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In the past, examinations of poverty in the United States have typically focused on how broad economic and societal trends and social welfare policy affect either the size of the poor1 population or the socio-demographic characteristics of those in poverty. Little effort has been made to evaluate the impact of immigration policy on the incidence of poverty in the United States. This report looks at the composition of persons living in poverty in 1979, 1989, and 1997. The findings indicate that despite a strong economy over much of this period and a slight decline in the poverty rate for persons in households headed by the native-born, the poverty rate of persons in immigrant households has remained high and has actually increased significantly in the last two decades. As a result, most of the increase in poverty in America in the last two decades was caused by immigration.
Trends in National Poverty Rate. Since an official poverty level was established in the early 1960s, the nation's poverty rate has witnessed several trends. After falling sharply in the 1960s and the first few years of the 1970s, the national poverty rate stabilized at around 11 or 12 percent though the 1970s. In the early 1980s the poverty rate began to rise, and despite strong economic growth in most of the 1980s and 1990s it has remained somewhat higher ever since (Dalaker and Naifeh, 1998). A number of authors have explored the reasons for changes in the nation's poverty rate and size of the poverty population (Harrison and Bluestone, 1988; Blank 1991; Hanratty and Blank, 1992; Devine and Wright, 1993; Mishel, Bernstein, and Schmitt 1999). Trends in the country's poverty rate have generally been attributed to short-term economic conditions associated with the business cycle and the unemployment rate, long-term macroeconomic changes such as deindustrialization, shifts to family types that are more vulnerable to being in poverty, and government policy such as the real value of the minimum wage and the level of Social Security benefits. Although the level of immigration is also a federal policy not unlike the value of the minimum wage, researchers generally have not examined its effect on the number of people in poverty or the nation's overall poverty rate.
Recent Trends in Immigration. Partly as a result of changes made in immigration law in the mid-1960s, as well as subsequent changes, the level of immigration has been rising steadily for the last three decades. At present, between 800,000 and 900,000 legal immigrants and an estimated 420,000 illegal immigrants settle permanently in the country each year (1996 Statistical Yearbook of the Immigration and Naturalization Service, 1997). As a result, the immigrant population has grown rapidly, almost tripling in number from 9.6 million in 1970 to 26.3 million in 1998; and these numbers do not include the U.S.-born children of recent immigrants. As the level of immigration has increased over the last three decades, the education level of immigrants in comparison to natives has declined significantly (Borjas 1994; Edmonston and Smith, 1997). This decline has prompted some to worry that immigrants may be falling behind natives economically. One of the most worrisome consequences of the relative decline in immigrant skills is that a growing percentage may end up in poverty.
Purpose of Research. This analysis has two primary goals. The first is to examine the direct effect immigration has on the size and growth of poverty at the national, regional, state, and local level using the most recent data available. Second, in order to better understand the causes of immigrant poverty the study also provides detailed information on the socio-demographic characteristics of persons in poverty based on whether they reside in a native- or immigrant-headed household. It is our hope that this study will provide policymakers, researchers, and others interested in the immigration debate with valuable information on the critical question of poverty associated with immigrants.
How is Poverty Defined? There are, of course, many possible definitions of poverty and what it means to be poor. The official definition of poverty, however, and the one used in this study was developed by the Social Security Administration in 1964. While there have been some minor changes over the years, persons are considered in poverty if the family in which they reside has pre-tax cash income below an officially determined threshold. Families are defined as a group of people related by marriage or blood living in the same housing unit.2 Persons living by themselves or with persons to whom they are unrelated are in effect their own family and their poverty status is calculated based on their individual income. Poverty status is not determined for persons who are institutionalized. A household consists of all persons living in a housing unit such as an apartment or house. Although most households consist of only one family, there can be more than one family living in the same household. The household head or householder is selected as a reference person and is typically the owner of the property or the person whose name is on the lease. The relationship of the head to other persons in the household is recorded by the Census Bureau.
The poverty threshold or line was originally based on the dollar value that a family would need over the course of a year, given its size, to purchase the Agriculture Department's "emergency temporary low budget diet." The poverty threshold was then calculated by multiplying this value by three based on the assumption that the average family spends about a third of its income on food. Some allowance is also made for the age of the household head and the number of children in the family. In 1964, the poverty threshold for the typical family of four was $3,169 a year. Subsequently, the poverty line has been adjusted upward based on the Consumer Price Index. By March of 1998 the threshold for a typical family of four was $16,400. This study relies only on the official definition of poverty. No adjustments of any kind are made to the data.3