Poverty, Welfare, and the Uninsured
Poverty Among Immigrants and Natives. The first column in Table 10 reports the poverty rate for immigrants by country and the second column shows the figures when their U.S.-born children under age 18 are included.22 Based on the March 2011 CPS, 19.9 percent of immigrants compared to 13.5 percent of natives lived in poverty in 2010.23 (Poverty statistics from the CPS are based on annual income in the calendar year prior to the survey and reflect family size). The higher incidence of poverty among immigrants as a group has increased the overall size of the population living in poverty. In 2010, 16.5 percent of those in poverty in the country were immigrants.
In some reports the U.S.-born children of immigrants are counted with natives. But it makes more sense to include these children with their immigrant parents because the poverty rate of minor children reflects their parents’ income. Overall in the United States there are 54.1 million immigrants and U.S.-born children (under 18) with either an immigrant father or mother. In the analysis of poverty and insurance coverage in this report we focus on the 51.8 million immigrants and their children (under 18) with an immigrant father and mother or only an immigrant father. Those with only an immigrant mother and a native-born father are counted with natives. In this way, we avoid overstating the impact of immigration. If we added those with only an immigrant mother to the poverty totals, poverty associated with immigrants would increase slightly.
The second column in Table 10 includes the U.S-born children (under 18) of immigrant fathers. Table 10 shows that the poverty rate for immigrants and their U.S.-born children was 23 percent compared to 13.5 percent for natives and their young children. (The figures for natives exclude the U.S.-born minor children of immigrant fathers.)
The data by country and region indicate that there is an enormous variation in poverty rates among immigrants from different countries.24 For example, the 34.8 percent of Mexican immigrants and their U.S.-born children living in poverty is many times the rate associated with immigrants from countries such as India and the Philippines.
Of the 46.2 million people in the United States living in poverty in 2010 (based on 2011 data), 11.9 million, or 25.8 percent, are immigrants or the U.S.-born children (under 18) of immigrant fathers. Among persons under age 18 living in poverty, 31.1 percent are either immigrants or the young children of immigrant fathers. Immigration policy has significantly added to the population in poverty in the United States.
In or Near Poverty. In addition to poverty, Table 10 reports the percentage of immigrants and natives living in or near poverty, with near-poverty defined as income less than 200 percent of the poverty threshold. Examining those with incomes under 200 percent of poverty is an important measure of socio-economic status because those under this income generally do not pay federal or state income tax and typically qualify for a host of means-tested programs. As is the case with poverty, near poverty is much more common among immigrants than natives. Table 10 shows that 43.6 percent of immigrants, compared to 31.1 percent of natives, live in or near poverty. (Like the figures for poverty, the figures for natives exclude the U.S.-born minor children of immigrant fathers.) If the U.S.-born children of immigrants are included with their immigrant parents, the immigrant rate is 47.6 percent. Among the young children of immigrants (under 18), 59.2 percent live in or near poverty, in contrast to 39.3 percent of the children of natives. In total, 24.7 million immigrants and their young children live in or near poverty. As a share of all persons in or near poverty, immigrants and their young children account for 23.8 percent.
Without Health Insurance. Table 11 reports the percentage of immigrants and natives who were uninsured for all of 2010. (The CPS asks about health insurance in the calendar year prior to the survey.) The table shows that lack of health insurance is a significant problem for immigrants from many different countries and regions. Overall, 34.1 percent of the foreign-born lack health insurance compared to 13.8 percent of natives. (Like the figures for poverty, Table 11 excludes the U.S.-born minor children of immigrant fathers from the figures for natives.) Immigrants account for 26.1 percent of all uninsured persons in the United States, compared to their 12.5 percent of the total population in the 2011 CPS. (This is slightly less than the 12.9 percent shown in the 2010 ACS.) If the young (under 18) U.S.-born children of immigrant fathers are included with their parents, the share without health insurance is 28.5 percent. The share of children who are uninsured is lower than for their parents mainly because the U.S.-born children of immigrants are eligible for Medicaid, the health insurance program for the poor. Thus the inclusion of the U.S.-born children pulls down the rate of uninsurance for immigrants slightly. In total, there are 14.8 million uninsured immigrants and their young U.S.-born children in the country, accounting for 29.7 of all persons without health insurance. This is nearly double their share of the total population of 16.9 percent in the CPS.
The low rate of insurance coverage associated with immigrants is partly due to their much lower levels of education. Because of the limited value of their labor in an economy that increasingly demands educated workers, many immigrants hold jobs that do not offer health insurance and their low incomes make it very difficult for them to purchase insurance on their own. A larger uninsured population cannot help but strain the resources of those who provide services to the uninsured already here. Moreover, those with insurance have to pay higher premiums as health care providers pass along some of the costs of treating the uninsured to paying customers. Taxpayers are also affected as federal, state, and local governments struggle to provide care to the growing ranks of the uninsured. There can be no doubt that by dramatically increasing the size of the uninsured population our immigration policy has wide‑ranging effects on the nation’s entire health care system. If the Patient Protection and Affordable Care Act is found constitutional and is implemented, a very large share of those currently uninsured who will receive coverage either through subsidies or Medicaid will be legal immigrants and their young children.
Do Uninsured Immigrants Cost Less? One study found that, after controlling for such factors as education, age, and race, uninsured immigrants impose somewhat lower costs than uninsured natives. However, when the authors simply compared uninsured immigrants to uninsured natives the cost differences were not statistically significant. In other words, when using the actual traits that immigrants have, the costs that uninsured immigrants create were the same as those of uninsured natives.25 It seems likely that uninsured immigrants do cost less than uninsured natives because immigrants are more likely to be in younger age cohorts where use of health care is much less. Of course, even if the average uninsured immigrant costs less than the average uninsured native, the difference would have to be enormous to offset the fact that immigrants are 2.5 times more likely to be uninsured than native-born Americans.
Immigration and Growth in the Uninsured. To understand the impact of immigration, we can remove from the CPS those immigrants who lack health insurance by year of arrival. If we examine growth after 1999, new immigrants and their U.S.-born children added 6.59 million uninsured people to the U.S. population, accounting for 68.1 percent of the growth in the uninsured over the last decade.26 To a significant extent the growth in the uninsured in the United States has been driven by the nation’s immigration policies.
