"High Cost of Cheap Labor" Reviewed

"Illegals" cost the U.S. treasury

(Des Moines WHO Radio talk show Host Jan Mickelson forwarded me, March 17, 2005, this note from Rep. Lamar Smith, a Republican from Texas, to a newspaper:) "Your March 10 editorial "The Old and the New" asserts that immigration is good for our Social Security system. This is misleading. An increased number of immigrants today means an increased number of beneficiaries tomorrow. Studies show most immigrants tend to be less educated and earn lower wages than U.S.-born citizens. These individuals will receive about $100,000 more from Social Security than they paid into it. This will only worsen the financial problems Social Security faces. There are ways to strengthen Social Security, but increasing immigration is not one of them. Also, in your March 11 page-one article "As Border Tightens, Growers See Threat to 'Winter Salad Bowl'," it is not accurate to imply that there are jobs that Americans won't do. The Labor Department reports that, in fact, half of the jobs are being done by legal immigrants and citizens. Furthermore, if we believe in the free market, why not let wages rise to attract more legal workers?"

My reply to Jan: Thanks for the opportunity to continue this conversation. (From our March 11 discussion on his show)

Your note makes two assumptions: first, that any conceivable immigration reform that would increase immigration would increase the welfare drain which "illegals" currently create; and second, that the welfare drain which they currently create exceeds the amount they pay in taxes.

Could any kind of reform lessen the current welfare drain caused by "illegals"? The primary reason "illegals" become a significant welfare drain when they finally become legal and can qualify for welfare themselves, not just for their citizen children, is that they are uneducated, according to the Center for Immigration Studies published August 24, 2004. They are not more dependent upon welfare than citizens with the same education, and indeed not all of them have little education and much welfare dependence. But the average legal immigrant is less educated than the average citizen, and proportionately more dependent upon welfare.

What details could be included in a welfare reform package that would correct this problem? The point system proposed in S1387 in 2004. To qualify for LPR, Legal Permanent Residence, applicants enrolled in the temporary work program would have to get educated, and stay off welfare! LPR is like a precious diamond to virtually every "illegal". Offer it for any price within their capacity to pay, and they will pay the price. You can bank on it. Make staying off welfare a condition for LPR, and speed citizenship for those who stay off, and they will try harder to help each other (which is the way citizens should live too) rather than rely on it, which by the way will create a block of voters who understand how inefficient welfare is, who may help us throw off Roosevelt's burden completely some day.

Does the welfare drain of "illegals" exceed their contributions in taxes?

Summary of the details which follow: If you just count the actual benefits received directly by "illegals", their average value of services received is $900, compared with the $4.200 which the average illegal contributes in taxes, for a total windfal to the U.S. treasury of $33 billion, based on figures from the Center for Immigration Studies report published August 24, 2004. If Congress writes a wise immigration reform bill with incentives to keep the welfare drain from increasing as "illegals" are legalized, the estimated 55% of "illegals" whose paychecks currently have taxes deducted will increase to virtually 100%, increasing the windfall to $60 billion. (Figures based on the Center for Immigration Studies report, "The High Cost of Cheap Labor", August 24, 2004.)

(This counts only the effect on the federal budget. A thorough study of the effect on state budgets would have to be done for each state, because lawmakers have varying sympathy for "illegals". Which brings up the point that the higher you can make the case that welfare is being drained by these people, the deeper a hole you dig for yourself if you think "deporting them all" is a realistic political solution. The fact is the amount of welfare taken fraudulently by "illegals" is almost nil; their access to welfare is often euphemistically called "loopholes", but those "loopholes" are deliberately in place because lawmakers want them there. Why? Because whether you think tender hearts are criminal or not, lawmakers elected by voters want them provided for at about the levels at which they are. Which means that to that degree, it is politically unrealistic to publicly advocate deporting them all. If Americans are tender hearted enough towards "illegals" to want them to have emergency medical care rather than to just die on the sidewalks, milk for their citizen babies, etc. etc., how realistic can it be for you to ask Americans to ship them all South where they will not only have any of these minimal benefits, but will not be able to work either?)

Then how does the Center for Immigration Studies reach the conclusion that "illegals" caused a net fiscal deficit of $10.4 billion last year, and that legalizing them would triple that figure?

Well, of course, regarding the second conclusion, CIS assumed legalizing them would come with no incentives to become educated or to stay off welfare. Indeed such plans are out there. The plan last year that got 110 House sponsors didn't have any such incentives. President Bush speaks of education as a goal, but refuses to link it to the LPR incentive. Without this most powerful of incentives, it is hard to imagine what would motivate "illegals" to work as hard towards this goal as we need them to. This underlines the importance of including these incentives in any immigration reform package. They will cause the welfare drain to drop, and the windfall to our U.S. treasury to mushroom.

Regarding the first conclusion, the CIS study counted, as part of the "services" "illegals" receive, $3,115 which is the cost of our federal "infrastructure" divided equally between every human being within our borders.

That's not "brick and mortar" infrastructure, like roads, sewers, electric lines, etc., which are paid for by "illegals" as well as by citizens through property taxes, gasoline taxes, and utilities bills. That's federal bureaucracy.

You and I know 50% of our federal bureaucracy is waste, and another 40% is for projects our federal government has no constitutional business doing. There is no "need" for it which increases the more people are added within our borders! It creates its own "need"! Its cause is voter apathy, a crime for which "illegals" cannot rationally be held responsible. We cannot rationally say "OK, another 200,000 'illegals' have joined us this year, so now we are going to have to soak taxpayers for another $10 million to pay for research on the mating habits of gunga frogs."

