Selected news coverage of

The High Cost of Cheap Labor
Illegal Immigration and the Federal Budget

August 2004

By Steven A. Camarota

The Washington Times
The Los Angeles Times
UPI
Lou Dobbs
Sacramento Bee
Other Coverage


Illegals' costs outpace tax payments, report says
By Jerry Seper
The Washington Times, August 26, 2004
http://www.washingtontimes.com/national/20040825-112521-6070r.htm

U.S. households headed by illegal aliens used $26.3 billion in government services during 2002 but paid only $16 billion in taxes, an annual cost to taxpayers of $10 billion, says a report issued yesterday by the Center for Immigration Studies (CIS).

The report, based on U.S. Census Bureau data, also said if illegal aliens now in the country -- estimated at between 8 million and 12 million -- received amnesty, paid taxes and used services similar to households headed by legal immigrants, the estimated net deficit would increase from $10 billion to more than $29 billion.

'Many native-born Americans observe that their ancestors came to America and did not place great demands on government services,' said Steven A. Camarota, CIS director of research and the report's author. 'Perhaps this is true, but the size and scope of government were dramatically smaller during the last great wave of immigration.

'Not just means tested programs, but expenditures on everything from public schools to roads were only a fraction of what they are today,' he said. 'The arrival of unskilled immigrants in the past did not have the negative fiscal implications that it does today.'

The 48-page report said among the largest government costs were Medicaid at $2.5 billion; treatment for the uninsured, $2.2 billion; food assistance programs and school lunches, $1.9 billion; the federal prison and court system, $1.6 billion; and federal aid to schools, $1.4 billion.

Katherine Culliton, spokeswoman for the Mexican American Legal Defense and Educational Fund in Washington, D.C., disputed the report, saying many segments of the U.S. economy would collapse without the labor provided by illegal aliens in occupations such as agriculture, food service, construction and health care.

She also said a 1997 study by economists at Harvard and Princeton universities indicated that immigrants paid significantly more in taxes than noted in the CIS report and that the migrant population was essential because of the aging U.S. work force.

The CIS report said the estimates were only for the federal government, but costs at the state and local levels were likely to be significant. It said costs to the government of unskilled immigrants 'simply reflect the nature of the modern American economy,' and cannot be avoided if the country's immigration policies remain unchanged.

With nearly two-third of illegals in the United States lacking a high school diploma, the report said, the primary reasons they cause a deficit are low education levels and resulting low incomes and tax payments.

Amnesty programs increase costs because illegal aliens still would be largely unskilled, and their tax payments would continue to be modest, but once legalized they could access many more government services, the report said.

In January, President Bush proposed a guest-worker program that would allow millions of illegal aliens in the country to remain if they have jobs and apply as guest workers. Under the proposal, the aliens could stay for an undetermined number of renewable three-year periods, after which they could seek permanent legal status.

The program is supported in the Republican Party platform draft for the upcoming convention, despite opposition within the party.

The report said if the United States is serious about avoiding the fiscal costs of illegal immigration, the 'only real option' is to enforce the country's existing immigration law and reduce the number of illegal aliens in the United States.

But the report said policy-makers can expect strong opposition from special interest groups, especially ethnic advocacy organizations and those elements of the business community that do not want to invest in labor-saving devices or pay better salaries, but want access to large numbers of cheap, unskilled workers.

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Study Says Illegal Immigrants Cost U.S. $10 Billion a Year; Analysis Is Disputed
By Ricardo Alonso-Zaldivar
Los Angeles Times, August 26, 2004
http://www.latimes.com/news/nationworld/nation/la-na-immig26aug26,1,6073272.story

WASHINGTON -- Illegal immigrants cost the federal government more than $10 billion a year, and a program to legalize them would nearly triple the figure, a study released Wednesday said.

The analysis by the Center for Immigration Studies, which opposes efforts to legalize the estimated 8 million to 12 million undocumented immigrants in the United States, comes as Republicans are bracing for a fight over immigration at their convention next week in New York.

Some conservatives are pushing for language in the GOP platform that strongly opposes amnesty for illegal immigrants. But business-oriented Republicans want to significantly loosen immigration restrictions.

In the middle is President Bush, who has proposed a guest-worker program that would grant temporary legal status to undocumented immigrants, the majority of whom are from Mexico.

'The fundamental problem is that the modern American economy is based on skills, and that makes it very difficult to bring unskilled workers in and not sock taxpayers with a huge cost,' said political scientist Steven A. Camarota, research director at the Washington center and author of the report.

'The fiscal impact of a legalization program needs to be an important consideration,' he said.

