Panelists:
Moderator: Mark Krikorian, Executive Director at the Center for Immigration Studies
Steven Camarota: Director of Research at the Center for Immigration Studies. Author of "Back Where We Started: An Examination of Trends in Immigrant Welfare Use Since Welfare Reform."
Douglas Besharov: Joseph J. and Violet Jacobs Scholar in Social Welfare Studies at the American Enterprise Institute.
Robert Rector: Senior Research Fellow at the Heritage Foundation.
MARK KRIKORIAN: Good morning. I’m encouraged there’s this many people not covering the war.
My name is Mark Krikorian. I am executive director of the Center for Immigration Studies, and the center is a research institute that examines and critiques the impact of immigration on the United States. All our work, by the way, is – including the report we’re releasing today and everything – is at our website: cis.org.
I’ll read you a quote from an analyst of this issue of immigration and welfare. Quote, “Since the passage of the Welfare Reform Act of 1996, welfare use by immigrant households has plunged.” End quote. This seems to be the conventional wisdom on this issue. In 1996, Congress set in motion a vast social experiment. The issue they were confronting was heavy immigrant use of welfare. Immigrants were about half again as likely to be – to use welfare than natives were – and this was widely acknowledged as a problem. It led to a variety of initiatives at the state level – Proposition 187 dealt specifically with illegal immigrants, there were lawsuits by a variety of states over the cost of immigrant welfare and related issues.
And then in 1996, Congress passed several pieces of legislation -- an immigration bill as well as the Welfare Reform Bill – that were partly inspired by this issue of welfare – of immigrant welfare use. In fact, the Welfare Reform Bill – approximately half of the savings projected from the Welfare Reform Bill were supposed to come from the cut-offs – the immigrants cut-offs where legal immigrants – many legal immigrants were denied access to many welfare programs. And in fact, that approach of using welfare was – could be summed up by the rallying cry many libertarian opponents of immigration cuts used, which was “immigration si, welfare no.” In other words, this was consciously pursued as a way of avoiding implementing Barbara Jordan’s recommendations on – for moderate cuts in the level of immigration, and instead, the approach that Congress ultimately embraced was to leave immigration at the historically unprecedented levels that it is now, but attempt to deal with the welfare consequences by keeping immigrants from being able to get welfare.
Well, the results of that vast social experiment – they’re in and they’re not encouraging for the proponents of this “immigration si, welfare no” approach, and we’ll talk about that in some detail. The report you have in front of you is authored by Steven Camarota, who is the director of research at the center – on my right. Steve is one of the country’s top students of the impact of immigration on the United States. He has written extensively for the center and elsewhere – again, all this work is on our website: cis.org – and after Steve presents the results of Congress’ 1996 social experiment, we’ll have two of the top students of welfare issues give their thoughts, both about the report and the issue in general.
The debate over the issue, to the extent there is any, is primarily on the right. Analysts on the left, students of welfare on the left seem to be pretty uniformly in favor of welfare eligibility for pretty much everybody, so we have two prominent students of the issue from conservative think tanks.
The first responder will be Douglas Besharov from the American Enterprise Institute, who has written – is the author of “The Past and Future of Welfare Reform,” as well as “America’s Families: Trends, Explanations and Choices.”
And after Mr. Besharov, we’ll have Robert Rector, who is a senior research fellow at the Heritage Foundation and author of, among other things, “America’s Failed $5.4 Trillion War on Poverty.”
After everybody has their say, we’ll then open the floor to questions from the audiences. Steve?
STEVEN CAMAROTA: Thank you, Mark. Now one of the most important issues surrounding the contemporary debate over U.S. immigration is its effect on public coffers. A key part – and only part – of that concern revolves around the issue of immigrant use of welfare programs. Partly out of concern over rising immigrant welfare use rates, Congress enacted a number of restrictions on immigrant use of many welfare programs as part of the ’96 overall reform of the welfare system.
As Mark has already pointed out, this was done partly in an effort to prevent reductions in the overall level of immigration. The idea behind this approach, as Mark has pointed out, was that immigration was not the problem, there was nothing wrong with our immigration policy; rather, welfare was the problem.
Now without going into a lot of detail – and there are a lot of good summaries, and we could talk more about this – but let me just very, very briefly summarize the basic points of welfare reform was that with regard to immigrants is that it has denied most types of means-tested assistance to immigrants who arrived after August ’96 until they had lived in the country for a certain number of years. It also emphasized the importance of sponsors providing assistance to immigrants in need rather than the government. The key point here is that the changes were intended to reduce the high rate of welfare use associated with immigrant families with the intent of saving taxpayers money.
Now the report we are discussing here is an attempt to evaluate the ’96 effort by examining trends in immigrant use of four major welfare programs. They are temporary assistance to needy families, or TANF; food stamps; supplemental security income, or SSI; and Medicaid. These four programs constitute the core of the nation’s welfare system.
Now like the Census Bureau and other work – academic work that has examined welfare use, this report looks at welfare use by immigrant and native households. Households are defined as immigrant or native based on the nativity of the household head. The terms “immigrant” and “foreign-born” are used synonymously in this report. Immigrants are basically, in a nutshell, all persons who are not U.S. citizens at birth. And unless I otherwise indicate it, it will include people who are here legally and illegally.
Immigrant households are primarily, of course, comprised of immigrants and their young children. In 2001, for example, 91 percent of persons in immigrant households were either immigrants themselves or the young child of an immigrant parent. The rest were spouses, you know, native-born American spouses, obviously.
Thus, this study is a comparison of welfare use between immigrants and their young children to natives and their young children. We rely on an analysis of the March files from 1997 through 2002 of the current population survey collected by the Census Bureau. The survey includes 217,000 individuals, 23,000 of whom are foreign born.
Well, as one of the best sources of information on the American population – it is by no means perfect -- for one thing, people tend to understate their use of welfare programs.
So what did we find? Using this data, we found that use of TANF and food stamps has declined significantly for both immigrant and native households, and the gap has narrowed between the two groups for these two programs.
However, when all four programs are considered, the gap has not narrowed and in fact has actually widened slightly between immigrant and native households. Moreover, immigrant households comprise a growing share of all households using the welfare system.
