New study shows undocumented immigrants good for Arizona economy

We can now add Arizona to the long list of states in which recent studies prove that the current influx of immigrants, both legal and undocumented, have contributed far more in taxes than they receive in government services.

Joining studies from California, Texas, Florida, New Mexico, Washington DC, and Long Island, NY, a new report from Udall Center for Studies in Public Policy at The University of Arizona looks at the contributions and costs of Arizona's immigrant population and finds not only an overall net gain for the state, but that the loss of this population would likely cause long term economic problems.

At a time when states like Georgia, Oklahoma and Colorado, and municipalities large and small all over the country, are passing harsh legislation intended to drive off their immigrant populations, this Arizona study concludes that, in the long run, these restrictionist tactics will end up creating economic disaster for certain segments of the economy and an overall loss for all residents. These finding don't bode well for the state which already has some of the toughest anti-immigrant laws in the nation.

The study is also unique in that it breaks out the non-citizen population from the rest of the immigrant population and still comes to the same overall conclusions.

This is a important development, since one of the restrictionsts chief weapons in their war of misinformation has been the lack of information on the contributions of the undocumented versus the larger immigrant population.

This has allowed them to wrongly discount or discredit many of the previous studies by claiming that undocumented are somehow different than the broader immigrant population in their use of services or contributions.

Based on this study, the total state tax revenue attributable to immigrant workers was an estimated $2.4 billion, of which about $1.5 billion came from for non-citizens. Balanced against estimated fiscal costs of $1.4 billion (for education, health care, and law enforcement), the net 2004 fiscal impact of immigrants in Arizona was positive by about $940 million.

The 2004 total economic output attributable to immigrant workers was about $44 billion, $29 billion of that coming from non-citizens. This output included $20 billion in labor and other income and resulted in approximately 400,000 full-time-equivalent jobs.

The study also looks at what impact the removal of as little as 10-15% of the immigrant workforce would have on the state's economy. Over $.5 billion in tax revenues would be lost, 125,000 jobs and $13.5 billion of lost economic output.

Clearly, lawmakers from statehouses to city councils across the country should examine this study before they begin to contemplate the adoption of restrictionist tactics and harsh legislation when addressing this issue. …..like the old saying goes:
"Be careful what you wish for … or you just might get it."

Immigrants in Arizona: Fiscal and Economic Impacts
by Judith Gans
Udall Center for Studies in Public Policy at The University of Arizona.

Preface
Arizona’s foreign-born population has grown dramatically since 1990 when there were about 268,700 foreign-born persons in the state. By 2004, the foreign-born population had grown to 830,900. This is more than a 200 percent increase. The vast majority of these new immigrants are in the non-citizen category, which went from 163,300 to about 619,800, an increase of almost 280 percent. Most immigrants are of working age and have come to the United States seeking employment. This fact is central to their impacts in Arizona.

The likelihood that many of Arizona’s non-citizens are undocumented immigrants has fueled anger over lawlessness and made discussion of immigration in Arizona politically contentious. But Arizona’s experience is a specific case of a national problem, one that exists because large economic incentives in today’s global economy are overwhelming the U.S. immigration system – a system that is widely understood to be in need of reform. Public discourse that equates immigration and illegal immigration is narrowly focused and risks overlooking broader dimensions of the role of immigrants in the economy.

It is not the purpose of this study to address the myriad issues surrounding illegal immigration or to imply in any way that illegal immigration is not a problem. Rather, the objective of this study is to suspend, for the moment, discussion of this narrow topic and focus instead on a broader examination of all immigrants’ impacts on Arizona’s economic and fiscal health. By so doing, we hope to create a more thorough understanding of the economic costs and benefits of immigration and of the tradeoffs involved in setting and enforcing immigration policy.

In Brief

Arizona’s proximity to Mexico, the growth of its immigrant population, and the proportion of immigrants that are in the United States illegally have made immigration a contentious issue. This study is intended to step back from debates over illegal immigration and deepen our understanding of the costs and contributions of immigrants to Arizona’s economy.

Executive Summary

This report examines the costs and benefits of immigration in Arizona. It provides estimates of the of incremental fiscal cost associated with immigrants – education, health care, and law enforcement – and measures their contributions to Arizona’s economy both as consumers and as workers. The two categories of immigrants (naturalized citizens and non-citizens) are examined separately in order to disentangle the economic costs and benefits associated with each.