Uninsured or on Medicaid. The 2011 CPS shows that 21.7 percent of immigrants and their U.S.-born children under 18 are on Medicaid, compared to 14.7 percent of natives and their children.27 Thus, the large share of immigrants and their U.S.-born children who are uninsured is not necessarily due to their being unable to access Medicaid. Their use of Medicaid is actually higher than that of natives. It is true that, unlike natives, illegal immigrants cannot use the program unless they are pregnant and most new legal immigrants are barred as well. Despite these prohibitions, more immigrants and their children use Medicaid than natives and their children. It might be correct to say that part of the reason that uninsurance is so high among immigrants is that a significant share that need access to Medicaid cannot access that program.
Combining the uninsured and those on Medicaid together shows that 50.2 percent of immigrants and their young children (under 18) either have no insurance or have it provided to them through the Medicaid system, compared to 28.5 percent for natives and their children. Immigration clearly has enormous implications for the nation’s health care system.
Welfare Use. As the Census Bureau does in many of its publications, we report welfare use based on whether the household head is an immigrant or native.28 With regard to immigrant households, this means we are mainly reporting welfare use for immigrants and their U.S.-born children who live with them and comparing them to natives and their children. Table 12 shows the percentage of immigrant‑ and native‑headed households in which at least one member of the household uses one or more major welfare programs. The definition of programs is as follows: cash assistance: Temporary Assistance to Needy Families (TANF), state administered general assistance, and Supplemental Security Income (SSI), which is for low-income elderly and disabled persons; food assistance: Supplemental Nutrition Assistance Program (SNAP), informally known as food stamps, free and subsidized school lunch, and the Women, Infants, and Children nutrition program (WIC); housing assistance: subsidized and government-owned housing. The table also shows figures for Medicaid, the health insurance program for those with low incomes.
Table 12 indicates that, even after the 1996 welfare reforms, which curtailed eligibility for some immigrants, immigrant households’ use of the welfare system remains higher than that of natives for most programs. Use of cash tends to be quite similar for immigrant and native households. Thus if by “welfare” one only means cash assistance programs, then immigrant use is roughly the same as that of natives. Of course, there is the question of whether native use of welfare is the proper yardstick by which to measure immigrants. If immigration is supposed to be a benefit, our admission criteria should, with the exception of refugees, select only those immigrants who are self‑sufficient. Table 12 shows that welfare use, even of cash programs, is not at or near zero. It is also worth noting that the welfare use figures in Table 12 understate use of all of these programs, particularly cash assistance. The problem of under-reporting of welfare in the CPS is well known by the Census Bureau and has been studied for some time.29 The welfare figures are all based on self-reporting and many people who have used the program in the prior calendar year forget about it or do not report it when asked by the Census Bureau. However, it is not clear if this problem is more or less pronounced among immigrants.
Table 12 shows that use of food assistance is significantly higher for immigrant households than native households — 24.1 percent vs. 13.9 percent. The same is also true for Medicaid: 28.4 percent of immigrant households have one or more persons using the program compared to 17.5 percent of native households. In terms of costs to taxpayers, use of Medicaid by immigrants and their dependent children is the most problematic because that program costs more than the combined total for the other welfare programs listed.
As was the case with lower income and higher poverty rates, the higher welfare use rates by immigrant households are at least partly explained by the large proportion of immigrants with few years of schooling. Less educated people tend to have lower incomes. Therefore, it is not surprising that immigrant households’ use of the welfare system is significantly higher than that of natives for some types of programs.
While immigrants’ use of some welfare programs is higher than that of natives, Table 12 shows that most households, immigrant or native, do not use the welfare system. On the other hand, even though most households (foreign-born or native) in the country do not use the welfare programs, the programs listed in Table 12 cost the government well over $700 billion annually.
Use of EITC and ACTC. In addition to welfare programs, Table 12 reports the share of households in which at least one worker is eligible for the Earned Income Tax Credit (EITC) and the refundable portion of the Additional Child Tax Credit (ACTC).30 Based primarily on income and number of dependents, the Census Bureau calculates eligibility for these programs and includes this information in the public-use CPS file. Workers receiving the EITC pay no federal income tax and instead receive cash assistance from the government based on their earnings and family size. The ACTC works in the same fashion, except that to receive it one must have at least one dependent child. The IRS will process the EITC and ACTC automatically for persons who file a return and qualify. Even illegal aliens sometimes receive the EITC and ACTC. This is especially true of the ACTC because the IRS has determined that illegals are allowed to receive it, even if they do not have a valid Social Security number. To receive the EITC one must have a valid Social Security Number. With an annual cost of over $40 billion for the EITC and $35 billion for the ACTC, the two programs constitute the nation’s largest means‑tested cash programs to low-income workers.
Table 12 shows that 29.7 percent of immigrant-headed households have enough dependents and low enough income to qualify for the EITC and 20.6 percent have low enough incomes to receive the ACTC. This compares to 14.5 and 8.4 percent respectively for natives. As already stated, the figures for the EITC and ACTC probably overstate receipt of the programs for both immigrants and natives because they are imputed. This is in contrast to the welfare programs listed, which are based on self-reporting by survey respondents and therefore underreported.31
Given the low education level of so many immigrants it is not surprising that despite the large share who work, they still have incomes low enough to qualify for the EITC and ACTC. It is important to understand that the high rate of EITC and ACTC eligibility does not reflect a lack of work on the part of immigrants. In fact, one must work to be eligible for them. Nor does the relatively high use of welfare programs reflect a lack of work on the part of immigrants. In 2010, 84.2 percent of immigrant households had at least one worker, compared to 75.8 percent of native households. Work in no way precludes welfare use, particularly use of the non-cash programs. The high rate of welfare use should also not be seen as a moral failing on the part of immigrants. Like all advanced industrial democracies, the United States has a well-developed welfare state. This fact coupled with an immigration system that admits large numbers of immigrants with modest levels of education and tolerates large-scale illegal immigration is what explains the figures in Table 12.
Welfare Use by Country and Region. Table 12 shows that immigrants from some countries have lower welfare use rates than natives while those from other countries have much higher rates than natives. Mexican and Dominican households have welfare use rates that are much higher than natives — even higher than for refugee-sending countries like Russia and Cuba. In fact, if one excludes the primary refugee-sending countries, as shown in the bottom portion of Table 12, the share of immigrant households using a welfare program remains virtually unchanged at 36 percent.32 Refugees are simply not a large enough share of the foreign-born, nor are their rates high enough, to explain the level of welfare use by immigrant households. Or put a different way, the relatively large share of immigrant households using welfare is not caused by refugees.