Yet even by adding this phantom $3,000 per "illegal" to the welfare drain they cause to the federal budget, the CIS figures still add up to $78 more in taxes which the average "illegal" contributes in taxes, than the services he consumes. So what ELSE did the CIS do, to justify its conclusion that the average "illegal" costs the U.S. treasury $2,700 per year?

They added services to citizen children!

Yes, that's right, in order to reach their conclusion that the average "illegal" costs the U.S. welfare treasury $2,700, they counted services to citizens!

Now, I understand there are many who think babies born here to "illegals" ought not be accorded citizenship. But can we agree that our laws -- the same laws which we accuse them of breaking"-- say that they are, and have said it for a lot longer than they have said "illegals" are breaking them?

Can we agree that it is not helping the public to understand the immigration problems, by counting welfare payments to U.S. Citizens as welfare payments to "illegals"?

Even the Supreme Court, in Plyler v. Doe, 1980, agreed that "There is no evidence in the record suggesting that illegal entrants impose any significant burden on the State's economy. To the contrary, the available evidence suggests that illegal aliens underutilize public services, while contributing their labor to the local economy and tax money to the state fisc."

The importance of the CIS study is that it is the most recent, and the most thorough. Only once every few years does anyone even attempt to compare the welfare costs with the tax contributions of "illegals", and this study even compares those studies with its own findings.

Its press release summary said "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." The CIS said "amnesty" would make it even worse: "...the estimated annual net fiscal deficit would increase from $2,700 per household to nearly $7,700, for a total net cost of $29 billion." (p. 5 of the report)

Now for the intellectually curious, here are the figures for my own evaluation of the CIS data, which brought me to my conclusion that "illegals" create a $33 billion windfall to the U.S. treasury, if we don't count the cost of bureaucratic waste, or the cost of welfare payments to citizens:

$6.949 is the total average welfare cost of "illegals", CIS concludes. The figure counts these services to citizen children, according to its chart on page 32: Social security, SSI, TANF payments, food stamps, Medicaid, energy assistance, higher education assistance, federal unemployment compensation, Medicare, WIC, child care subsidies, school lunches, Stafford Student Loan, TANF social services, and means-tested programs for children of migrants. I assume the Earned Income Tax Credit and Additional Child Tax Credit are likewise available only for citizens, since social security numbers must be listed on the tax form to receive them. By subtracting this from CIS's total "illegal" cost of $6,949, the bill drops to $4,945.

The study listed two benefits which are available for citizen as well as illegal children, without offering any breakdown: federal funding for public education, and for English Language Acquisition. If we arbitrarily guess that half of that is for citizens, and just subtract half the amount from our bill, we decrease our bill by $171, for a total of $4,774.

Next we may consider discounting the costs which are the direct result of keeping these workers illegal, which would disappear were they given the rights of the rest of us. $415 is down as the cost of "federal prison and court systems". There is no explicit breakdown between those incarcerated for traditional crimes, and those incarcerated only for the "crime" of breathing our air without authorization, but the study estimates that were illegals legalized, this figure would drop to $120, so taking $295 off our bill would better reflect the cost of illegals to our prison system which is not caused just by making it illegal for them to work.

That brings our bill to $4,479. Finally, the CIS adds $345 as the cost of INS enforcement caused by the average illegal family; this figure would disappear if illegals were given a front door to legal status. Taking $345 off our bill leaves us $4,134, which is $78 less than the average illegal household is estimated to pay in taxes. This $345 off closer to what their cost will be, if Congress writes a bill right.

$3,115 of the cost is not for anything anyone has received personally, but is the cost of federal "infrastructure" which this study divides equally between all households, whether of citizens, legal immigrants, or illegals. (This study considers only federal expenses compared with federal taxes; not state or local benefits or taxes.)

This leaves only $1,019 which, this study estimates, the average illegal household personally "receives" for the illegals in the family. This includes rent subsidy, $86; public housing, $40; energy assistance, $8; education subsidy, $172 (by guessing that 1/2 of the amount given here is for non-citizens); the cost of crime, $120; and $591 for "medical care for the uninsured", whose meaning is not given, so I do not know what it includes or whether any of it really goes for illegals. (This gives a result only $2 off, which is the amount the total on the chart is off, if you add up all the items in the column.)

Food Stamps. If unauthorized immigrants ever get food stamps for themselves, they get it from government offices who are violating the law. However, parents may receive food stamps to feed their children who became citizens by being born here, by authority of 8 U.S.C. 1401. Many feel the law ought to treat U.S.-born children of illegals as illegals themselves. But the term "illegal aliens" is not defined as including U.S. citizens, unless we redefine it. (Food stamps applicants must present a valid social security number. If a false number is presented, caseworkers will know it in about a month, and will cut off the stamps. If benefits fraudulently obtained amount to very much, caseworkers will turn over the case to law enforcement for prosecution.)

Source: I called the Iowa Department of Human Services at 281-3147 and was transferred to 281-6899 where I talked to "Vicki". Vicki had a heavy food stamp case load for 3-1/2 years. She has heard all the news stories alleging illegals receive welfare, but she can't imagine it. She can't imagine anyone got by her. Food stamp applicants have to have a valid Social Security number. If a phony card were presented, "I would get a match in a month or so saying it wasn't valid." Surely the fear of exposure to the INS would discourage illegals from trying to get welfare with phony papers, she agrees; although "we don't report to the INS", they would report to local law enforcement if the fraud resulted in payouts of "large dollar amounts" for which there are criminal penalties. Vicki assumes the system is as tight in all states, since it is a federal program.

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