The bottom line

Based on this study, the total state tax revenue attributable to immigrant workers was an estimated $2.4 billion (about $860 million for naturalized citizens plus about $1.5 billion for non-citizens). Balanced against estimated fiscal costs of $1.4 billion (for education, health care, and law enforcement), the net 2004 fiscal impact of immigrants in Arizona was positive by about $940 million.

The 2004 total economic output attributable to immigrant workers was about $44 billion ($15 billion for naturalized citizens and $29 billion for non-citizens). This output included $20 billion in labor and other income and resulted in approximately 400,000 full-time-equivalent jobs.

Fiscal costs of immigration

Estimates of the incremental fiscal costs of immigration were derived from a variety of sources. In summary:

• Education: For this analysis, English Language Learner (ELL) enrollment was used as a proxy for the number of immigrant children in Arizona’s public schools. The 2004 cost of ELL education in Arizona was about $540 million of which about $350 million (65 percent) was incurred in Maricopa County.



• Health care: Total uncompensated care costs (reported as bad debt) for hospitals in Arizona was about $420 million, of which an estimated $150 million (32 percent) was incurred by immigrants. Of the $150 million in uncompensated care costs associated with immigrants, nearly $140 million was incurred by non-citizens.
  
  The total cost in 2004 of Arizona Health Care Cost Containment System (AHCCCS), Arizona’s Medicaid program, was $4.3 billion, of which an estimated $640 million was incurred by immigrants. Of the $640 million in AHCCCS costs associated with immigrants, about $480 million was incurred by non-citizens.



• Law enforcement: In the area of law enforcement, the cost to the Arizona Department of Corrections of incarcerating immigrants in 2004 was $91 million, of which $89 million was for non-citizens.

Immigrants as consumers

As consumers, immigrants bring considerable spending power to Arizona’s economy. This spending contributes to Arizona’s overall economic performance, and, in turn, generates tax revenues for the state.

• Jobs and income: Consumer spending in 2004 by naturalized citizen households in Arizona was an estimated $6.1 billion. Approximately 39,000 full-time equivalent jobs can be attributed to this spending along with $5.9 billion of output in the state’s economy.
  
  This output included labor income of $1.2 billion, and other income (defined as rents, royalties, dividends, and corporate profits) of $900 million.
  
  Consumer spending in 2004 by non-citizen households in Arizona was an estimated $4.4 billion. Approximately 28,000 full-time equivalent jobs can be attributed to this spending along with $4.3 billion of output in the state’s economy. This output included labor income of about $930 million, and other income (defined as rents, royalties, dividends, and corporate profits) of $560 million.



• Tax revenues: Consumer spending in 2004 by Arizona’s naturalized citizens generated tax revenues of approximately $460 million, consisting of personal taxes of about $49 million, sales taxes of about $210 million, and business taxes of $190 million.
  
  Consumer spending in 2004 by Arizona’s non-citizens generated tax revenues of approximately $320 million, consisting of personal taxes of nearly $36 million, sales taxes of $150 million, and business taxes of about $130 million.
  Immigrants as workers
  
  Immigrants in 2004 were 14 percent of Arizona’s workforce, and were a larger proportion of low-skilled labor in agriculture, construction, manufacturing, and certain service industries. High-skilled immigrants were a large percent of the workers in specific areas of medicine and science.

In low-skilled occupations in Arizona:

• Agriculture: Immigrants were 59 percent of the workforce in farming occupations and 22 percent of the workforce in food-preparation-and-serving occupations.


• Construction: Immigrants were between 35 percent and 41 percent of the workforce in certain construction trades such as brick masons, flooring installers, and cement masons. They were 27 percent of the workforce in all construction trades.


• Manufacturing: Immigrants were 35 percent of the workforce in food-related manufacturing, 46 percent of the workforce in textile-related manufacturing, and 22 percent of the workforce in metal-working manufacturing.


• Service industries: Immigrants were 34 percent of the workforce in occupations providing services to buildings, 51 percent of the workforce in landscaping-services occupations, and 38 percent of the workforce in building-and-grounds maintenance. Immigrants were 26 percent of the workforce in traveler-accommodations occupations, 23 percent of the workforce in restaurant-and-food-serving occupations, and 33 percent of the workforce in private-household help.

In high-skilled occupations in Arizona:

• Medicine: Immigrants were 38 percent of medical scientists and 19 percent of physicians and surgeons.