Welfare for Households with Children. The bottom of Table 12 makes a number of different comparisons between immigrant and native households. Households with children have among the highest welfare use rates. The share of immigrant households with children using at least one major welfare program is high —57 percent. The share of native household with children using welfare is also very high. But the figures for immigrants mean that a very large share of immigrants come to America and have children, but are unable to support them. As a result, immigrant households with children make extensive use of food assistance and Medicaid. This raises the important question of whether it makes sense to allow the large-scale settlement of immigrants who are unable to support their own children.
Welfare Use Among Working Households. The bottom of Table 12 shows the share of households with at least one worker using welfare. The table shows that 33 percent of immigrant households with at least one working person still use the welfare system. This compares to 18.2 percent of native households with at least one worker. Most immigrant households have at least one person who worked in 2010. And as we have already seen, immigrant men in particular have high rates of work. But this in no way means they will not access the welfare system, particularly non-cash programs, because the system is designed to provide assistance to low-income workers with children and this describes a very large share of immigrant households.
Given their education levels and relatively large family size, many immigrant households work and use the welfare system. In fact, of immigrant households using the welfare system, 82.1 percent had at least one worker during the year. For native households, it was 66.2 percent. And, as already discussed, immigrant households in general are more likely to have at least one worker than native households. But immigrant households are still often dependent on the government to support their families, particularly in providing food assistance and medical care.
Self-Employment. Table 13 examines the self‑employment rates of immigrants and natives. The table shows that immigrants and natives exhibit remarkably similar levels of entrepreneurship. The table shows that about 11.5 percent of immigrants and 11.7 percent of natives are self‑employed. There is no meaningful difference between the two groups in self-employment. Turning to self‑employment income, we see that the average self‑employment income (revenue minus expenses) of immigrants is slightly higher than that of natives, though the average is quite low for both groups. The table also reports the share of entrepreneurs whose business has more than 10 employees. Self-employed natives are somewhat more likely to have larger businesses than self-employed immigrants. The share of natives who are self-employed part-time also is shown at the bottom of the table and differences are small.
While immigrants overall are not more entrepreneurial than natives, immigrants from some countries and regions are, including Korea, Canada, the United Kingdom, and the Middle East. But overall entrepreneurship is neither a lacking nor a distinguishing characteristic of the nation’s immigrants, at least as measured by self employment. If one removed immigrants from the data, the overall rate of self‑employment in the United States would be about the same.
Households, Home Ownership, and Language
Household Income. Table 14 shows average and median household income. The average household income of native-headed households is about 7 percent higher than that of immigrant-headed households. The difference in median income is about 15 percent. The larger difference between median and mean is almost certainly due to income among immigrants being somewhat more skewed than native income, with a large share of immigrant households on the high and low income extremes. As discussed earlier in this report, there is a large difference with natives in per-capita household income whether it is calculated by dividing median or mean income by household size. Immigrant households are 30 percent larger than native households. Per-capita median household income for natives is $6,924 (50 percent) higher than per-capita median immigrant household income. Per-capita mean household income for natives is $7,951 (39 percent) higher than that of immigrants. Immigrant households do not differ that much from native households in income, but because they are much larger, their per-capita income is much lower.
Table 14 also shows large differences in income for immigrants by country and sending region. Immigrants from Canada and South Asia have very high household incomes, while those from Mexico, Central America, Sub-Saharan Africa, and the Caribbean tend to have relatively low incomes. It is worth noting that while the average household income of some immigrant groups such as South Asians is much higher than that of natives, the per-capita household income is closer to that of natives because many of these immigrant groups have much larger households on average than natives.
Overcrowded Households. There are several possible measures of what constitutes an overcrowded household. The Department of Housing and Urban Development has compiled a detailed summary of the overcrowding literature and the various ways to measure it.33 Most researchers define a household as overcrowded when there is more than one person per room. The analysis that follows uses this standard definition of dividing the number of rooms in the housing unit by the number of people who live there. The ACS records the number of rooms by asking respondents how many separate rooms are in their house or apartment, excluding bathrooms, porches, balconies, foyers, halls, or unfinished basements. Dividing the number of rooms in a household by the number of people living there determines if the household is overcrowded.
Overcrowding is a problem for several reasons. First, it can create congestion, traffic, parking problems, and other issues for neighborhoods and communities. Second, it can strain social services because the local system of taxation is based on the assumption that households will have the appropriate number of residents. Third, like poverty, it can be an indication of social deprivation.
The far-right column in Table 14 shows the share of households headed by immigrants and natives that are overcrowded.34 The 2010 ACS shows that 12.7 percent of immigrant-headed households are overcrowded compared to 1.9 percent of native households. Because immigrant households are so much more likely to be overcrowded, they account for a very large share of such households. In 2010, 52 percent of overcrowded households were headed by an immigrant, even though they represent only 13.8 percent of all households. Table 14 shows that overcrowding varies significantly by sending region. Relatively few households headed by Canadians and Europeans are overcrowded. In contrast, it is particularly common among immigrants from Mexico and Central America.
Home Ownership. Owning a home has long been an important part of the American dream. Table 15 reports home ownership for immigrant and native households and some of the characteristics of those households.35 There is a very significant difference in home ownership rates between immigrants and natives. Overall, Table 15 shows that 52.6 percent of immigrant households are owner-occupied compared to 67.5 percent of native-headed households. While it may seem that home ownership is a clear sign of belonging to the middle class, Table 15 shows that for immigrant households in particular this is not always the case.
The table shows that overcrowding is much more common among owner-occupied immigrant households, with 7.5 percent being overcrowded compared to just 1 percent of owner-occupied native households. While 7.5 percent is not a large percentage, it does mean that roughly one out of 14 owner-occupied immigrant households is overcrowded compared to one out of 100 for native households. The table also shows that 23.5 percent of owner-occupied immigrant households used at least one major welfare program compared to 14.2 percent of native households. A somewhat larger share of immigrant households also have low incomes, with 30.1 percent below 200 percent of poverty compared to 22.3 percent of native home owners. Thus it would be a mistake to think home ownership is always associated with prosperity.