Other researchers challenged some of the study's assumptions about what illegal immigrants cost the government.

Based on census data for 2002, the report compared households headed by undocumented immigrants with those headed by citizens and legal residents. Federal benefits for U.S.-born children of undocumented immigrants were counted as a cost of illegal migration.

The study included findings that ran counter to commonly held stereotypes. For example, it concluded that illegal immigrants did not constitute a significant drain on welfare programs, receiving much less in social services than citizens and legal residents.

However, it found that undocumented immigrants paid nearly 75% less per household in federal taxes, on average. Some work off the books, but the majority who pay taxes are unskilled, low-wage workers with little income tax liability.

'The primary reason they create a fiscal deficit is their low education levels and resulting low incomes and tax payments, not their ... heavy use of most social services,' the study said. 'The vast majority of illegals hold jobs. Thus, the fiscal deficit they create for the federal government is not the result of an unwillingness to work.'

The study estimated the costs of illegal immigration by calculating the migrants' share of specific federal programs, among them Medicaid, food assistance and subsidies for hospitals that treat uninsured patients. It also assigned to illegal immigrants a proportional share of general government costs.

The report found that federal programs for the elderly benefited from illegal immigration. Social Security and Medicare reap a $7-billion annual windfall from payroll taxes paid by undocumented workers. That accounts for about 4% of the total annual surplus of the two programs.

But the balance sheet may shift in the other direction. Under a recent agreement, retirees in Mexico will be able to claim credit for taxes paid into Social Security while they worked in the United States.

Legalizing undocumented immigrants would bring them out of the underground economy and increase the amount they pay into Treasury coffers. But it could also make them eligible for more government benefits.

The study estimated that paying for added benefits would swamp any increase in tax collections, increasing the net cost to the federal government to $29 billion a year.

A leading immigration researcher challenged the study.

Jeffrey S. Passel, a demographer at the Urban Institute, a Washington nonprofit economic and social policy research organization, said a significant share of the costs attributed to illegal immigrants represented general expenses on domestic programs. The government would incur the costs -- for such things as building roads and paying bureaucrats' salaries -- with or without the presence of undocumented workers.

'Most of that money is not money that would be saved if you could magically make these people disappear,' Passel said.

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Illegal immigration costing U.S. taxpayers
By Shihoko Goto
United Press International, August 25, 2004

WASHINGTON (UPI) -- Lawmakers continue to battle on whether or not to loosen immigration laws, particularly on the possibility of allowing illegal immigrants from Mexico to stay legitimately and potentially become U.S. citizens.

But while the politically sensitive debate continues, some analysts argue that the cost to care for illegal immigrants far outweighs the potential benefits they bring to the table. The Center for Immigration Studies, a Washington think-tank, for one argued Wednesday that unlawful aliens are draining the federal government's coffers.

According to the center's latest study on the cost of illegal immigration, families that are in the United States used $10.4 billion more in government services than they paid in taxes in 2002.

While the precise cost of illegal immigrants on the national economy is arguable, it is clear that under the current system, even those who are in the country unlawfully can and often do make use of federal programs such as food assistance, healthcare, and access to public education.

But while proponents of allowing illegal workers to be allowed to stay in the country argue that the U.S. economy would not function without such laborers, opponents say that such a move would actually prove to be a greater burden for taxpayers.

Of the 9 million illegal immigrants in the United States in 2003, two-thirds of them did not even have a high school degree, according to the Center for Immigration Studies.

'If illegal aliens were legalized and began to pay taxes and use services like legal immigrants with the same education levels, the estimated annual fiscal deficit at the federal level would increase from $2,700 per household to nearly $7,700, for a total federal deficit of $29 billion,' said Steven Camarota, director of research at the center.

Moreover, 17 percent of prisoners in the United States are illegal aliens, even though they make up only 3 percent of the total population, thus straining the government budget still further, Camarota added. He also pointed out that many illegal immigrants have children in the United States, who automatically become citizens, and parents can and often do receive benefits that comes with citizenship through their offspring.

'And that's a strain,' Camarota said.

Yet it is clear that both businesses and consumers benefit from illegal laborers, especially through those who will take on jobs at or under minimum wage. Moreover, the question of immigration is one where conservative businessmen and liberal activists can find common ground, as the former could benefit from cheaper workers, while the latter calls for a more humane approach to migration flows.

From a purely economic perspective, there is no doubt that consumers can benefit from illegal labor as products and services are often significantly cheaper in the United States than in Europe precisely because so much of the work is done by illegal workers, said Lindsay Lowell, director of policy studies at the Institute for the Study of International Migration at Georgetown University.