• Science: Immigrants were 36 percent of astronomers and physicists, 16 percent of computer-hardware engineers, 18 percent of computer-software engineers, and 17 percent of electrical and electronics engineers. Immigrants were 15 percent of economists.

Economic contributions of immigrant labor

Approximately $15 billion, or four percent, of the state’s output can be attributed to naturalized citizen workers, resulting in about 120,000 full-time-equivalent jobs. This output included $4.9 billion in labor income and $1.9 billion of other income in the state. State tax revenues resulting from this economic activity were approximately $860 million.

Non-citizens, for their part, contributed about $29 billion, or eight percent of Arizona’s economic output, resulting in about 280,000 full-time-equivalent jobs. Their output included $10 billion in labor income, and $3.3 billion in other property income. The state tax revenues resulting from this economic activity were approximately $1.5 billion.

The role of immigrants as workers can be further understood by analyzing the potential consequences of this source of labor not being available. In other words, what would be the impacts if immigrant labor were removed from the economy?

To this end, this study used a series of computer simulations to examine the impacts of reduced immigrant labor on the industries that employ relatively large numbers of immigrants. The study focused on industries employing low-skilled, non-citizen workers because this is where recent growth in Arizona’s immigrant population has occurred and because we know that significant numbers of these workers are in the country without authorization. Thus, the simulations are designed to estimate the economic consequences of eliminating this segment of the workforce.

• Agriculture: A 15-percent, immigrant-workforce reduction in the agriculture sector would result in direct losses of 3,300 full-time-equivalent jobs, and losses of about $600 million in output including lost labor income of about $200 million, and lost other income of about $110 million. The lost direct state tax revenue would be approximately $25 million.


• Construction: A 15-percent, immigrant-workforce reduction in the construction sector would result in direct losses of about 56,000 full-time-equivalent jobs, and about $6.6 billion in output including lost labor income of about $2.6 billion and some $450 million in lost other income. The direct lost state tax revenue would be approximately $270 million.


• Manufacturing: A ten-percent reduction in immigrants in the manufacturing workforce would result in direct losses of about 12,000 full-time-equivalent jobs, and about $3.8 billion in output including lost labor income of about $740 million, and lost other income of nearly $290 million. The lost direct state tax revenue would be approximately $100 million.


• Service industries: In the service sectors analyzed, a 16-percent reduction in the immigrant labor force would translate to direct losses of 54,000 full-time-equivalent jobs, and lost output of $2.5 billion including reduced labor income of about $900 million, and reductions in other income of about $270 million. The lost direct state tax revenue would be nearly $160 million.

Net fiscal impacts of immigrants

Total state tax revenue attributable to immigrant workers was estimated to be about $2.4 billion ($860 million for naturalized citizens plus $1.5 billion for non-citizens). Balanced against estimated incremental fiscal costs of $1.4 billion, the net 2004 fiscal impact of immigrants in Arizona was positive, by approximately $940 million.

As 14 percent of the workforce, immigrants make significant contributions to Arizona’s economy. There are also specific fiscal costs associated with immigrants. But, by virtue of their contributions as workers to Arizona’s economic output, their overall contribution to the state’s fiscal health is positive. Certainly, these impacts are changing over time, but looking at data for one year provides a snapshot of the extent and magnitude of the role of immigrants in Arizona’s economy.

Note: We have estimated the incremental (marginal) costs of immigrants as individuals. If the immigrants were not present in Arizona, these costs would disappear. Immigrants’ impacts on costs of social services, such as fire and public safety protection, are not estimated because it is not possible to measure the incremental costs attributable to immigrants for these services.

Read complete report

UPDATE: 10/16/07: 7:30 EDT

Some questions have been raised at various other sites about two aspects of this study. One is the standard question about breaking down the numbers for just the undocumented population as oppossed to the non-citizen population as a whole.

The other questioning the extrapolations made about the economic costs of losing a portion of the undocumented workforce and the possible replacement of those workers with US-born workers.

the study answers both those questions:

How much of Arizona's immigrant population is here illegally?

We do not know. The U.S. Census does not ascertain legal presence in the United States when conducting its surveys and so the non-citizen category includes both legal and illegal non-citizen immigrants. However, there are reasonable, statistically derived estimates. Research by Jeffrey Passel at the Pew Hispanic Center indicates that, in 2002, there were between 250,000 and 350,000 unauthorized immigrants in Arizona, most of whom came from Mexico, and that by 2005 their numbers had increased to as many as 500,000.