Table 16 shows home ownership rates by country of birth. As with the other socio-demographic characteristics examined so far in this report, there is significant variation by country. For example, the home ownership rate for households headed by Italian immigrants (82.7 percent) is more than 3.5 times that of Dominican immigrants (23.5 percent). Table 17 shows home ownership rates by region, race, and ethnicity. In addition to overall rates, Table 17 shows home ownership rates for households headed by immigrants who have been in the country for 20 years.36 The table shows that immigrant households headed by these well-established immigrants have about the same rate of home ownership as immigrants overall. This does not mean that immigrant home ownership does not rise over time. In fact, as we will see later in this report, home ownership does increase significantly the longer immigrants live in the country. What it does mean is that the much lower rate of home ownership for immigrants overall is not caused by a large number of new arrivals. Even immigrants who have been in the country for two decades still have substantially lower rates of home ownership than native-headed households.
Language Ability. Table 18 reports immigrants’ language ability by country. Table 19 shows the same information by region, race, and ethnicity. The 2010 ACS data on which the tables are based report language skills for persons five years of age and older. The skill level is entirely based on the respondent’s own opinion of their language ability. The tables show that about half of all immigrants report that they speak only English or speak it very well and about one-third report that they speak it not at all or not well. Like the other tables reporting socio-economic status by country or region in this paper, Tables 18 and 19 show very significant variation in language ability.
Not surprisingly, the vast majority of immigrants from English-speaking countries such as Guyana, the United Kingdom, and Jamaica report that they speak only English or speak it very well. In contrast, a majority or near majority of immigrants from Guatemala, Honduras, Mexico, El Salvador, and the Dominican Republic report that they speak English not at all or not well. There is a large body of research showing that language skills are a key determining factor for immigrant earnings. The large share of immigrants from Latin America who have limited or no English language ability must play a significant role in the high rates of poverty, near poverty, lack of health insurance, and welfare use reported earlier in this report.
Public Schools. One the biggest impacts of immigration is on U.S. public schools. The American Community Survey (ACS) asks respondents if they are in school, and if the school is public or private, so it is possible to report statistics for students from immigrant and native households by the type of school they attend. The top of Table 20 shows the number of school-age children (five to 17) from immigrant and native households. The 2010 ACS shows that 20.6 percent of five- to 17-year-olds live in immigrant-headed households.37
In the last few years, a good deal of attention has been focused on the dramatic increase in enrollment experienced by many school districts across the country. While it has been suggested that this increase is the result of the children of baby boomers reaching school age, the so called “baby boom echo”, it is clear from the ACS that immigration policy accounts for the dramatic increase in school enrollment. Table 20 shows that there are 11.1 million school-age children from immigrant households. Some 20 percent of these students are immigrants themselves. The children of immigrants account for such a large percentage of the school-age population because a higher proportion of immigrant women are in their childbearing years and immigrants tend to have somewhat larger families than natives.
Table 20 shows that children from native households are significantly more likely to be in private school than children from immigrant households. As a result, children from immigrant households are a slightly larger share of public school students than they are of the school-age population. The 10.5 million children from immigrant households in public schools are 21.5 percent of all students in public schools.
Table 20 also shows that the average number of public school students per household is dramatically larger for immigrant households. In 2010, there were 646 public school students for every 1,000 immigrant households, compared to 375 students for 1,000 native households. This means that the average number of public school students per immigrant household is 72 percent larger than the number for native households. Of course, the dramatic increase in school enrollment caused by immigration may not strain public schools if tax revenue increases proportionately. As reported in Table 14, however, the average household income of immigrant households is about 7 percent less than the average income of native households — $63,694 compared to $68,095. This almost certainly translates into lower average tax payments from immigrant households, as the household is the primary unit by which taxes are collected. The much larger number of students on average in immigrant households coupled with slightly lower income means that immigration is likely to create fiscal strain for some public school districts in areas of large-scale immigrant settlement.
Non-English Speakers. Another potential challenge created by immigration stems from the large share of public school students from immigrant households who speak a language other than English. The bottom of Table 20 shows that 8.2 million (78.5 percent) of students from immigrant households speak a language other than English at home. In addition, there are 2.8 million students from native households who speak a language other than English at home in public primary and secondary schools. In total, almost 23 percent of students in public school in the United States speak a language other than English at home.
Just because a language other than English is spoken at home does not mean the students struggle with English. Most of these students were born in the United States. But providing appropriate language instruction for the millions of students for whom English is not their first language is a significant expense for many school districts. This fact, coupled with the much larger size of immigrant households and their lower than average incomes means that school budgets often will be strained by the arrival of large numbers of immigrant families in their school district.
Immigrant Progress Over Time
Poverty and Income over Time. Both the ACS and CPS ask respondents when they came to the United States. Thus it is possible to examine immigrants by year arrival. Table 21 reports the progress of immigrants over time. The public-use CPS files group immigrants by year of arrival in an effort to preserve anonymity. Table 21 reports year of arrival in the most detailed fashion possible using the public-use CPS data. The far left of Table 21 reports the length of time the immigrants have been in the country as of 2011. The next column reports the share in poverty, followed by the share in or near poverty, followed by the share without health insurance. The bottom of the table reports figures for all immigrants and natives.38 Table 21 reads as follows: In 2011, 33.3 percent of immigrants who have lived in the country for less than four years had incomes below the poverty threshold. The table also shows that 55 percent of the newest immigrants were in or near poverty, defined as income below 200 percent of the official poverty threshold. Those with income above this amount can be seen as at least middle class, while those with incomes below this amount can be viewed as the low-income population. Poverty and near poverty are also good measures of economic progress because they include people in and out of the workforce. Another advantage of using poverty to measure progress is that it controls for the number of people in a family.
Two key findings can be drawn from Table 21: First, immigrants make significant progress the longer they reside in the United States. The newly arrived have much higher rates of poverty and near-poverty than natives, but the longer the immigrants have lived in the country, the lower their poverty or near-poverty. The share without health insurance coverage also declines significantly with time. The second key finding is that despite this progress it takes immigrants a very long time to close the gap with natives because they start out so much poorer. For example, immigrants who have been in the country for 20-21 years still have a poverty rate that is 32 percent higher than that of natives. Their rate of being in or near poverty is 39 percent higher than that of natives.
