimates or counts of illegal immigrants living in the United States." In terms of real numbers, whites have always constituted the greatest number of people living in poverty. The majority of people living in poverty are white, 48 percent.

Prices

NPR reported in March 2006 that when the wages of lowered skill workers go down, the rest of America benefits by paying lower prices for things like restaurant meals, agricultural produce and construction. The economic impact of illegal immigration is far smaller than other trends in the economy, such as the increasing use of automation in manufacturing or the growth in global trade. Those two factors have a much bigger impact on wages, prices and the health of the U.S. economy. But economists generally believe that when averaged over the whole economy, the effect is a small net positive. Harvard's George Borjas says the average American's wealth is increased by less than 1 percent because of illegal immigration.

Education

More than 75 percent of immigrants arrive to the US in their prime working years, having completed their education in their native countries. This constitutes a net gain for the country. In a book by Stephen Moore, Senior Economics Writer at the Wall Street Journal and former director of Fiscal Policy Studies at the Cato Institute, and Richard Vedder, Distinguished Professor of Economics at Ohio University, the authors conclude that immigrants, whether legal or illegal, generate billions of dollars in taxes, which is a windfall for the country. Their book reports that immigrants paid approximately $300 billion in federal, state and local taxes; $165 billion in federal income taxes; $85 billion in state and local income taxes, and $50 billion in business taxes. The immigrants who arrived to the US after getting their education in their home countries constitute a windfall for the US of about $2.8 trillion. The local and federal governments get all the benefits of these educated immigrants who pay taxes, even though they did not pay a cent to educate them.

Using the U.S. INS statistics on how many illegal immigrants are residing in each state and the U.S. Dept of Education's current expenditure per pupil by state, the Federation for American Immigration Reform, known for its anti-illegal alien stance, has estimated cost of educating illegal alien students was as follows:

State	Illegal Alien Students
California	$3,220,200,000
Texas	$1,645,400,000
New York	$1,306,300,000
Illinois	$834,000,000
New Jersey	$620,200,000
For all 50 states	$11,919,900,000

However, schools are generally funded via property and sales taxes, which everyone pays, either through sales taxes, property taxes, or via rent, as the taxes are passed on to the renter by the property owner. Everyone pays for education, whether a citizen, legal or illegal immigrant. Illegal immigrants are younger and less likely to be going to school. Only 1.5 of students in elementary school, 3 percent of secondary school children were undocumented. Overall, students whose parents are undocumented is about 5 percent. Spending for public education of illegal immigrant children in K-12 public education in Minnesota for 2003-2004 was a total of $78.76 million to $118.14 million. Immigrants pay more than their share in taxes to fund education. According to the California Immigrant Policy Center immigrants, both legal and illegal, pay approximately $5.2 billion in state income taxes each year; they contribute an additional $4.6 billion in sales taxes. Immigrants in California have a combined federal tax contribution of more than $30 billion annually. In California,the average immigrant-headed household contributes a net $2,679 annually to Social Security, which is $539 more than the average US-born household. A 2006 study by the Texas Comptroller found that undocumented immigrants produced $1.58 billion in state taxes, far more than what they used in benefits. According to the report, the absence of the estimated 1.4 million undocumented immigrants in Texas in fiscal 2005 would have been a loss to the state's gross state product of $17.7 billion. A study by the Fiscal Policy Institute concludes that “New York’s immigrants are responsible for $229 billion in economic output in New York State."

For the same time period, total spending in New Mexico at the state and local levels for illegal immigrant schoolchildren was about $67 million The undocumented population is one of the lowest of any state, estimated at 2 percent. The number of undocumented students is almost negligible. A report by the New Mexico Fiscal Policy Project concludes that undocumented workers have a positive effect on the economy in NM via sales, property and income taxes. They paid 1.814 billion in taxes more in taxes then the cost of educating students k-12.

During April 2006, Standard & Poor's analysts wrote: "Local school districts are estimated to educate 1.8 million undocumented children. At an average annual cost of $7,500 (averages vary by jurisdiction) per student, the cost of providing education to these children is about $11.2 billion."

Health care

Effect on Medicaid

Reuters reported that illegal immigrants, as well as legal immigrants in the country less than five years, generally are not eligible for Medicaid. However, they can get Medicaid coverage for health emergencies if they are in a category of people otherwise eligible, such as children, pregnant women, families with dependent children, elderly or disabled individuals, and meet other requirements. The cost of this emergency care was less than 1% of Medicaid costs in North Carolina from 2001-2004 and the majority was for childbirth and related complications. USA Today reported that Illegal immigrants can get emergency care through Medicaid, the federal-state program for the poor and people with disabilities. However, this is not free care. People who use the emergency room are charged for this service. Illegal immigrants can't get non-emergency care unless they pay. They are ineligible for most other public benefits. The National Center for Health Statistics has concluded that it's a myth that the uninsured are clogging emergency rooms. In its report, the agency found that Medicare recipients constituted a third of ER patients during 2007. In addition, people with private health insurance were half as likely to visit the ER. Far less of the uninsured, one in five, went to the ER. In 2006, the Oklahoma Health Care Authority estimated that it would spend about $9.7 million on emergency Medicaid services for unauthorized immigrants and that 80 percent of those costs would be for services associated with childbirth.