'But taxpayers are subsidizing employers' as those who take on low-paying jobs are forced to depend more on state welfare, Lowell said. As a result, while grocery bills and leisure outings might be cheaper in the United States, thanks to cheaper labor costs, the middle class in particular has to pay the price of depending so much on illegal laborers, Lowell said.

As a result, taxpayers have to pay the price of illegal immigrants sooner or later, Lowell added.

'But we have a choice' on whether or not to benefit from cheaper costs in the near-term and pay more in taxes, or simply to bite the bullet and pay higher prices in the first place, said Robert Rector, senior research fellow in domestic and economic policy studies at the Heritage Foundation.

Rector also argued that illegal immigration hurt lower-wage income earners in the United States, as many employers sought to fill blue-collar jobs with cheaper workers, regardless of their legal status.

And while advocacy groups for illegal immigrants would argue that those workers provide essential services, Rector said that 'if they were so essential, employers would pay more' to have the same things done once illegal workers were no longer available for the jobs.

Still, even opponents to legalizing unlawful aliens acknowledge that they not only provide much-needed services to the U.S. economy, but according to the Center for Immigration Studies, the average illegal household pays about $4,200 a year in federal taxes, for a total of nearly $16 billion.

'However, they impose annual costs of more than $26.3 billion, or about $6,950 per illegal household,' said the center's Camarota.

He also said that while the United States is a country where almost everyone can trace their roots back to an immigrant, the situation only a few decades ago is very different from the current situation.

'The fiscal realities of modern America are very different now...immigration did not have the negative fiscal implication like it does today,' as illegal aliens continue to put an ever-increasing burden on the government's coffers, Camarota said.

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Broken Borders
Lou Dobbs Tonight
CNN, August 25, 2004
. . .
DOBBS: In 'Broken Borders' tonight, a study released today details the financial burden that illegal aliens are putting on this nation's taxpayers. It's conclusions are stunning, yet simple: Illegal aliens are draining much of the nation's finances, and stronger enforcement of immigration laws is the only practical solution. Casey Wian reports from Los Angeles.

CASEY WIAN, CNN CORRESPONDENT (voice-over): It's a question that is central to the debate over what to do about the 10 million illegal aliens in the United States. Are they an economic benefit? The answer is a resounding no, according to a detailed analysis by the Center for Immigration Studies. Titled 'The High Cost of Cheap Labor,' it calculates the taxes paid by illegal aliens and the costs they impose. It concludes that illegal aliens take more than $10 billion a year out of the pockets of taxpayers or $2700 per illegal household.

STEVEN CAMAROTA, CENTER FOR IMMIGRATION STUDIES: With nearly two-thirds of illegal aliens lacking a high school degree, the primary reason they create a fiscal deficit is their low education levels, and resulting low incomes and tax payment, not their legal status or even particularly heavy use of most social services. Nor is it caused by an unwillingness to work, a vast majority of adult illegals, in fact, hold jobs.

WIAN: Among the report's startling findings, illegal aliens make up about 17 percent of federal prison population, even though they're only 3 percent of the general population. And they consume 13 percent of federal spending on medical care for the uninsured.

The study also estimates the financial impact of an amnesty program, like those proposed by both President Bush and Senator Kerry. The taxpayer burden would nearly triple to $29 billion a year. That's more the federal government's entire budget for the Department of Homeland Security.

ROBERT RECTOR, HERITAGE FOUNDATION: A society which has an advanced welfare state for the economically disadvantaged will incur considerable cost when it imports large numbers of low skilled individuals.

WIAN: The study concludes the only practical way to avoid those costs is to enforce the law, and reduce the number of illegal aliens in this country. And the centerpiece of that strategy should be cracking down on employers who continue to hire illegal aliens.

WIAN: We contacted the offices of several members of the Senate and Congress who are sponsoring illegal alien amnesty bills, none were available to discuss the study. Also the study did not calculate the impact of illegal aliens on state and local governments, but the authors say those are probably even higher -- Lou.

DOBBS: The study is remarkable in that it clearly sets out that the taxpayer in this country is paying for those companies and businesses and homeowners who are hiring illegal aliens and who get all the benefits of illegal alien labor while the taxpayer pays all of the costs. Casey Wian thank you -- yes, go ahead, Casey.
. . .
http://www.cnn.com/TRANSCRIPTS/0408/25/ldt.01.html

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Illegal immigration is fiscal drain, study says
By Michael Doyle
The Sacramento Bee, August 26, 2004
http://www.sacbee.com/content/politics/story/10513206p-11432370c.html

WASHINGTON -- Illegal immigrants use billions of dollars more in federal services than they pay in federal taxes, a study released Wednesday says.