The last column in Table 21 shows the average age of immigrants in 2011 based on how long they have lived in the country. The table shows that the poverty and near-poverty rates of immigrants who have been in the country for 28-29 years are similar to those of natives. Because it takes immigrants so long to match the rates of natives, they tend to be much older than the average native-born American by the time they have the same rate of poverty or near-poverty. Immigrants in the United States for 28–29 years are 49 years old on average, or 11 years older than the average native. Natives who are 49 years old have a rate of poverty under 10 percent, and their share in or near poverty is slightly more than 22 percent. So although long-time immigrant residents have poverty levels similar to natives overall, they are significantly more likely to be poor than are natives of the same age. This is important because it indicates that a much larger share of immigrants have low-incomes during their adult lifetimes than natives.
The difference between immigrants and natives is also somewhat understated in Table 21 because no children of immigrants who have been in the country for 18 or more years are included. In contrast, the figures for natives include their children. This is important because poverty is higher for children than adults. If the U.S.-born children (under 18) of immigrants who live with their parents were included in Table 21 the poverty rates shown would be higher.
Table 21 provides important insight into how immigrants fare over time. However, it must be remembered that it is not known if today’s new arrivals will follow a similar path. Table 21 only shows how immigrants are doing at one point in time. What we can say is that progress in terms of poverty and health insurance coverage was significant over time, yet this progress still leaves immigrants well behind natives, especially relative to natives of the same age.
Welfare, Home Ownership, and Income over Time. Table 22 reports welfare and home ownership rates by year of entry for households headed by immigrants. The table also reports average total personal income for adults (18+) by year of arrival. Turning first to the share of immigrant households using at least one welfare program, the table indicates that the improvement over time in poverty rates and health insurance coverage shown in Table 21 does not apply to welfare use. Welfare use is a problem for new arrivals and well-established immigrants.
Home ownership on the other hand rises significantly over time, though it takes immigrants a very long time to match the rates of natives. Households headed by immigrants that have been in the country for 32 to 36 years have home ownership rates that roughly match those of native-headed households — 68.6 percent. However, these households are headed by an immigrant who is 54 years old on average. Native households headed by a 54-year-old have a home ownership rate of 78 percent. Still, immigrant progress is significant over time and the overall rate of home ownership after a few years can be seen as high. Of course, home ownership in the United States is very common, partly as a result of direct and indirect government subsidies. Nearly two-thirds of all households in the country are owner-occupied. Even among native households with incomes below the poverty line, 38 percent are still owner-occupied. Thus, high rates of home ownership are to be expected in America. This is especially true given the lax lending standards that became so pronounced in the last decade, which have been so criticized as contributing to a housing bubble and subsequent housing bust.
Turning to average total income for adults (18+), Table 22 indicates that immigrants income rises the longer they reside in the United States. But like the other socio-economic measures examined, only immigrants who have been in the country for a very long time have incomes roughly similar to that of natives. The table indicates that in 2011 an immigrant who had been in the country for 30–31 years had an average income that roughly matched that of adult natives. Immigrants who have been in the country for this long are on average 49 years old. Native income at age 49 averages $45,404 or nearly 30 percent higher than the income for immigrants who have been in the country for 30–31 years. This is another indication that the lifetime income of the foreign-born is substantially lower than the native-born.
Language Skills over Time. Table 23 shows self-reported language skills based on the 2010 ACS. The ACS reports individual years of arrival, unlike the CPS, which groups year of arrival by multiple years. The table shows two-year groupings simply to make the table manageable. Table 23 shows significant improvement in language skills over time. Language skills, unlike other measures of progress, cannot be compared meaningfully with the native-born. Nevertheless, Tables 23 provides reasons for both optimism and pessimism. On the one hand, immigrants report a clear and steady improvement in language skills over time. On the other hand, less than half of immigrants in the country for 25 to 26 years report that they speak only English or speak it very well. And more than one-fourth who have been in the country that long report that they do not speak English, or if they do speak it, they don’t speak it well. Common sense and a large body of research indicate that knowing English is a key to improving one’s life prospects. The large fraction of even long-time residents who report that they have not mastered English is troubling and contributes to the relatively low socio-economic status of immigrants shown elsewhere in this report.
Figure 5 reports socio-economic statistics for immigrants who have been in the country for five or fewer years and those here for 20 years.39 Figure 6 reports the same information, but for only Hispanic immigrants. Like Tables 21 and 22, Figure 5 indicates that even well-established immigrants (those in the country 20 years) lag significantly behind natives. Figure 6 shows this is even more true for Hispanic immigrants. Even well-established immigrants are dramatically poorer than natives and have much higher welfare use, and much lower home ownership rates than natives.
Progress over Time by Age. As we have seen, time spent in the United States and age are, quite naturally, highly correlated. Immigrants who have been in the country longer tend to be older on average. Therefore, one way to think about progress over time is to examine socio-economic status by age. Table 24 reports the share of immigrants in or near poverty (under 200 percent of poverty threshold), the share of workers in the bottom fourth of the wage distribution, and average total income. (Unlike income, wage data are only for those who are employed full-time and year-round.) All figures for both immigrants and natives are for adults 18 and older.
Table 24 shows that immigrant adults never come close to matching the income of natives of the same age, with the exception of the average income for those 18 to 25. Figure 7 shows average income by age. Both Table 24 and Figure 7 support the general observation that the lifetime income or wages of immigrants are substantially below that of natives, even though immigrants do make progress over time as they age. Table 25 further reinforces this observation. It shows the average income and the share in or near poverty in 2010/2011 by age for immigrants who arrived in the 1990s and 1980s. (To obtain more robust estimates, Table 25 uses a combined sample of the March 2010 and 2011 CPS.) On average, 1990s immigrants have been in the country for 15 years and 1980s immigrants have been here for 25 years.
Turning first to 1990s immigrants, Table 25 shows that the share of immigrants in or near poverty (under 200 percent of the poverty threshold) is significantly higher for immigrants at every age. In terms of income, immigrants 25 to 29 come closest to natives. But the difference is more than $5,000 on average and in the other age groups the difference is about twice this amount. Like the age comparisons in Table 24 and Figure 7, the younger age cohorts come closest to matching natives. This is an indication that those immigrants who arrived young and grew up in the United States do better than those who arrived as adults. This makes perfect sense, since children will be more acclimated to the language and culture of the United States. Moreover, they will have greater access to educational opportunities.