Now let’s go through some numbers – I’ll try not to overwhelm you with them, but the report is about numbers so you have to have some. In ’96, 22 percent of immigrant households used at least one major welfare program compared to 15 percent of native-headed households. After declining in the late ‘90s, welfare use return to their ’96 levels, with 23 percent of immigrant households using welfare – again, compared to 15 percent of native households; that is, 23 percent of immigrant households used at least one of the four major programs compared to 15 percent of native-headed households. You can see this in Figure 1 of the report. The persistently high rate of welfare use by immigrant households is entirely explained by their heavy reliance on Medicaid, which has actually risen very modestly.
In contrast, as I indicated, their use of food stamps has declined significantly over this time period, and has their use especially of TANF. These rates for those two programs – TANF and food stamps – are now only modestly above those of natives. You can see all this in Table 1.
The decline in TANF and food stamps use has not however, resulted in a significant savings for taxpayers because it has been almost entirely offset by increases in the cost of providing Medicaid to immigrant households because Medicaid is by far the most expensive program that we have.
The total combined value of benefits and payments received by immigrant households from welfare programs are almost unchanged on average in inflation-adjusted dollars, averaging roughly $2,000 in both ’96 and 2001, and this average payment and benefit is about 50 percent higher than that of natives. The numbers for this you can in Figure 2 in the report.
Now Figure 2 reports the average welfare payment in constant 2001 dollars received by all immigrant households and legal immigrant households only. The dollar values are for the total amount in payments and benefits received divided by each type of household.
Now Table 1 breaks things down further. We look at illegal immigrants and we also try to look at legal, non-refugees as well as refugees. Now in general, when we look at illegals, Table 1 shows that there was decline in the average payment received by both immigrant and native – well, illegal households through ’99. However, since ’99, the size of the payment has increased so that in 2001 the payment was again very similar to what it had been before welfare reform, and this again is true generally for legal immigrants, refugees, non-refugee legal immigrants and natives.
The reason this situation exists is that the costs of providing Medicare rose significantly over this time period, offsetting the very substantial declines in use of TANF and food stamps. The payments are – and this is important because it shows that – the higher payment is important because it shows that not only are immigrant households more likely to use at least one program, but the size of that payment is larger. Now it could have been the case that higher overall just rates of immigrant welfare use, as found in Figure 1, do not translate into higher welfare costs because the average payments and benefits immigrants receive was no larger or in fact smaller than that of natives.
This situation, however, does not appear to be the case. For the average costs to look as they do, the value of payments and benefits received by immigrant households on welfare must be very similar to that of native households on welfare, and as I discuss in the report, they are.
Not surprisingly, continuing high rates of immigrant welfare use, coupled with the rapidly growing immigrant population, has meant that the number of immigrant households using at least one program has increased by 750,000 since ’96, with immigrant households now accounting for 18 percent of all households using a major welfare program, up from 14 percent in 1996. And you can see the numbers in Figure 3 of the report.
Thus, if the goal was to save American taxpayers money or to reduce the number of immigrant households using the overall welfare system, then we have to say that welfare reform, at least as regards to immigrants, has failed. But again, it’s important to keep in mind that these results are due to continued heavy use of Medicaid, which is by far the most expensive program.
It is also important to keep in mind that these results are due mainly to welfare use by legal immigrants. Households headed by illegal immigrants do receive welfare; primarily Medicaid on behalf of their U.S.-born children, who are of course American citizens. In 2001, for example, the average value of payments and benefits received by illegal alien households averaged over a thousand dollars. But this is still considerably less than the $2200 received by legal immigrant households. So in other words, if you take the average value of payments and benefits received by legal immigrant households versus illegal, it’s about twice for legal than it is for illegal.
But this is important also because what this indicates is that one unintended consequence of legalizing illegal aliens would be to significantly increase welfare costs, We can see this very clearly if we look for just a moment at Mexican immigrants. As you probably know, there was a lot of talk of an illegal alien amnesty prior to 9/11 for people from Mexico. While these proposals have obviously moved to the backburner for a while, they might reemerge.
In 2001, 37 percent of households headed by legal Mexican immigrants, we estimate, used at least one welfare program compared to 31 percent of those headed by illegal aliens from Mexico. Clearly an amnesty for Mexican immigrants would create a significant rise in welfare costs, which does of course have significant implications for public coffers and thus should be something to be considered if we decide to give out green cards to illegal aliens from Mexico.
Now we also found that continued high rates of immigrant welfare use do not seem to be due to refugees. Although refugees – and the figures are in the report, I won’t go over them – make the most extensive use of welfare programs of any immigrant group, they do not account for a large enough share of even the legal immigrant population to explain the results. Excluding households headed by refugees, we estimate that 21 percent of non-refugee legal immigrants used at least one welfare program in 2001, compared to 15 percent of natives again.
Now in the time remaining, let me touch on a number of other important findings very quickly, and we can talk about them more in the discussion period. Consistent with previous research, this study finds that use of welfare programs does not decline significantly the longer the immigrants live in the country. Figure 5 shows that in 2001, immigrant households headed by an immigrant who has been in the country for more than 20 years continued to use the welfare system at significantly higher rates than natives.
Another important finding is that the high rates of welfare use associated with immigrants is not – and I repeat not – explained by their unwillingness to work. In 2001, almost 80 percent of immigrant households using welfare had at least one person working. One of the main reasons for the heavy reliance of immigrants on welfare programs is that a very large share of immigrants have very little education, and the American economy offers very limited opportunities to such workers. As a result, many immigrants families work, but they are also still eligible for welfare programs because of their very low income.
Finally, let me touch on a couple of other findings. While not the focus of the study, it should be obvious that while immigrants use welfare, they also pay taxes. However, because immigrants tend to have lower incomes and larger families, their tax paid – the amount of taxes they pay tends to be less. The current population survey includes figures for the estimated average federal income tax liability for all persons in the survey. In 2001, the average immigrant household should have paid $5800 in federal income tax. In contrast, the average native household should have paid over $7,000. Now there are certainly other types of taxes in addition to federal income tax, but the lower incomes of immigrants means that they generally pay less in those taxes as well. The bottom line is that it does not appear that very high tax contributions by immigrants are likely to offset their use of the welfare system.
I guess the bottom line here is that the attempt to reduce immigrant welfare use represents, as Mark pointed out, a real-world social experiment. The findings of this report strongly suggest that at least in terms of saving taxpayers’ money that experiment has largely failed. In fact, because the number of immigrants has been allowed to grow substantially since ’96, the total cost of providing immigrant households with welfare programs has risen significantly.