The result in 2002 was a $10.4 billion net drain on the federal treasury, according to the study conducted by a think tank that wants to curtail immigration levels. Granting illegal immigrants legal status will increase the costs, the analysts contend.

'This is not due to laziness on the part of illegal aliens,' said study author Steven Camarota, of the Center for Immigration Studies. 'It simply reflects the low educational status of illegal aliens, and hence their low incomes.'

Using census data and various economic assumptions, Camarota concluded the average household headed by an illegal immigrant paid $4,212 in federal taxes in 2002. The average household accounted for $6,949 in federal services.

Those federal costs span a wide range, including medical care, food assistance and school aid. They also include imprisonment, as 17 percent of federal prisoners nationwide are illegal immigrants.

Immigrant advocates are skeptical about the center's work and the policy agenda that motivates it. Precise numbers, moreover, incite serious debate. For instance, some analysts question whether the study overstates some costs and understates some benefits.

'Wouldn't the costs of not educating the (illegal immigrant) child, or not treating the child, be even greater?' asked B. Lindsay Lowell of Georgetown University's Institute for the Study of International Migration.

Still, the political timing appears apt for the study that Camarota billed as one of the first to estimate the cost of illegal immigration on the federal budget. Congress is weighing an immigration bill that could grant legal status to several hundred thousand illegal immigrants now working on farms.

The new study concluded that while tax revenues would significantly increase if illegal immigrants were legalized, this would not offset a corresponding increase in costs for services. For instance, the newly legalized residents would start lining up for their share of the Earned Income Tax Credit.

'The exact amount of the net fiscal cost should probably not be taken to the bank,' Lowell said. 'But there's a shadow side to the population that needs to be considered.'

Other studies have focused on the overall costs that illegal immigrants impose on state and local governments. These have been particularly relevant in California, home to an estimated one-third of the roughly 9 million illegal immigrants nationwide.

This latest study acknowledges that 'many of the preconceived notions about the fiscal impact of illegal households turn out to be inaccurate.'

For instance, the analysts noted, about 55 percent of illegal immigrant households are currently paying taxes. Illegal immigrants, moreover, were found to make relatively low use of welfare cash assistance, while paying into the Social Security and Medicare programs.

Other studies have previously emphasized the longer-term economic benefits that immigrants may bring. The National Academy of Sciences, in particular, observed in 1997 that immigrants increase the supply of labor and help produce new goods and services at relatively lower cost.

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Illegal Immigrants' Cost to Government Studied
By Mary Fitzgerald
The Washington Post, August 26, 2004; Pg. A21
http://www.washingtonpost.com/wp-dyn/articles/A33783-2004Aug25.html

Illegal Immigrants Cost U.S. $10 Billion - Study
By Alan Elsner
Reuters, August 25, 2004
http://www.reuters.com/newsArticle.jhtml?type=domesticNews&storyID=6069311

Legalized immigrants would be big drain on public, report says
By Jerry Kammer, Copley News Service
The San Diego (CA) Union-Tribune, August 26, 2004
http://www.signonsandiego.com/news/nation/20040826-9999-1n26immig.html

Group's study says illegals not paying their way
Taxes gleaned from undocumented workers said to be less than cost of services they use
By Tyche Hendricks
The San Francisco Chronicle, August 26, 2004
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2004/08/26/MNG478ECAM1.DTL

Illegal immigrants' impact disputed
By Jack Chang
The Contra Costa (CA) Times, August 26, 2004
http://www.contracostatimes.com/mld/cctimes/news/9500643.htm?1c

Study: Illegal immigrants a burden
Report contrasts federal taxes paid to services used
By Teresa Borden
The Atlanta Journal-Constitution, August 26, 2004
http://www.ajc.com/news/content/news/0804/26immig.html

Illegal migration costly, research group's report says
By Sergio Bustos
The Arizona Republic (Phoenix), August 25, 2004
http://www.azcentral.com/arizonarepublic/news/articles/0825illegals-cost25.html

Study: Illegals cost U.S. billions
By Lisa Friedman
Los Angeles Daily News, August 27, 2004
http://www.dailynews.com/Stories/0,1413,200%257E20954%257E2359072,00.html?search=filter

Study: Illegals cost U.S. $10 billion a year
If Bush amnesty program were implemented, figure would triple
WorldNetDaily.com, August 25, 2004
http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=40146

N.C. immigrant population rises
By Erin Gibson
The Daily Tar Heel (Chapel Hill, NC), August 30, 2004
http://www.dailytarheel.com/vnews/display.v/ART/2004/08/30/413320d9a3d58