But children will always comprise a modest share of new arrivals because most people make the decision to go to a new a country in their late twenties, typically before they have had children. In 2010, of the immigrants who arrived in 2009 or the first six months of 2010, 83 percent were older than 15 and 79 percent were older than 18. Immigrants generally do not come as children, nor do they generally arrive at older ages. Of the newest arrivals in 2010, 54 percent were between 18 and 39. The age of immigrants at arrival partly reflects the nation’s immigration policy, but it mainly reflects the simple fact that people generally make the decision to leave their home countries as adults under age 40. This means that only a modest share of immigrants will ever grow up in the United States. Because of this, the closer income and poverty of younger immigrants found in Table 25 will be unrepresentative of immigrants overall. In 2011, just 6 percent of 1980s immigrants were 25 to 29, compared to 18 percent who were 45 to 49.
The 1980s immigrants shown in Table 25, are somewhat better off at each age group than 1990s immigrants. This makes sense because these immigrants have lived in the United States considerably longer than 1990s immigrants. And as we have seen, conditions improve for immigrants over time. However, 1980s immigrants still have substantially higher rates of poverty/near-poverty and lower average incomes than natives of the same age. For example, across age groups, immigrant income is on average 24 percent lower than native income. Immigrants who arrived in the 1980s can only be described as very well established in the United States by 2010, yet they are still much poorer on average than natives of the same age.
Tables 21 through 25 and figures 5 through 7 show that it would be incorrect to think that immigrants do not do better the longer they live in the country. With the exception of welfare use, immigrants improve their situation over time for every measure examined. However, the tables and figures also show that even very long-time residents lag well behind natives. This is especially true compared to natives of the same age. Of course, we cannot say for sure that immigrants will continue to follow the same pattern in the future. But if they do, then they will arrive with relatively low incomes and make significant progress over time. But that progress will still leave them substantially poorer, more likely to use welfare, less likely to have health insurance, and less likely to be home owners than natives, even after they have been in the country for two decades.
Hispanics by Generation
Progress Across Generations. While it is not the focus of this paper, it is possible to distinguish among natives by generation using the CPS. The CPS asks respondents about the country of birth of their mother and father. (The ACS does not include these questions.) While there is some debate about definition, the brief analysis below follows the common practice of referring to those born outside of the United States (immigrants) as the “first generation”, those born in the United States with either an immigrant father or mother as the “second generation”, and those born here with two U.S.-born parents as the “third generation-plus”, or more simply as just the “third generation”.40
In the discussion that follows we focus on Hispanics because nearly 60 percent of all children born to immigrants are born to Hispanics.41 Therefore, how the descendants of Hispanic immigrants fare is one of the most important issues surrounding the current immigration debate. Moreover, the number of second generation adults from most countries and for non-Hispanics in general is small in the CPS, making meaningful analysis by generation difficult.
Comparing generations is not as straightforward as it may seem. First, there is the issue of minor children who are by definition a different generation than their parents, but who are nonetheless dependent on their parents. This must be addressed when making comparisons across generation.42 For this reason when we examine poverty or health insurance coverage we report statistics only for adults in the analysis that follows. Second, there is research showing that persons whose ancestors are from a Spanish-speaking country are less likely to identify as “Hispanic” the higher their income and education. It is not entirely clear how much this issue matters. Mexicans are by far the largest Hispanic group and in the 2011 CPS, 97 percent of U.S.-born individuals with a Mexico-born father identified as Hispanic, as did 98 percent of those with a Mexico-born mother. Ultimately, the term “Hispanic”, like race, is a construct that relies on self-identification. So if an individual does not see himself or herself as Hispanic, it is difficult to argue that he or she is in fact Hispanic. Moreover, researchers have little choice except to rely on self-reported ethnicity and we follow this practice.
It is important to keep in mind that by examining the generations at one point in time we are not comparing parents or even grandparents and their children. The parents of today’s second generation adults are generally not today’s immigrants. Instead, the parents of today’s second generation adults typically entered the country decades ago and have in most cases either passed away or have retired. The same is true of adults in the “third generation-plus” whose forbears, at the very least, entered many decades ago.43 What the data from 2011 can tell is how past waves have done up to the present time. They cannot tell us whether the descendants of today’s immigrants will follow the same pattern.
Socio-Economic Status by Generation. The first two sets of bars in Figure 8 show educational attainment for persons 25 to 65. The comparison is with non-Hispanic natives. As will be recalled from Tables 7 and 26, immigrants overall are much less likely than natives to have completed high school and are slightly less likely than natives to have at least a bachelor’s degree. Figure 8 shows that this difference with natives is much more pronounced among Hispanic immigrants, who are much less likely to have completed high school or have a bachelor’s degree.
Turning to the second generation, Figure 8 shows that those adult Hispanics with immigrant parents are much more likely to have completed high school than foreign-born Hispanics — 47 percent versus 16 percent. The same is true of third-generation Hispanics. Relative to non-Hispanic natives, however, the share of second- and third-generation Hispanics who have not completed high school (16 percent) is still twice as high. Furthermore, the high school completion rate for the third generation is no higher than the second generation. This implies no progress between the second and third generations in this area.
Figure 8 also shows that the share of second- and third-generation Hispanics with at least a bachelor’s degree is significantly higher than that of foreign-born Hispanics. However, it is still dramatically lower than for non-Hispanic natives. Only 22 percent of second-generation Hispanics have a college degree, compared to 34 percent of non-Hispanic natives. And for third generation Hispanics the share with a bachelor’s degree is even lower, just 18 percent. Like the high school completion rate, this is an indication of no progress between the second and third generations for college completion. In fact, it implies deterioration. This is very troubling given the importance of education in the modern American economy.
The third and fourth sets of bars in Figure 8 show the share of adults, 18 and older, living in poverty and the share in or near poverty. In or near poverty is defined as income below 200 percent of the poverty threshold. The bars show that U.S.-born Hispanic adults have significantly lower poverty than foreign-born Hispanics. However, even through the third generation, the share of Hispanic adults in poverty is significantly higher than non-Hispanic natives. The same is true for the share with income under 200 percent of the poverty threshold. Equally important, the poverty rate for adults is no better for the third generation relative to the second.
The next set of bars show the share of adults without health insurance. As with poverty, native-born Hispanics are much more likely than immigrants to have insurance. However, there is only modest progress between the second and third generations — from 30 to 24 percent. Also, the slight improvement between the second and third generations in insurance coverage seems to be mostly due to higher Medicaid use by third-generation Hispanics.44 Perhaps most important, third-generation adult Hispanics are still much less likely to have health insurance than are native-born non-Hispanics.