Now some may still argue that if only we made further changes in the welfare system in general or in regard to immigrants, that this problem could still be solved. But such proposals are grossly – in my view – unrealistic. Political realities make it very difficult to exclude people in the country from accessing social services once they are here. In fact, Congress repealed some welfare restrictions on immigrants shortly after they were passed. Moreover, many state governments chose to cover otherwise ineligible immigrants with their own money, their own state money. Legal immigrants can also avoid any restrictions simply by becoming a citizen.
Perhaps most important, immigrants can receive welfare benefits on behalf of their U.S.-born children who have welfare eligibility like any other American citizen. As a practical matter, the only way to significantly reduce immigrant welfare use in the future is by moving to a system that selects as few immigrants as possible without regard to their skills and ability to compete in the modern American economy. The reason for this is simple. Unskilled immigrants use a lot of welfare while skilled immigrants use much less. Let me just give you a number, I think, that sums this up. In 2001, 42 percent of households headed by legal immigrants without a high-school education used at least one welfare program compared to 10 percent of households headed by immigrants who are college graduates, so you have almost tripled the welfare use rate for a high-school dropout or a non-high-school graduate immigrants as you do when you compare them to natives overall. If we wish to reduce welfare use associated with the foreign-born population, we are going to have to look at policy options in the immigration area rather than denying immigrants access to welfare programs.
Now what effect would less immigration have on the economy? Well, less unskilled immigration, it seems to me, would have the obvious effect of inducing employers to invest in laborsaving devices. Now some may argue that there are businesses that simply cannot afford to pay workers any more money and still stay in business. There are businesses that, it is argued, would not survive without immigration constantly increasing the supply of unskilled labor and holding down labor costs.
If this is the case, the fact is perhaps we should still reduce immigration and let such businesses fold. If such businesses can only survive by paying poverty-level wages and thereby creating huge costs for taxpayers in the form of welfare payments to the workers, then maintaining such an industry or business makes little sense. Welfare payments to workers represent a large subsidy to businesses that cannot be profitable without the direct subsidy of welfare payments to their employees.
For example, if taxpayers provide health care in the form of Medicaid, then employers don’t have to provide health care to their workers. Now of course, employers find this situation very desirable, and the employer doesn’t see the costs of Medicaid because they are diffused, they are born by all taxpayers, and like any business receiving a subsidy, those who use unskilled immigrant labor will try very hard to retain that subsidy; that is, they will try to keep unskilled immigration very high.
But the fact that some businesses wish to retain this subsidy cannot, however, justify the cost to taxpayers or the reduction in wages for the poorest American workers and immigrants here that comes from constantly increasing the supply of unskilled labor.
The failure of the immigrant provisions of welfare reform to address fundamentally the very real problem of high rates of immigrants who get welfare use indicates, as I said, that another approach is needed. But I also think that the welfare reform itself has fundamental problems with regard to immigrants because, in a nutshell, by allowing lots of immigrants in and then trying to deny them access to programs, it conveys the message to them that they may come, but they are – they should not expect to be treated as one of us or as the future American or Americans that they are. The decision in ’96 to leave the level of immigration at record levels and instead cut immigrants off of welfare can be described as a policy of high immigration but anti-immigrant.
But there is another set of policies that almost certainly would make more sense. This approach may be described as one of lower immigration and a pro-immigrant policy; that is, the United States could move to an immigration system, a legal immigration system that selects immigrants based primarily on their skills. As far as illegal immigrants are concerned, obviously we need to enforce the law and police the borders, but we would also do things like give immigrants the same welfare eligibility as all other Americans. We might also adopt policies to better facilitate their incorporation and assimilation and integration into American society.
If we do not restructure our immigration policy, then the cost of providing welfare to immigrant families will almost certainly continue to grow, as it has during this period. In my view, politicians can only ignore this problem for so long. It would certainly be desirable to address this problem sooner rather than later. Thank you.
MR. KRIKORIAN: Thank you, Steve.
Mr. Besharov?
DOUGLAS BESHAROV: Well, thank you very much for having me here. It’s a pleasure, although it’s so beautiful outside that we should be doing this under a tree somewhere.
I am not an expert about immigration, so I am going to confine my comments to the welfare issues that are raised by the report and kind of describe what I think is another way of looking at what has happened.
First, let me give you a report from the report, which is I’ve read the report, it’s a nice report. It lays out the issues, I think, quite fairly and transparently, and that’s often not the case in policy work, so you can look at this report and see what’s going on if you read it, so that’s good. Nice job – appreciate it.
As the report describes, traditional welfare is way down and Medicaid is somewhat up. And you saw the numbers and they’re really quite striking. Just to reinforce what Steve said, just look at page 6. For basic welfare, which is TANF or general assistance, the numbers are reported that all immigrants in 1996, 5.7 percent were on some kind of welfare program by – welfare meaning general assistance, only 2.3 percent in 2001.
Steve and I have talked, and he mentioned the fact that the CPS doesn’t do quite as good a job now as it did in the past in measuring welfare recipiency, so that might be a bit of an exaggeration in the decline, but it’s true, it’s real. All one has to look at the national caseloads for welfare and food stamps to see that there has been a tremendous decline. Likewise, Medicaid usage does seem to be up.
But the point I’d like to make is those two trends are really quite similar to the trends for the native born, which is to say that TANF, old AFDC, food stamps are both down; Medicaid usage is up a little.
The striking thing, when Steve first passed this report to me, I said, “Steve, your numbers on Medicaid cannot be right.” Right? Poor Steve, we made him go through all sorts of double checking, and if any of you have some money left for the stock market, my advice is invest in companies that serve Medicaid recipients because those expenditures are increasing much faster than the cost of living, much faster than inflation, and it doesn’t – it looks to me as if they are out of control.
Okay, so two points here: number of recipients who are immigrants, up; costs, up. As I mentioned about costs, partly that’s the increase in the number of recipients, but partly it is the fact that Medicaid expenditures per child, per parent, per recipient are all up. And number two, the – there is an increase in Medicaid recipiency. Now – in numbers -- and here is where I’d like to put a slightly different spin on – or dimension on what Steve said. This is actually a reflection, I think, of a more generalized change in what you would call the American welfare state. In the last ten years, we’ve moved away – not totally away, but we’ve moved away from providing income support to people who do not work, parents who do not work, and we’ve increased substantially the support to what are called, loosely, the working poor. The reason I say loosely is many of the aid program that benefit low-income Americans aren’t limited to poor people. They go to 150 percent of the poverty line or 185 percent of the poverty, or for S-CHIP/Medicaid, 250 percent of the poverty line, and if you really push it, much higher than that.