Given these numbers it's statistically safe to estimate that somewhere around 80% of the non-citizen population is in fact undocumented in Arizona. This allows us to extrapolate the statistics given on the "non-citizen" population to see what's occurring with just the undocumented portion of that population.

As to the extrapolations made about the effects of the removal of the undocumented population on the economy and the likelihood that US-born workers would step up to fill the gap:

Our analysis to this point has focused on measuring the portion of Arizona's economic activity attributable to immigrants in its workforce. This raises the following question: would the jobs filled by immigrants be taken instead by native-born workers if immigrants were not part of the labor force in Arizona? The answer to this question is complex but largely depends on the availability of native-born workers with skills similar to Educational attainment data, both for Arizona and for the United States, indicate that immigrants and native-born workers tend to have different skills, with immigrants filling specific gaps in the native-born workforce by providing needed low-skilled and high-skilled workers. Immigrants in Arizona are an important source of low-skilled labor and of specific high-skilled labor that is relatively scarce in the native-born population and thus are vital to the total output of the industries that employ them. It is difficult to make the case that all or even most jobs filled by immigrants would, instead, be filled by native-born workers if immigrant workers were not available.

Read More...

Summary only...

New study looks at Hispanic immigration impact on Long Island

When talk turns to immigration and immigration reform more often than not the discussion will revolve around the border states or California with its large Latino population, or even the southeast where the recent influx of new immigrants has sparked backlash and controversy. But rarely do people think of traditional immigrant gateways like New York. Yet, every year New York is in the top three states for the number of foreign born residents both legal and illegal, and as anyone with even a cursory knowledge of the state can figure out, the bulk of those immigrants live in and around the NYC area.

Over the past 25 years, one region that has seen the greatest increase in immigrant population, and particularly in Latino immigrant population, has been Long Island. Originally a prototype for the mostly white, middle and working-class, suburban communities that sprung up in post-war America, Long Island has matured over time into a much more diverse, multi-ethnic, immigrant gateway. Today it is home to one of the fastest growing Latino populations in the nation made up of both new immigrants and native born.

A new study from the Horace Hagedorn Foundation and Adelphi University takes an in-depth look at over twenty five years of Latino immigration to Long Island and it's effects on the economic growth of the region.

In 1980, fewer than one out of every twenty Long Islanders was Hispanic. Today, the proportion is nearly one in eight. This rapid demographic change has resulted in increased ethnic tension and anti-immigrant sentiment. Suffolk County Executive Steve Levy recently made national headlines by sponsoring legislation that would make it illegal for businesses with contracts with the county to employ undocumented immigrants. Congressional Representative Peter King, one of the nation's most vocal opponents to immigration reform, co-sponsored last years House immigration bill, H.R. 4437, that sparked protests throughout the country.

While King and Levy pander to the lowest impulses of human nature, the new study, "The Economic Impact Of The Hispanic Population On Long Island, New York" from Mariano Torras, Ph.D.,of Adelphi University and economist Curtis Skinner, Ph.D. shows that rather than lowering the quality of life for Long Islanders, over 25 years of Latino immigration has brought great benefits.

The study takes a comprehensive look at how continuing immigration effects a mature “immigrant gateway”, focusing on the demographics and economic effects of Latino immigration in the area.

Executive Summary

Long Island’s Hispanic population has grown dramatically in recent years, led by new immigration from Latin America. Indeed, Hispanics have emerged as the major source of demographic growth for the region—excluding new Hispanic residents, Long Island would have lost, rather than gained, people since 1980. The new Hispanic presence is visible both in cities and villages with established Hispanic populations and in smaller and more remote communities, especially in Suffolk County.

As workers, consumers, entrepreneurs and taxpayers, Hispanics make important contributions to the Long Island economy. Hispanic residents add nearly $5.7 billion to total Long Island output as a result of their consumer spending. Hispanic employment continues to grow very rapidly—increasing by almost one third from 2000 to 2004 alone—and Hispanic workers are an important presence in diverse regional industries, including Manufacturing, Accommodation and Food Services, Landscaping Services and Construction. Hispanic-owned business is also booming in the region, posting almost $2 billion in sales in 2002. In addition, Long Island Hispanic residents contribute positively to local government budgets. This study finds that Hispanics contribute $614 more per resident to local revenues than they receive in local expenditures on education, health care and corrections.