The sixth set of bars show welfare use. They show that the share of households headed by Hispanic immigrants using at least one major welfare program is somewhat higher than for native-born Hispanics. But even through the third generation the rates are significantly higher than for non-Hispanic natives. And as is the case with other measures in Figure 8, there seems to be no evidence of progress between the second and third generations.
Turning to home ownership, Figure 8 shows that it is higher for U.S.-born Hispanics than foreign-born Hispanics — 43 versus 50 percent. However, the rates are still dramatically lower than for non-Hispanic natives. Furthermore, there seems to be no intergenerational progress between the second and third generations. On the other hand, the 50 percent home ownership rate for U.S.-born Hispanics (both second and third generation) can by itself be seen as high. However, as discussed earlier, home ownership is very common in the United States. With 70 percent of non-Hispanic households owner-occupied, the 50 percent shown for Hispanic natives through the third generation is low in relative terms. It should be remembered that the third generation includes all subsequent generations, obscuring any progress that may be made across later generations.
Income by Generation. Figure 9 reports earnings and total income. In Figure 9 all figures are only for adults 18 and older. The income figures are lower than earnings because some adults, particularly those who do not work, may have little or no income and these individuals lower the average. The average earnings of adult Hispanic immigrants are $17,831 (40 percent) lower than those of non-Hispanic natives. For the second generation they are $13,120 (29.4 percent) lower and the average earnings of third generations Hispanics are $10,178 (22.8 percent) lower than those of average native-born non-Hispanics. This is an indication of progress between the generations and some convergence toward the earning levels of non-Hispanic natives.
But again, the third generation still has significantly lower earnings than native-born non-Hispanics. While they are not shown in Figure 9, the difference between Hispanics and non-Hispanics in median earnings, rather than mean earnings, follows the exact same pattern.45 Figure 9 also shows that average income follows the same pattern as earnings, with the gap between Hispanics and non-Hispanics being somewhat larger than for earnings.
One weakness of both Figures 8 and 9 is that they do not fully control for age. A larger share of adult second- and third-generation Hispanics are young and this impacts income.46 Table 26 reports earnings by age and generation. It also reports the share in or near poverty. Like other measures examined in this report, Table 26 shows that native-born Hispanics are much better off than immigrant Hispanics. But Table 26 also shows that second- and third-generation Hispanics have much lower earnings than non-Hispanic natives in the same age cohort. The same pattern holds for the share in or near poverty, defined as less than 200 percent of the poverty threshold. Figure 9 shows that the average earnings of third-generation adult Hispanics is $10,178 lower (22.8 percent) than native-born non-Hispanics. In Table 26 the average difference across age cohorts is about $8,700 (22 percent) lower when compared to non-Hispanics of the same age. Table 26 indicates that some of the difference between the overall earnings of adult native-born Hispanics and non-Hispanics shown in Figure 9 is due to the relative youth of Hispanics. But most of the difference remains when age is controlled for. The same general pattern holds for second-generation Hispanics. One other interesting finding in Table 26 is that the seeming progress from the second to third generations in earnings found in Figure 9 seems to disappear once age is taken into account.
As for the share in or near poverty, Figure 8 shows a 14.6 percentage-point gap between third-generation Hispanics and non-Hispanic natives overall. Table 26 shows that when age is controlled for, the difference averages 12.5 percentage points across the age cohorts. Thus, the much larger share of third-generation Hispanics in or near poverty shown in Figure 8 remains even when age is taken into account. The overall conclusion from Table 26 is that when it comes to average earnings and the share in or near poverty, the relative youthfulness of Hispanic natives does not explain the large differences with non-Hispanic natives.
Generational Change, 1995-2010. Figure 10 shows the share of Hispanics by generation living in or near poverty from 1995 to 2010. As was discussed earlier, in or near poverty (below 200 of poverty threshold) is an important measure because below this level income taxes are generally not paid and it is where eligibility for many welfare and other means-tested programs begins. The figure shows that for all generations there was significant improvement from 1995 to 2000. The economic expansion of the 1990s lowered the share of all Hispanics in or near poverty. Perhaps most importantly, it narrowed the gap with non-Hispanic natives. But since 2000 the share of Hispanic adults in or near poverty has not declined significantly, nor did their rates converge with non-Hispanic natives. Even during the economic expansion from 2000 to 2006, second- and third-generation Hispanics did not converge with U.S.-born non-Hispanics.
There are many possible explanations for the much lower socio-economic status of native-born Hispanics relative to non-Hispanics natives, even through the third generation. Figures 8, 9, and 10 and Table 26 do not really answer the question of why Hispanics are so far behind non-Hispanic natives. Discrimination, culture, and the changing nature of the economy may all play a factor in reducing economic opportunities for Hispanics. The figures also do not answer the question of what yardstick should be used to measure progress by generation. For example, should improvement between generations by itself be the primary way to think about progress? Or is a comparison with non-Hispanic natives the best way to think about intergenerational mobility? Further, the list of variables used to measure progress in Figures 8, 9, and 10 and Table 26 is not exhaustive. But the above analysis indicates that there are real reasons for concern about the intergenerational progress of Hispanics, who are by far the largest immigrant group now arriving in the United States.
Like any important social question, there is debate among academics about how U.S.-born Hispanics are faring. However, a number of researchers have found cause for concern in the economic mobility of second and third generation Hispanics. Several researchers have, for example, highlighted significant problems in the educational environment in which Hispanics are learning.47 Other research have also found that, while native-born Hispanics are better off than their foreign-born Hispanic counterparts, they still are significantly worse off than other natives.48 The findings in this report support such a conclusion.
Figures 8, 9, and 10 and Table 26 make clear that it would be wrong to argue that U.S.-born Hispanics have the same socio-economic status as foreign-born Hispanics. But it would also be a mistake to think that low socio-economic status among Hispanics is only associated with immigrants, or just the children of immigrants.
Education Level of Immigrants. The statistics reviewed thus far indicate that a larger share of immigrants than natives have low incomes, lack health insurance, access means-tested programs, and in general have much lower socio-economic status. As already mentioned, one of the primary reasons for this situation is that many immigrants arrive in the United States with relatively few years of schooling. Table 27 reports the education level of immigrants ages 25 to 65 by country and region. The table shows very significant differences between immigrants by sending country and region. Some immigrant groups are much less educated on average than natives, while immigrants from other countries are much more educated than natives. Immigrants from Mexico and the Western Hemisphere (excluding Canada) in general tend to be the least educated, while those from South Asia, East Asia, and Europe tend to be the most educated.