So post-welfare reform in 1996, there has been an expansion of funding and services to working poor or working low-income Americans. If you want to see some of the numbers, read my article in the Public Interest. And I think what Steve has packed into here, to the other side of the story is, at a time when the non-work, old AFDC-welfare world has been shrinking, the aid-to-working-poor world has been expanding. And since immigrants tend to be more concentrated, as these numbers indicate, among the working poor, they have in effect ridden this expansion in Medicaid, S-CHIP and so forth. And I think that’s what is going on here.
So Steve’s first reaction is cut off the immigration or change it or whatever, because my reaction is cut off aid to the working poor if you want to fix it – no, I’m not serious, but the point is there are two ways to look at what is causing this change.
Now strikingly, it’s probably the case that this change in funding and so forth reflects the underlying attitudes, wishes and desires of the American people. I took a check, just to make I had this right, and it is the case that the American voter and the American citizen in general supports aid to the working poor. If you ask the question, “Should we increase welfare?” the answer is usually no. “Should we help – should we increase aid to the poor or the working poor or low-income families where the parent is working, the answer is almost always yes. So partly this expansion of aid to the working poor reflects what voters want.
Secondly, if you ask voters or potential voters whether immigrants should get medical coverage, voters also say yes, so this is consistent with that as well, as Steve knows. So we’re tapping into here – this is, in effect, reflecting what Americans want.
What do I think about that, and how should we think about this? I think – I’m not sure, Steve – I think your numbers would be even larger if you had included the earned income tax credit in the process.
MR. CAMAROTA: I have done that, actually. In your packet, I believe, right, is the snapshot backgrounder. We didn’t put that in there? Okay. We have it on our website, and yes, immigrant use of the earned income tax credit by household is quite high.
MR. BESHAROV: Double. Feel free to – yeah, double. Double what? Double what it was or double –
MR. CAMAROTA: Double what it is for native, yes.
MR. BESHAROV: For natives.
MR. CAMAROTA: Yes. Well, again, that makes the point that the concentration of these immigrant households are among the working poor, and as we increase – so this is not static. The EITC has not been static for the last ten years – increased 15, increased substantially, first under Reagan, then under Bush I, and then under President Clinton. So there has been an expansion of this program independent of immigration issues.
My last point about all this and then I will cede the floor to Robert is there’s another part of this that is not in these numbers, of course, which is the growing movement for the living wage, which also substantially affects not just, of course, the working poor, but it affects immigrant groups who are in those jobs. And that’s about where the data take you.
My own view about these things – again to stay on the welfare side of this discussion and not the immigration side – is that we are in the process of getting closer and closer to what the Europeans do about income support. You look at these trends, they are very powerful. I think the – I don’t remember exactly, but I believe it’s the case that there are more Americans as a percentage of the population on a means-tested program today than at any time since the Great Depression, and that is not because poverty is higher; that is because we have redefined who we want to help and the conditions under which we do it, and as more and more people benefit from these programs, they become a constituency for their further increase.
And so I get to be curmudgeony here, not on the issue of immigration, but that somebody ought to look at this and say, wait a minute, where’s the line, how are we drawing it, how are we going to deal with it, how are we going to prevent employers from free riding, not just with immigrants, Steve, but with all low-income Americans because what you described happens for anyone when we have those problems.
Anyway, my time is up. Thank you very much for asking me to do this.
MR. KRIKORIAN: Sure, thanks. Mr. Rector.
ROBERT RECTOR: What we see here is a pretty clear evidence of the general thesis that if the idea was that the fiscal problems that stem from the very large-scale immigration of low-skilled immigrants were going to be solved by welfare reform, that was not true. It has not happened, it will not happen, and in fact, I – you know, no serious welfare analyst thought it would happen. I mean, maybe some people engaged in the immigration debate were making claims like that, but certainly no one who was designing welfare reform, I think, was claiming that welfare reform alone was going to solve these problems.
And so, guess what? It didn’t. You know, to put in a context of libertarians, libertarians would also be talking about massive elimination of large numbers of means-tested programs that, you know, would – those types of policies would have the support of maybe three members of Congress. So the whole discussion is just irrational.
The reality is, as I understand this – and this report again confirms the basic picture, is that America has very, very high levels of immigration today relative to historic patterns, and that this immigration is essentially bi-modal; it’s clustered in two different ways. We have a lot of high-skilled immigrants, and we also have a very, very large number of very low-skilled, low-educated individuals, and anyone who is a welfare expert, when he looks at, you know, a immigrant population coming in with three or four or five years of education, you know immediately that these people are going to be an enormous net drain on social services and on government revenues. There is no possible way that they could not be, irrespective of any type of welfare reform. It’s self-evident. And what we basically see here is that when you have a large influx of people into a modern welfare state who are either very poorly educated or very elderly and without substantial assets, those individuals will in one way or another end up being a net drain on the general tax system, and will end up being on net supported by the existing cadre of taxpayers. They are inevitably net tax receivers who are receiving transfers from a much – from a small population of net tax givers. And the way that we would see those aid flows coming in would be through the earned-income tax credit, through day care, through Medicaid, through public housing, but also through public education, which is very costly, is a tax burden, and it would be unreasonable to accept – to expect that many of these – that a substantial portion of these families would in fact pay taxes sufficient to pay for public education costs for their children. Not their problem, but it is a situation that has to be rationally addressed in public policy.
The fact is as we look at the data here, what you see in the data presented is that there has been a substantial decline in TANF receipt. That’s to be expected because TANF benefits in general have declined due to the – I think to the work requirements, but you have not seen a decline in other programs. Of particular interest, I think, in this program is the fact that we – this paper shows very little net decline in immigrant use of SSI, and SSI was probably the most salient of the immigrant-related debate in welfare reform. The problem with SSI was that we clearly had an explosive growth of elderly, non-citizens coming to the United States with the apparent intent of retiring on the U.S. welfare system, that their kin were actively using the welfare system in that manner, and so we put a restriction and said you really can’t do that, you can’t get SSI benefits until you become a citizen, which really didn’t solve the problem; it just put it – essentially a delay period before these individuals came on welfare, for the most part. And so I think that’s a problem. I’d like to see more research on SSI specifically, but that’s a problem which we didn’t solve and is a problem that really must be solved. The United States cannot let its welfare system essentially become a retirement system for elderly people from around the globe.