The importance of Hispanic Long Islanders to the regional economy will only deepen as this population continues to grow in the years ahead. This study documents the extraordinary recent changes in the region’s Hispanic residents and describes the key demographic characteristics of this population. It then quantifies the Hispanic population’s contributions to production, employment and new business creation on Long Island. The report concludes by analyzing the Hispanic contribution to local government revenues and costs.

Among the study’s major findings:

Demographics: The Long Island Hispanic population tripled to nearly 330,000 residents since 1980, and it now represents approximately 12 percent of the general population.

• The rate of increase was far greater than that for the Long Island population as a whole and significantly more rapid than the Hispanic population growth rate nationwide.



• Immigrants from Central America, the Caribbean, and South America accounted for almost half of the growth in Long Island’s Hispanic population since 1980.



• Sixty-five percent of Nassau County’s Hispanics lived in Hempstead town in the year 2000, while 68 percent of Hispanics in Suffolk lived in either Brookhaven or Islip.



• Almost half of all Long Island Hispanics are in the “prime working age” category of 18 to 44, compared to only a little more than one third of all Long Islanders.

Entrepreneurship: From 1997 to 2002, the number of Hispanic-owned businesses in Long Island rose by almost 35%, and total sales and receipts by 21%.

• Growth was especially strong in Suffolk County, where the number of firms increased by 51% and sales by 39%.



• Long Island Hispanic-owned businesses earned almost $2 billion in sales and receipts, and employed an estimated 25,000 people.

Economic Impact: Long Island’s Hispanic population contributed an average of $614 more per resident than it received in local expenditures on education, health care and corrections.

• The buying power of Long Island Hispanics in 2004 amounted to $4.4 billion. Hispanic spending produced an economic impact of nearly $5.7 billion—of which more than $3.2 billion was in Suffolk County—and created more than 52,000 jobs.



• In 2004 Hispanics contributed about $925 million in taxes and other government revenues (directly and indirectly), while costing Nassau and Suffolk local governments (counties, towns/cities, villages and school districts) about $723 million for K-12 education ($520 million), health care ($158 million), and corrections ($45 million). The net benefit to Long Island was about $202 million.

The Economic Impact Of The Hispanic Population On Long Island, New York, Horace Hagedorn Foundation

Read More...

Summary only...

Report Finds Colorado Anti-Immigration Law Cost State over $2mil.

Last summer when Colorado passed one of the toughest anti-immigration laws in the country, Governor Bill Owens claimed it would save the state millions of dollars and remove more than fifty thousand people from the welfare rolls.

Creating tougher guidelines for those applying to receive all but emergency services, the law was intended to prevent those in the country illegally, even those with fake documents, from receiving public benefits.

According to NPR, after numerous reports of citizens and legal residents having difficulty receiving public benefits, Colorado lawmakers asked all state agencies a few weeks ago to tally up the costs and savings of the new law.

In all, the state has spent over two million dollars to implement it. And the savings from kicking migrants here illegally off the welfare rolls? Nada.

NPR

The panel's report that undocumented immigrants really didn't use state services, and that the new laws are costing more to implement than they're saving, came as no surprise to State Senator Dave Schultheis, yet he said it didn't matter since the law was never about saving money

Maybe there's not thirty thousand illegal aliens that are utilizing this system. That's not the issue. The issue is if there are ten, that's too many; and if there are five, that's too many. No one that is here in this country illegally should be using hard earned taxpayer dollars. It's not right.

NPR

I wonder if the people of Colorado knew that rather than saving all that money they were told that immigrants were in effect "stealing" from them, they would instead have to spend $2mil to try to make life miserable for them as a matter of "principle", they would have backed the idea in the first place.

Despite overwhelming evidence that shows that undocumented migrants don't come here to collect free social benefits, but rather come to work, anti-immigration hawks consistently try to sell the public on programs like those implemented in Colorado.

Even Schultheis admitted that he wouldn't be surprised if the costs of the program would remain high and the benefits low.

He agrees with the dominant theory among immigration researchers that people don't risk their lives crossing the border to tap into our welfare system. They come here to work. Researchers say migration within the U.S. backs up this contention too. Instead of moving to states with relatively generous welfare programs like California, immigrants are choosing states in the Rockies, the Midwest, and the Southeast where there are plenty of jobs. And for the few who do want benefits, a 1996 welfare reform law made that illegal.

