Thursday, March 24, 2005

The Costs of Immigration

In a previous essay, I attempted to demonstrate that the aggregate economic impact of immigration is small. According to economist George Borjas, “All the available estimates suggest that the annual net gain is astoundingly small, less than .1% of GDP.” In real terms, that translates into approximately $10 billion dollars added to the overall economy, just $30 per person.

Borjas also establishes that mass immigration has dramatic redistributive effects. As low-skill immigrants have flooded the labor market, Borjas estimates that immigration is responsible for half the decrease observed in the wages of high-school dropouts.

There are numerous other economic costs connected to immigration. According to Census Bureau figures for 2003, poverty rates increased and the number of uninsured Americans reached all-time highs. This bad news occurred despite an ongoing economic recovery in its third year.

Census numbers showed a growing chasm between natives and the foreign-born. For example, look at median family income for 2003:

*Income of native households rose $135, or 0.3%
*Income of naturalized citizen households fell $422, or 0.9%
*Income of non-citizen households fell $1,852, or 5.6%

Similarly, the poverty rate for U.S.-born citizens was 11.8%, but 21.7% among foreign-born non-citizens.

The data pertaining to health insurance coverage is most shocking of all. While 13% of natives lack insurance coverage, 34.5% of all immigrants and 45.3% of non-citizen immigrants do not have health coverage.

According to a report by the Federation for American Immigration Reform, one out of every four uninsured Americans is an immigrant. Furthermore, 1/2 of immigrants have no insurance or have it provided at taxpayer expense. Unfortunately, the problem of uninsured immigrants is on the rise. According to FAIR, immigrants (legal and illegal) who arrived between 1994 and 1998 and their children accounted for 59 percent of the growth in the size of the uninsured population in the last ten years.

As Borjas points out, increasingly the immigrants coming to our shores and teeming across the southern border have limited job skills and are very poor. As a result, they also become a burden on the American welfare state. According to analyst Steve Camarota, state governments spend an estimated $11 billion to $22 billion to provide welfare to immigrants. Camarota finds, not surprisingly, welfare use remains high over time; immigrants in the country for more than 20 years still use the welfare system at significantly higher rates than natives.

Finally, immigration is causing school overcrowding and states are speeding $7.4 billion annually to educate illegal immigrants--which doesn't account for the massive expenditures undertaken to educate the children of legal immigrants. As Peter Brimelow says, there are no national studies calculating the cost of bilingual education because no one wants to know the answer.

An economic cost/benefit analysis should not drive immigration policy. I am merely suggesting that the assumption that immigration produces ecomomic benefits is a dubious proposition at best.

Coming soon--Can immigration save Social Security?


Anonymous Anonymous said...

This helped a lot. Thanks. And do you know hwo much it cost per immirgrant when they come to the is?

11:49 AM  

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