Similarly, it’s absolutely true that TANF receipt is down, but as Doug Besharov said, TANF is only a small part of the welfare system, and it would meet everyone’s expectation, as the paper demonstrates, that if you have large amounts of low-skilled people coming to the U.S., they would get a wide array of welfare benefits – not just from Medicaid, but from other programs – day care subsidies, earned income tax credit, and again, public education subsidies are quite substantial.
I would also make the general contention – although I really couldn’t back this up at this time – but I recently served as a commissioner on Congress’ Millennial Housing Commission where we heard a lot of talk about the crisis of affordable housing in urban areas in the U.S. and so forth, and a lot of that was quite overblown, but one thing that struck me, at least on an anecdotal level, was that there seemed to be – not surprisingly – a high correlation between the patterns of immigration where heavy immigration was occurring in the U.S. and the alleged problems concerning the lack of affordable housing for low-income people, and this should not cause anyone to stagger in surprise. But the fact of the matter is that in almost every way you can look, this influx of low-skilled immigration causes social costs, causes fiscal government costs. They are not recouped by any kind of taxation that the immigrants are paying or, I think, will be paying at any point in the future. It’s not their fault, but it’s something that we simply shouldn’t ignore. We can’t put our head under the sand and pretend that this is not occurring.
So the bottom line is that a modern nation with an extended welfare state, which is the United States and will be the United States for the rest of our lifetimes, has to be very cautious about the importation of two groups of people: young people with very low skill levels and elderly people with no assets or very low assets. And our immigration system has a very large influx of those two groups in particular. They will cause fiscal problems in the U.S., they will put strain on our social services, and it is indeed irrational to expect that the way that we are going to deal with that strain is simply to say come on in here, but when you get here, we ain’t giving you anything, okay? It’s just not going to happen.
I sit up on Congress a lot, and I – (chuckles) – watch conservative Republicans in these border states trying to get federal money to pay for medical costs for illegals – not legals, you know, but illegals, you know, because if they’re here, we’re not going to deny them medical services. I mean, who is kidding, all right? But – and somebody is going to pay for that, and the states in these areas are saying, you know, hey – and the conservative Republicans up on the Hill are saying, hey, yeah, you know, as long as they’re here, don’t put the whole burden on our state alone to pay for them.
So in reality we are going to have to address this issue by saying – by looking at the fundamental issues of immigration, which we have not really done, and that doesn’t mean you are anti-immigrant. I mean, once you look at immigration, you have to ask certain basic questions about what is the net number of people you want coming in per year, and who do you want coming in. What is the skill level and the age and so forth of the people that you want coming in?
It’s an absolute responsibility of the nation to look at that issue and make rational choices in terms of the net national interest, and by and large for the last 20 years or so, this nation has avoided that issue and has made no decisions whatsoever. The system seems to be basically out of control, and I think that that is not in the national interest. And I think this paper basically, yet again, underscores that fundamental reality.
MR. KRIKORIAN: Thank you, Mr. Rector. I’ll give Steve a couple of minutes, just briefly, to respond and then we’ll take questions from the audience.
MR. CAMAROTA: Yeah, I mean, I think I would reiterate most of what was said up here, and the fundamental question that you have to answer is does it make sense to bring in a lot of working poor. And that’s what we’re talking about here because given the political dynamics at work in the United States – and I think these represent some of the best impulses of Americans, in my view, we are not going to deny them services. So that having been said, don’t you have to have an immigration policy that constantly takes into account the fiscal implications; that is, the impact on taxpayers, of bringing in lots of unskilled people. And in case you’re wondering, about a third of immigrants, say, lack a high school education. The corresponding figure for natives is about 10 percent or 8 percent, so that’s really where the biggest difference remains. And as I said, it’s that group at the bottom end of the educational distribution that does make the most extensive use of welfare, though I would want to point out that one of the interesting things in the report is that when you look at households headed by more skilled immigrants and then compare them to more skilled natives – (audio break, tape change) -- that would be. For example, let’s look at page 11, Table 3. This is a somewhat puzzling finding, and again, it needs to be investigated, but if you look at the last educational category, “People with more than four years of college,” among native-headed households where the household head is a college graduate, about 5 percent – you see that, 4.6 percent? – used at least one major welfare program in 2001. But for immigrants who are college graduates, that figure is 10 percent, which is interesting. It’s hard to understand why that wouldn’t be about the same, but what seems to be the case – because college graduate immigrants make a little bit less, only a little less, than college graduate natives.
So it does seem that even among skilled immigrants there is a tendency to see welfare as a good deal and so apparently they’re about twice as likely to use it, even when you control for educational attainment. So that’s something to consider but, again, if the number of immigrants coming in is moderate, their actual welfare use rates of course don’t make that much difference because it isn’t a huge cost to the taxpayer.
With that I think we should open it up for questions.
MR. KRIKORIAN: Thanks, Steve. Questions from the audience, and if you could identify yourself? You, sir.
Q: Yeah, I’m Jeremy -- (off mike) – also from the American Enterprise Institute. I had a couple of questions. One is that I noticed, especially on the first two figures, Figure 1 and 2, there is a U-shaped curve that made me think that had we had this session in 1999 we would have been patting ourselves – well, not, maybe, we, but I think that the Congress would have been patting itself on the back saying, look, they’ve dropped, and then the stock market went down and the numbers went up.
So my first question is, could you address how the economy has played into that in the last couple of years? And the second question is we’ve talked of first generations; are there numbers available for the second and third generations, or is that getting fuzzy with intermarriage, et cetera?
MR. CAMAROTA: Well, let’s take a look at Figure 1. Is that a big drop? I don’t know. On page four, the share of all immigrant households receiving one welfare program went from 22 percent to the low of 20 percent in ’99. For natives it went from 15 percent in ’96 to a little over 13 percent at the low. I’m struck by how constant those figures are, but I guess you could think about that in other ways. But it doesn’t really change the fact that the gap between immigrants and natives stays about the same in terms of overall welfare use or overall costs.
And of course remember at this time period, the number of immigrants using welfare pretty much is going up constantly, and you can see that in Figure 4 – I’m sorry, Figure 3, page 8 -- so that even in ’99 the number of people – immigrant households using welfare was about what it was in ’96, and then by 2000 of course it’s a couple of hundred thousand more, and then 2001 – (inaudible).