NPR

At the end of the day, the kinds of laws passed in Colorado have far more to do with stirring up ant-immigration sentiments than saving any government money. It's no small wonder that the state that brought us Tom Tancredo is willing to spend $2mil dollars of its taxpayer's money just to make an anti-immigration statement.

to hear the complete NPR report: click here


tags: immigration, CO , immigration laws, welfare

Read More...

Summary only...

Texas Comptroller reports undocumented immigrants good for economy

A report released this week by the Texas Comptrollers Office found that undocumented immigrants contributed $17.7 billion to that states economy and that state revenues collected from undocumented immigrants exceeded what was spent on services for them by $424.7 million.

The report found that undocumented immigrants in Texas generated more taxes and other revenue than the state spends on them. These findings run in direct contradiction to a recent report from The Federation for American Immigration Reform (FAIR), “The Cost of Illegal Immigration to Texans” which claimed that "Texas’s illegal immigrant population is costing the state’s taxpayers more than $4.7 billion per year for education, medical care and incarceration."

Comptroller, Carole Keeton Strayhorn, was quick to point out that this was the first time any state agency in the country presented "a comprehensive financial analysis of the impact of undocumented immigrants on a state’s budget and economy, looking at gross state product, revenues generated, taxes paid and the cost of state services."

The report titled "Undocumented Immigrants In Texas: A Financial Analysis of the Impact to the State Budget and Economy" found that "“the absence of the estimated 1.4 million undocumented immigrants in Texas in fiscal 2005 would have been a loss to our gross state product of $17.7 billion. Undocumented immigrants produced $1.58 billion in state revenues, which exceeded the $1.16 billion in state services they received."


tags: immigration, Texas comptroller study

Much has been written in recent months about the costs and economic benefits associated with the rising number of undocumented immigrants in Texas and the U.S. as a whole. Most reports tie the costs of the undocumented population to education, medical expenses, incarceration and the effects of low-paid workers on the salaries of legal residents. Revenue gains to governments resulting from undocumented immigrants consist primarily of taxes that cannot be avoided, such as sales taxes, various fees and user taxes on items such as gasoline and motor vehicle inspections.

This financial report focuses on the costs to the state of Texas; that is, services paid for with state revenue, including education, healthcare and incarceration. What government- sponsored services are available to undocumented immigrants is often determined by federal restrictions on spending (Exhibit 1). The report also identifies areas of costs to local governments and hospitals. Finally, it analyzes the $17.7 billion impact on the state’s economy as well as state revenues generated by undocumented immigrants.

The Comptroller’s report estimates that undocumented immigrants in Texas generate more taxes and other revenue than the state spends on them. This finding is contrary to two recent reports, FAIR’s, “The Cost of Illegal Immigration to Texans” and the Bell Policy Center’s “Costs of Federally Mandated Services to Undocumented Immigrants in Colorado”, both of which identified costs exceeding revenue.

-snip-


The immigration debate has become more heated in 2006. Congressional hearings were held across the U.S. to discuss the impact of undocumented immigrants on the economy and the culture. At the same time, two distinctly different pieces of legislation were voted out of the U.S. House and Senate.

The Comptroller’s office estimates the absence of the estimated 1.4 million undocumented immigrants in Texas in fiscal 2005 would have been a loss to our Gross State Product of $17.7 billion. Also, the Comptroller’s office estimates that state revenues collected from undocumented immigrants exceed what the state spent on services, with the difference being $424.7 million (Exhibit 18).

The largest cost factor was education, followed by incarceration and healthcare. Consumption taxes and fees, the largest of which is the sales tax, were the largest revenue generators from undocumented immigrants.

"Undocumented Immigrants In Texas: A Financial Analysis of the Impact to the State Budget and Economy"

The study did show that unlike the state, local governments and hospitals incur costs that are not reimbursed by the state or federal government.

While not the focus of this report, some local costs and revenues were estimated. State-paid health care costs are a small percentage of total health care spending for undocumented immigrants. The Comptroller estimates
cost to hospitals not reimbursed by state funds totaled $1.3 billion in 2004. Similarly, 2005 local costs for incarceration are estimated to be $141.9 million. The Comptroller estimates that undocumented immigrants paid more than $513 million in fiscal 2005 in local taxes, including city, county and special district sales and property taxes.

While state revenues exceed state expenditures for undocumented immigrants, local governments and hospitals experience the opposite, with the estimated difference being $928.9 million for 2005.