Looking back on Tables 10 through 19, we see that immigrants from those countries and regions that have higher education levels tend to have the highest income and home ownership rates and lower levels of poverty, welfare use, and uninsurance. Conversely, the least-educated immigrant groups tend to be the least prosperous. There is nothing particularly surprising about this finding.
It has been well known for some time that education is one of the best predictors of economic outcomes in modern America. In fact, the benefits of education have become more pronounced in recent decades. The arrival of large numbers of less-educated adult immigrants means that many will struggle in the United States. As we have seen, this does not mean that they make no progress over time. Nor does it mean that they will not find jobs. But it does mean that absent a change in U.S. immigration policy, immigration will continue to add workers disproportionately to the bottom end of the labor market, where wages are the lowest and unemployment the highest. It also means that immigration will add disproportionally to the overall size of the low-income population in the United States.
Importance of Education. The importance of education is shown very clearly in Table 28 The table reports income, poverty, health insurance coverage, and language skills for adults, and welfare use and home ownership based on the education of the household head. The table indicates that the least-educated immigrants are much worse off than are average natives. For example, the poverty rate for adult immigrants without a high school education (31.7 percent) is nearly triple the rate for adult natives overall (11.8 percent). For adult immigrants with only a high school education it is nearly double the overall native rate — 20 percent vs. 11.8 percent. However, immigrants with a college degree have a poverty rate that is actually lower than the overall rate for natives — 7.4 percent vs. 11.8 percent. The share of households headed by an immigrant who has not graduated from high school that use at least one major welfare program is 2.5 times that of native households overall. And for households headed by immigrants with only a high school education, it is still nearly double the rate for natives overall. But for households headed by immigrants who have at least a bachelor’s degree, welfare use is a good deal lower than the overall rate for native households. Table 28 indicates just what would be expected; the least-educated immigrants do much worse than natives, who are on average more educated. In contrast, the most educated immigrants do a good deal better than the average native.
Table 28 confirms the common sense observation that education is a key determinant of economic outcomes. Thus, one of the main reasons immigrants are much poorer than natives on average is that a much larger share of immigrants have low levels of education. This results in their having much higher rates of poverty, uninsurance, and welfare use and lower income and rates of home ownership. While not surprising, it is very relevant to immigration policy. It means, for example, if we would like immigrants who arrive in the future to have higher incomes and lower poverty and welfare use, then allowing in fewer immigrants who have modest levels of education could do a lot to accomplish that goal. Of course, there are many other competing goals of immigration policy, so creating a more-educated stream of immigrants is only one among a number of policy options that could be pursued.
Immigrants and Natives by Education. While the differences in socio-economic status with natives shown in Table 28 are large, comparing immigrants and natives with the same education shows that, with some exceptions, immigrant adults tend to do somewhat worse. However, the differences within educational categories are, for the most part, not enormous. Equally important, differences by education are much less than are the overall differences between immigrants and natives. For example, the table shows that adult immigrant poverty overall is 18.9 percent, 7.1 percentage points higher than the rate for adult natives overall. But, looking at the differences across the four educational categories in Table 28 shows an average difference of 3.7 percentage points. Thus it can be said that roughly half the difference in poverty between immigrants and natives is caused by the lower educational attainment of immigrants.
Education and Progress over Time. In addition to overall figures, Table 28 provides statistics by educational attainment for immigrants in the country for less than five years and for immigrants in the country for 20 years. As already discussed at length in this report, immigrants who have been in the country longer are much better off than newer arrivals. Table 28 shows this is true for all educational categories. Even the least-educated immigrants in the country for 20 years are far better off than their newly arrived counterparts. Income, poverty, home ownership, insurance coverage, and language skills all improve with time. Welfare use is the lone exception. It does not decline with time. Putting aside welfare use, if all that matters is progress over time, then Table 28 shows that progress over time is a characteristic of immigrants regardless of education.
However, Table 28 also shows that the least-educated immigrants who have been in the country for two decades have dramatically higher poverty, uninsurance, and welfare use as well as dramatically lower home ownership and income. The poverty rate for immigrants who lack a high school education and have been in the country for 20 years is still nearly triple that of natives and the share in or near poverty is more than double. Of these least-educated, long-time immigrant residents, 66.2 percent live in or near poverty. Nearly half (47.6 percent) do not have health insurance and 63.2 percent use at least one major welfare program. Immigrants with less than a high school education who have been in the country for 20 years are dramatically worse off than natives, even though they are better off than their newly arrived counterparts.
The situation is better for those with a high school education who are long-time residents, but the differences with natives are still very large. The average income for those with only a high school education who have been here for 20 years is still only 60 percent that of natives. The share in poverty is 62 percent higher and the share without health insurance is 2.5 times higher than for the average native. Almost half (49.2 percent) of households headed by an immigrant with only a high school education who has been in the country for 20 years access the welfare system. Well-established immigrants who have only a high school education are clearly better off than well-established immigrant high school dropouts, but they are still much worse off than the average native.
Immigrants with some college who have been in the United States for 20 years are much closer to the average for natives. While income lags that of natives, long-time resident immigrants with some college are similar to natives in poverty and near poverty. Health insurance coverage is still half that of natives and welfare use is well above that of natives. As for college graduates, the situation is reverse that of the lower educational categories. Immigrants with at least a bachelor’s degree who have been in the country for 20 years have much higher incomes than the average native, as well has much lower rates of poverty. Health insurance coverage is similar to natives, as is home ownership.
Even newly arrived college graduates are relatively prosperous. Table 28 shows that the average income of immigrant college graduates in the country for five or fewer years is not that different from the average for natives. Poverty does tend to be relatively high for newly arrived college graduates, but the share in or near poverty is very similar to natives. These results in Table 28 are relevant to immigration policy because they indicate that low socio-economic status is not always associated with new arrivals. Newly arrived immigrant college graduates do relatively well in the United States. Thus, it is wrong to think that low income or high welfare use is simply unavoidable among new immigrants. The most educated immigrants are relatively prosperous even when have been in the country for only a few years.
That educational attainment matters a great deal to economic success in the United States is expected. The question for policymakers and the public is should this fact be given more weight in formulating immigration policy.
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