But you’re right, it did go down some, and I think you’re absolutely right; the economy played some role. I mean, that’s really an important issue to think about is that much of these results are probably driven by the economy. Now, this is something researchers have looked at in terms of overall welfare use -- how much is explained by changes in the economy versus welfare programs -- and that’s an interesting question. But for our purposes here, what’s important is that – and I think the economy plays a lot of role, but it didn’t change that much. That’s the way I read that.
On second-generation immigrant welfare use is a tough question, obviously because the people who are second generation today are not the children of today’s immigrants. The big concern over high rates of immigrant welfare use is with the immigrants who’ve entered maybe in the last 20, 25 years. Most of their kids haven’t grown up yet, so we don’t know. I guess that’s sort of the answer. So that’s the big question looming out there. But let’s assume that they do just as well as natives -- they close that gap and there’s no problem. It still means that their parents imposed some very significant costs, and that’s certainly something to consider in your immigration debate.
MR. RECTOR: I think one clear leading indicator that you could look at on that is the fact that in the U.S. today the Hispanic out-of-wedlock birth rate is at 44 percent. Anyone who knows this field, that is not only an immediate indicator that someone is going to be a net dependent now, but it’s a very strong indicator of rather serious social problems in this group in the next two or three generations. It’s a looming problem.
MR. CAMAROTA: Yeah, on that second generation, the only group I have looked at is Mexican-Americans, and their persistently high welfare use rates are found through the second and third generation. And that’s consistent with all of the research on that population. The reason it matters now a lot more is that Mexicans make up a much larger share, roughly a third or almost a third, of all the foreign-born in the past decade.
MR. KRIKORIAN: Another question? Back there, yes.
QUESTION: (Off mike.)
MR. CAMAROTA: Yeah, I’m interested in the question of course as immigration policy. So the question you’re basically asking is how do immigrants in poverty compare to natives in poverty, or how do natives in or near poverty compare to immigrants in or near poverty? And the bottom line is immigrants are no more likely to use welfare – poor immigrants are no more likely to use welfare than poor natives. But of course, from my point of view, if you’re interested in immigration policy, that’s an irrelevant question because the reason immigrants use so much more welfare is they’re so much more likely to be poor, and the question is, is that wise to bring in a lot of poor people? You might conclude it is, but you have to recognize that one of the consequences will be heavy use of welfare programs.
So I think that is the bottom line on that, that the problem here is that immigrants are poor and then they use welfare programs, but they’re no more likely to use programs than are poor natives. Though the non-decline over time is a little troubling, if you look at long-time residents, they’re not so poor – obviously they’re still poorer than natives – their high rates are a little more puzzling in this regard, and that’s an area in need of more work.
QUESTION: (Off mike.) Steve, I like you, I respect you, but I think your report is quite wrong and – (off mike) – and has actually just put out a press release today – or maybe it was last night. But a key problem is that you use essentially, Steve, sloppy definitions to come up with results that are misleading and contradict all the prior research in this area that’s been done by me, by people at the Urban Institute, by people at UCLA. And the key problem is the welfare reform law that was passed in 1996 did not aim at immigrant households the way you defined it because immigrant households as you defined it includes naturalized citizens; it includes U.S.-born citizen children in immigrant families. In fact, the welfare reform law aimed exclusively at recently admitted non-citizen immigrants. And as you look more closely then at the group that the welfare reform was actually aimed at, who are non-citizens, you find the trends are strikingly different.
So, for example, Medicaid is the thing that you say has grown, and actually it’s Medicaid and CHIP together, the way you’ve measured it. But what happens, for example, when we look at low-income, non-citizen children themselves, we find that in 1996, using the CPS data, the same data you used, about 29 percent of them were on Medicaid, but in 2001 it had fallen to 25 percent. So non-citizen children – (off mike) – they’re dispelled. By contrast, you look at citizen children. Their use was 43 percent in 1996, so it was higher substantially than non-citizen children. Their use grew to about 48 percent by 2001.
Now, the reason that growth existed had nothing to do with immigration policy. It was entirely because of the fact that the CHIP program was created, and the CHIP program aimed to expand insurance eligibility and coverage for uninsured kids across the board, immigrant or non-immigrant, and it succeeded in doing that, but again, the big gap group was non-citizen kids.
MR. KRIKORIAN: Do we let – I mean, that’s sort of a question. I’m going to let Steve respond.
MR. CAMAROTA: I like you too, but you’re completely wrong. You and the high-immigration left always make this argument, and it’s irrelevant. The point here is this is what our immigration policy is doing. Most Americans think – that’s what you have to understand – most Americans think that the problem’s been fixed, and it hasn’t. Of course the welfare reform could only apply to non-citizens, but what’s important to understand is what our immigration policy is doing, and what it’s doing is bringing lots of low-income people, some who will become citizens, some will have children in the United States, and this creates huge costs for taxpayers.
The fact that non-citizen children, their welfare use rates may fluctuate this way or that, is just a tiny part of the picture. It has everything to do with U.S. immigration policy because if we selected immigrants based on skills, the problem would go away. If we continue down this road, the problem will not go away. That is the bottom line. You are very interested in how immigrants differ from each other and whether non-citizens use more; I’m interested in what’s the big picture? What has U.S. immigration policy done? The bottom line from that is that it’s dramatically increasing welfare costs for the United States, whether that’s all citizens, as George Borjas has pointed out in his research.
In fact, what happened over this period is a lot of people who were non-citizens became citizens in order to retain their welfare benefits, as is their right, in my view, and they rightly should have done that, but that’s not relevant to taxpayers or the costs. The bottom line is the taxpayers will have to pay for that, and that’s what you miss. This is crucially important when understanding U.S. immigration policy, not whether one group went down a little bit as a component. People shifted out of that group. The overall picture is a very significant welfare cost, and that’s the bottom line.
MR. RECTOR: I mean, there are a couple of points here. First of all, you’re not claiming that because we excluded this tiny little group from welfare that this was a success, because your organization wants them all put back on welfare, right? Okay. And you also – your organization doesn’t think that net welfare costs are any fiscal concern at all in general. I respect your organization. You want more welfare spending.