The $1.3 billion in uncompensated costs to local hospitals attributed to undocumented immigrants represents 14% of the total $9.2 billion in uncompensated care reported for uninsured and underinsured individuals who could not pay for the services they received. As healthcare professionals are quick to point out, the problem of uncompensated care is systemic and not limited to the undocumented. Studies show that the undocumented generally utilize health services at a much lower rates than legal residents and that the chief causes of increasing rates of uncompensated costs are the ever increasing numbers of uninsured coupled with limited payment schedules of government programs such as Medicaid and Medicare.

Read More...

Summary only...

The Immigration Equation: Summer reading for wonks

For the time being the immigration issue has moved from the front pages to be replaced by more pressing world affairs. Yet with both houses of Congress out on the road holding public hearings on the topic, it will only be a matter of time before the big wedge issue of 2006 returns. Looming large on the midterm election horizon, the debate over immigration reform has been the subject of numerous studies, polls and research papers, many of them highly partisan and of dubious academic merit. Recently the New York Times Magazine separated the wheat from the chaff when it published an article recapping the work done by leading labor economists on the issue.

While most look at the summer as a time to catch up on some light reading, something frivolous and entertaining; for the wonkish it's the perfect time to bone up on some solid academic research on immigration and it's real effects on our economy.

The Times article, "The Immigration Equation" is a great primer on the subject and looks at the two competing schools of thought of leading labor economists on immigration and how their work plays out in the current debate.



tags: immigration, George Borjas, David Card , economic studies, HR4437, S.2611

To Borjas, a Cuban immigrant and the pre-eminent scholar in his field, the truth is pretty obvious: immigrants hurt the economic prospects of the Americans they compete with. And now that the biggest contingent of immigrants are poorly educated Mexicans, they hurt poorer Americans, especially African-Americans, the most.
Borjas has been making this case — which is based on the familiar concept of supply and demand — for more than a decade. But the more elegantly he has made it, it seems, the less his colleagues concur. ‘‘I think I have proved it,’’ he eventually told me, admitting his frustration. ‘‘What I don’t understand is why people don't agree with me.''

It turns out that Borjas's seemingly self-evident premise — that more job seekers from abroad mean fewer opportunities, or lower wages, for native workers — is one of the most controversial ideas in labor economics. It lies at the heart of a national debate, which has been encapsulated (if not articulated) by two very different immigration bills: one, passed by the House of Representatives, which would toughen laws against undocumented workers and probably force many of them to leave the country; and one in the Senate, a measure that would let most of them stay.

You can find economists to substantiate the position of either chamber, but the consensus of most is that, on balance, immigration is good for the country. Immigrants provide scarce labor, which lowers prices in much the same way global trade does. And overall, the newcomers modestly raise Americans' per capita income. But the impact is unevenly distributed; people with means pay less for taxi rides and household help while the less-affluent command lower wages and probably pay more for rent.

The debate among economists is whether low-income workers are hurt a lot or just a little — and over what the answer implies for U.S. policy. If you believe Borjas, the answer is troubling. A policy designed with only Americans' economic well-being in mind would admit far fewer Mexicans, who now account for about 3 in 10 immigrants.

-snip-

Easily the most influential of Borjas's critics is David Card, a Canadian who teaches at Berkeley. He has said repeatedly that, from an economic standpoint, immigration is no big deal and that a lot of the opposition to it is most likely social or cultural. "If Mexicans were taller and whiter, it would probably be a lot easier to deal with," he says pointedly.

Economists in Card's camp tend to frame the issue as a puzzle — a great economic mystery because of its very success. The puzzle is this: how is the U.S. able to absorb its immigrants so easily?

After all, 21 million immigrants, about 15 percent of the labor force, hold jobs in the U.S., but the country has nothing close to that many unemployed. (The actual number is only seven million.) So the majority of immigrants can't literally have "taken" jobs; they must be doing jobs that wouldn't have existed had the immigrants not been here.

The economists who agree with Card also make an intuitive point, inevitably colored by their own experience. To the Israeli-born economist whose father lived through the Holocaust or the Italian who marvels at America's ability to integrate workers from around the world, America's diversity — its knack for synthesizing newly arrived parts into a more vibrant whole — is a secret of its strength.