Insured vs. Uninsured

The Pew Hispanic Center estimated in 2005 that 59% of the nation's illegal immigrants are uninsured, compared with 25% of legal immigrants and 14% of U.S. citizens. Illegal immigrants represent about 15% of the nation's 47 million uninsured people — and about 30% of the increase since 1980.According to a report by the Center for Studying Health System Change (HSC) organization, communities with higher numbers of uninsured, Hispanics or non-citizens have a lower use of hospital emergency departments. The author of the study, Peter J. Cunningham, a senior fellow at HSC, found that immigrants are not a significant factor contributing to ER overcrowding. "Hispanic immigrants—a high proportion of whom are uninsured—are not heavy users of EDs compared to other individuals, including whites with private insurance," Cunningham said. "And their numbers are still too small in the vast majority of communities nationwide to have a major impact on the health care system in those communities." Moreover, a study by the Rand Corp., published in the November 2006 issue of Health Affairs, found that undocumented immigrants in Los Angeles County use disproportionately fewer medical services.

Effect on hospitals

Uncompensated care generates a significant financial burden on hospital emergency departments and cost-shifting to insured and paying patients. Because of the U.S. Emergency Medical Treatment and Active Labor Act of 1986 (42 U.S.C. § 1395dd), most hospitals may not refuse anyone treatment for an emergency medical condition because of citizenship, legal status, or ability to pay.

Data on health care costs for illegal immigrants are sketchy because hospitals and community health centers don't ask about patients' legal status. In California, a 2004 study by the Federation for American Immigration Reform put the state's annual cost at $1.4 billion. Similar studies in Colorado and Minnesota in 2005 came up with much smaller estimates: $31 million and $17 million, respectively. Texas estimated its 2006 costs at $1.3 billion. Because most illegal immigrants are relatively young and healthy, they generally don't need as much health care treatment as U.S. citizens. They account for less than 2% of national medical spending.

The Immigration and Naturalization Service (INS) continues to bring injured and ill illegal immigrants to hospital emergency rooms without taking financial responsibility for their medical care. Almost $190 million or about 25 percent of the uncompensated costs southwest border county hospitals incurred resulted from emergency medical treatment provided to illegal immigrants

At least two research studies have been done which attempt to discover the cost of health care for illegal immigrants by asking the illegal immigrants themselves.

• A phone survey in which Alexander Ortega and colleagues at the University of California asked illegal immigrants how often they receive medical care reported that illegal immigrants are no more likely to visit the emergency room than native born Americans.
• A RAND study concluded that the total federal cost of providing medical expenses for the 78% illegal immigrants without health insurance coverage was $1.1 billion, with immigrants paying $321 million of health care costs out-of-pocket. The study found that illegal immigrants tend to visit physicians less frequently than U.S. citizens because they are younger and because people with chronic health problems are less likely to immigrate.

Contagions and epidemic

To reduce the risk of mortality from infection diseases in low-incidence areas, the main countermeasure has been the screening of immigrants on arrival. Prior to being awarded a green card, legal immigrants over the age of 15 must have a chest x-ray or skin test to check for tuberculosis. Illegal immigrants are not screened in this manner.

State and local welfare costs

Michael D. Antonovich, Los Angeles County Supervisor for the 5th District, announced in August 2009: "Figures from the Department of Public Social Services show that children of illegal aliens in Los Angeles County collected nearly $22 million in welfare and over $26 million in food stamps in June 2009. Projected over a 12 month period, this would exceed $575 million dollars. Annually the cost of illegal immigration to Los Angeles County taxpayers exceeds $1 billion dollars, which includes $350 million for public safety, $400 million for healthcare, and $500 million in welfare and food stamps allocations. Twenty-four percent of the County’s total allotment of welfare and food stamp benefits goes directly to the children of illegal aliens born in the United States." He referred to the costs as "catastrophic" for taxpayers. He estimated that the total cost for illegal immigrants to County taxpayers exceeds $1 billion a year, excluding education.. Antonovich's statement is dubious, as he simply put out a news release, without citing the methodology of his research or how he arrived at his figures. The California Community Foundation in Los Angeles has released a report stating that immigrants make up nearly half the Los Angeles workforce and contribute nearly 40 percent of the county's gross regional product. Despite lower-than-average wages, immigrants also account for more than one-third of the county's spending power. . Immigrants are more likely to create their own jobs than the native born. In California, they pay approximately $5.2 billion in state income taxes each year and an additional $4.6 billion in sales taxes.

Mortgage defaults

According to the executive vice president of Banco Popular, the bank had found no higher rate of default in home loans to illegal immigrants than any other market the company serves.

See also

• Economic impact of immigration to Canada
• Economic impact analysis