So the fact of the matter is that, as this paper shows, that low-skilled immigrants overwhelmingly end up in the means-tested welfare system. You would want them to get more benefits, not less. You don’t regard this as any type of fiscal or social problem, but I – you know, and we can respect that viewpoint, but the fact of the matter is that the underlying issue here, which is when you import large numbers of low-skilled individuals they end up imposing governmental costs that cannot be recouped by any taxes they’re going to contribute, is a reality. It strains the system, okay? And I’ve always wondered how – I mean, when you’re over on the right, one of the arguments that’s quietly always advanced is, you know, if we have these high levels of immigrants it lowers our wage costs – it keeps the costs of maids in the hotel down. And I would say, yeah. I’ve never found that a really attractive argument, okay, and I’ve never exactly understood why, for example, the unions are – you know, say, oh, yeah, good, you know, let’s have – we can keep these wage costs really low for everybody. I don’t know why that’s a net good social policy.
But the fact of the matter is you are skirting the basic issue that’s being presented here, which is we know this – you know this – (chuckles) – you bring in a lot of people with 8thgrade educations, they end up getting means-tested aid. They end up getting a lot of social services that they can’t possibly pay for. We’re a generous society; not as generous as you would like to be, but a relatively generous society. And that’s the thing, and we have to essentially come to grips with that and see exactly why we would want that as the policy relative to welfare and relative to the overall fiscal condition of the country. Maybe there are other things that we should be doing with those fiscal resources in terms of caring for native-born Americans. You know, that’s a decision we have to make.
MR. KRIKORIAN: You first – no, Jack and then you.
QUESTION: Jack Martin, Federation for American Immigration. Just two quick questions, one of them basically technical and the other one policy.
The technical question has to do with the use of data from the CPS. Given the fact that the Current Population Survey was shown by the 2000 census to underestimate the foreign-born, particularly illegal immigrants, if that situation persists, doesn’t that in effect mean that the findings that are shown in this study taken from the CPS probably understate the nature of the problem?
And the second question, the policy question, is, talking about shifting the employment sectors that are using low-skilled immigrants, doing away with them for example, the question is, what sort of sectors would you identify where you could do that? I mean, basically the garment industry has gone overseas. You can’t do that very well for meat processing. Of course, you might to suggest that. You can’t very well do it for hospitality services. You can’t do it for construction. So where are these sectors that you would, in effect, allow to go offshore?
MR. CAMAROTA: Yeah, let me answer the data question and Mark may want to approach the other question. Remember, the more recent data has been controlled to the 2000 Census results carried forward. In general, it’s thought that the characteristics of the foreign-born were not that off, so it doesn’t really matter in terms of the percent in poverty, and that’s what drives the welfare results so that in terms of when you look at the percentage using welfare, it shouldn’t change too much – it should have very little impact. And the newer data has all been controlled to the census results.
So where it might have some impact though is the number using. It’s probably the case that in ’96, maybe 200,000 families or something more were using welfare back then. The more recent data, again, has been controlled. So I don’t think it’s a big issue in terms of sort of calculating average payment, average percentage using. It might have some impact on the numbers, at least in the earlier segment.
The other thing is – one of the things to think about is the results were an undercount of natives, and as a share of all people using welfare immigrants are now – immigrant families are about 18 percent. They used to be 14 percent. That probably doesn’t really change that either. So it’s kind of a small issue, but it’s always something to be cognizant of.
MR. KRIKORIAN: Let me just address your second question. The point is not so much that the construction industry will cease to exist if there were a smaller flow of low-skilled immigrants, but rather that specific – that poorly capitalized, inefficient employers within, say, the restaurant industry, the construction industry, agriculture, would likely fold. In fact, a much more prevalent phenomenon would be a combination of two things: employers making the jobs that they are now having trouble filling more attractive by increasing wages, improving benefits and making the work easier for more people -- for instance, planting dwarf trees instead of big trees so more people are able to pick them.
But at the same time, employers would respond in another way, and that is by eliminating many of the jobs. Agriculture, for instance – fresh fruit and vegetable agriculture makes astonishingly inefficient use of labor simply because there’s so much of it and it’s so cheap. There are a whole variety of laborsaving technologies that are coming down the pipe. There are a lot of ways that the use of low-skilled labor can be reduced while at the same time those jobs are made more attractive for the smaller number of people who would be willing to do them.
MR. CAMAROTA: Yeah, put simply, in construction, instead of hiring five guys with hammers to put up drywall you buy the prefabricated walls. In landscaping, instead of hiring five guys with shovels you can hire one guy and get a little backhoe to dig your holes. In agriculture you transfer over to dried-on-the-vine agriculture, which is what they do in Australia where they have very internationally competitive agriculture but not a huge flow of unskilled immigrants coming through the country. And there might be sectors where the only response is to raise wages. Since the people who would benefit then from that process are the poorest American workers, I would argue that that is a positive social end in and of itself.
And the beauty of it is – one final note – is that unskilled workers account for such a tiny fraction of American economic output as it is, that we can allow their wages to rise substantially without spiking inflation. In other words, we can make the low-income worker better off and not result in higher prices because that section of the economy accounts for a tiny amount of the total price as it is.
MR. KRIKORIAN: Yes, sir?
QUESTION: I’m Bill – (off mike).
MR. KRIKORIAN: No, let’s just have one very short question, please. I want everybody to be able to get a chance to ask a question.
QUESTION: All right. I just wanted to know what the dollar amount is we’ve talking about. We’ve talked about all these percentages and I don’t know whether we’re talking about $100 billion or $1 billion or –
MR. CAMAROTA: It’s in the tens of billions of dollars. You could sort of come up with – now, remember, the cost here is based on what people indicate in the survey – so people tend to understate the amount of food stamps they got in the previous year, but if you take the number of households, which is in the survey, and multiply it by the average, you could get some idea, and then you could compare that to the overall expenditures.
QUESTION: But the survey is not as – you know, it doesn’t capture everything with regard to what people use.
MR. RECTOR: I think it’s much more important to look at the long term social and fiscal costs here. Again, I would go back to the point that I made earlier that the out-of-wedlock birth rate among Hispanic Americans is 44 percent. Now, we’re going to actively try to address that problem per se to try to deal with the underlying social problems there and help these young people and their children as it is now, but again, it’s not merely an immediate welfare cost that these individuals bring with them; it’s in fact a multi-generational cost – social cost that you’re potentially looking at. It doesn’t mean that you would not want any low-skilled labor, but again, I think this is -- the policy that we have now is really one that we have fallen into accidentally as a nation, and we’ve never as a nation said, you know, what we really need is a very large influx of low-skilled labor and that that really is going to make everything so much easier and better for our nation. We’ve never had that debate, we just got here, and I think we got here largely by accident.
MR. KRIKORIAN: Sergio?
QUESTION: (Off mike.) In looking at the data, obviously it shows that the numbers of – (off mike). It seems like the argument that we’re now trying to help the working poor and not just – (off mike). Isn’t your argument better directed at not really welfare but corporate welfare, the fact that – (off mike)? Isn’t that really the argument you’re trying to make?
MR. CAMAROTA: I’m saying that immigration is the subsidy. That’s what creates the underlying subsidy. Instead of investing in laborsaving devices and instead of paying their workers more money, we just flood the unskilled labor market. And it’s not so much the immigrants are going to work for less, though that certainly does happen; the primary effect on the labor market is that it just dramatically increases the supply of unskilled labor. That’s the source of the subsidy. So instead of the higher wages, better benefits and capital substitutions, the laborsaving devices, you get a subsidy in the form of immigration.
Just to give you, I think, a summary statistic, immigration in the ‘90s increased the number of high school dropouts in the U.S. workforce by about 22 percent. It increased the supply of all other workers by about 5 percent. So that’s one of the main effects on the U.S. labor market is immigration, and that’s the problem. And the point is, you let people in, we’re going to give them services, in particular, healthcare benefits. And as of course you know, that if you added up all the costs of TANF, SSI and food stamps together, it doesn’t come close to what Medicaid is, and that’s the problem. That’s what drives the average cost figures up.
MR. RECTOR: I think you sort of are misunderstanding the current nature of the welfare system. Effectively what was done in ’96 was that we reformed one program with an expectation that single mothers would no longer be long-term dependents of cash welfare with the intention that they would move into the labor market, but when they were there they would receive an increasing array of wage subsidies and supplements. That is the essence of welfare reform: the earned income tax credit, massive new daycare subsidies, Medicaid and so forth, and that’s exactly what we’re seeing.
So, in fact, we have a very explicit policy in the United States, which is that because we are a generous nation, although not as generous as you would like, if you are a low-skilled parent with low wages, we will effectively close to double your wages through a whole variety of subsidies, and there’s – that’s what we do, okay, because we do not want working people to be poor, and the fact of the matter is that low-skilled immigrants fit seamlessly into this pattern. I mean, they’re just there. It’s as if the pattern was in fact designed for them. And that’s not necessarily a bad thing, but we have to understand that that’s what’s going to happen when we bring this type of individual into our labor market.
MR. KRIKORIAN: Let’s have a couple more questions. Yes?
QUESTION: (Off mike.) I’m wondering if you have numbers on the number of immigrants and natives that remain in welfare over a period of time – (off mike) – and when and where they dropped out or moved out of welfare.
MR. CAMAROTA: These are all good questions. People do look at it, you know, with a very limited amount of data on that – with some administrative data. And then the SIPP attempts to be that, the Survey of Income and Program Participation. There are problems with the society -- the immigrant sample in the SIPP, and so – but this report has nothing on that. There is some evidence that immigrants’ – (off mike) – of welfare use might be longer than natives, but in terms of – you have to study one group over a very long period, and we don’t do that very well, and this census proved that. But that’s a great question, important question.
MR. KRIKORIAN: Yes? Yes, ma’am, you.
QUESTION: (Off mike.)
MR. KRIKORIAN: Well, we’ve actually done a good deal on this idea of guest-worker programs, and they are superficially attractive. That is, in fact, they’re increasingly attractive as a way of avoiding the consequences of immigration but capturing people’s labor. Unfortunately, they don’t work. No guest worker program at any point in human history, in any society that anyone has ever studied, has every worked on its own terms. In other words, all guest worker programs result in permanent immigration. This is not to say that everyone who comes in in a guest worker program stays permanently as immigrants. Many people do in fact go home. Many people who are in these temporary worker programs will come and go for a period of time, but all guest worker programs lead to permanent immigration.
The allure of guest worker programs -- as a German writer described it as “the illusion of return,” the idea that workers would go back. In Germany in fact they coined the term guest worker there, and in the ‘50s and ‘60s they imported large numbers of especially Turkish workers. And the idea was that when the need for – that those workers were going back and forth, and when the need stopped, new workers would not come; the ones that were here would continue that process of return and they’d all be gone pretty soon. In fact, when the guest worker program in Germany was stopped in 1973, from then until now the foreign population has increased by almost 100 percent.
So there is nothing as permanent as a temporary worker, and Congress may well be attracted to this idea, but we’ll be paying the consequences for it for decades.
MR. CAMAROTA: There is this – a German cynic once said, you know, with regard to the guest workers, “We wanted workers but they sent us men.” There is a misperception here that immigrants are somehow – and a guest worker – they’re things; they’re just factors in production like a cheap plastic part you import from China and then when you don’t need it anymore I guess you just stop importing it and you throw it on the rubbish heap. The bottom line is – I mean, that’s the implication of a guest worker program, that you bring people in when you need them and then you boot them out when you don’t.
That is not how a democratic republic ever works. It’s mean-spirited. It defies – it’s a misperception of what immigrant labor is, and that is there’s a person there, a human being, who is entitled to dignity and all kinds of treatment, and you just can’t – it’s not a cheap plastic part. I mean, that’s the bottom line.
MR. KRIKORIAN: Let’s take another question and then – yes.
QUESTION: (Off mike.)
MR. BESHAROV: California and New York, right?
MR. CAMAROTA: Yeah. The Urban Institute has a lot of good stuff on this where they try to sum up the changes and try to keep track of it. It’s part of their new federalism program. Obviously states like Texas were the harshest, they didn’t do much of anything, whereas California, New York and Massachusetts were the most generous, and the results partly reflect that in terms of – and it’s an interesting social experiment, but in general, in every state the number of immigrant households using at least one program went up so that even in the least generous states it didn’t quite have – I’m sorry, the number – the percentage didn’t go up in every state, though, the percentage using, and so that reflects partly lack of generosity I guess.
MR. KRIKORIAN: Let’s wrap it up here. Please feel free to accost the panelists.
MR. : Could you use a different word? (Laughter.)
MR. KRIKORIAN: Again, thanks for coming. All of our work, this report and everything else, is on our website at cis.org, and thanks for coming on this non-military topic. Thank you.