-snip-

In a recent paper, "Is the New Immigration Really So Bad?" Card took indirect aim at Borjas and, once again, plumbed a labor-market surprise. Despite the recent onslaught of immigrants, he pointed out, U.S. cities still have fewer unskilled workers than they had in 1980. Immigrants may be depriving native dropouts of the scarcity value they might have enjoyed, but at least in a historical sense, unskilled labor is not in surplus. America has become so educated that immigrants merely mitigate some of the decline in the homegrown unskilled population. Thus, in 1980, 24 percent of the work force in metropolitan areas were dropouts; in 2000, only 18 percent were.

Card also observed that cities with more immigrants, like those in the Sun Belt close to the Mexican border, have a far higher proportion of dropouts. This has led to a weird unbalancing of local labor markets. For example, 10 percent of the work force in Pittsburgh and 15 percent in Cleveland are high-school dropouts; in Houston the figure is 25 percent, in Los Angeles, 30 percent. The immigrants aren't dispersing, or not very quickly.

So where do all the dropouts work? Los Angeles does have a lot of apparel manufacturers but not enough of such immigrant-intensive businesses to account for all of its unskilled workers. Studies also suggest that immigration is correlated with a slight increase in unemployment. But again, the effect is small. So the mystery is how cities absorb so many unskilled. Card's theory is that the same businesses operate differently when immigrants are present; they spend less on machines and more on labor. Still, he admitted, "We are left with the puzzle of explaining the remarkable flexibility of employment demand."

alternate link

The article also references other academic studies and reports and gives good historical background on the topic. It's a great starting point for acquiring a good understanding of current debate amongst social scientists in the field.

With all the hyperbole and partisan rhetoric passing for information in the immigration debate, this little lull in activity presents an ideal opportunity for those truly interested in immigration reform to bone up on some solid reality-based information.

For further reading see:

Is the New Immigration Really So Bad?
David Card, Department of Economics, UC Berkeley, January 2005

This paper reviews the recent evidence on U.S. immigration, focusing on two key questions: (1) Does immigration reduce the labor market opportunities of less-skilled natives? (2) Have immigrants who arrived after the 1965 Immigration Reform Act successfully assimilated?

Looking across major cities, differential immigrant inflows are strongly correlated with the relative supply of high school dropouts. Nevertheless, data from the 2000 Census shows that relative wages of native dropouts are uncorrelated with the relative supply of less-educated workers, as they were in earlier years. At the aggregate level, the wage gap between dropouts and high school graduates has remained nearly constant since 1980, despite supply pressure from immigration and the rise of other education-related wage gaps. Overall, evidence that immigrants have harmed the opportunities of less educated natives is scant. On the question of assimilation, the success of the U.S.-born children of immigrants is a key yardstick. By this metric, post-1965 immigrants are doing reasonably well: second generation sons and daughters have higher education and wages than the children of natives. Even children of the least educated immigrant origin groups have closed most of the education gap with the children of natives.

"The Impact of Immigration and the Labor Market" , George J. Borjas, Harvard University, January 2006

Not surprisingly, the impact of immigration on the host country’s labor market is now being heatedly debated in many countries. In the U.S. context, this concern has motivated a great deal of research that attempts to document how the U.S. labor market has adjusted to the largescale immigration of the past few decades. Three central questions have dominated much of the research: What is the contribution of immigration to the skill endowment of the workforce? How do the employment opportunities of native workers respond to immigration? And, who benefits and who loses?

The policy significance of these questions is evident. For example, immigrants who have high levels of productivity and who adapt rapidly to conditions in the host country’s labor market can make a significant contribution to economic growth. Conversely, if immigrants lack the skills that employers demand and find it difficult to adapt, immigration may increase the size of the population that requires public assistance and exacerbate ethnic and racial inequality. Similarly, the debate over immigration policy has long been fueled by the widespread perception that immigration has an adverse effect on the employment opportunities of natives.
Which native workers are most adversely affected by immigration and how large is the decline in the native wage?

The Impact of Mass Migration on the Israeli Labor Market, Rachel M. Friedberg, Brown University and NBER, August 1997

Rachel Friedberg, an economist at Brown, added an interesting twist to the approach. Rather than compare the effect of immigration across cities, she compared it across various occupations. Friedberg's curiosity had been piqued in childhood; born in Israel, she moved to the U.S. as an infant and grew up amid refugee grandparents who were a constant reminder of the immigrant experience.

She focused on an another natural experiment — the exodus of 600,000 Russian Jews to Israel, which increased the population by 14 percent in the early 1990's. She wanted to see if Israelis who worked in occupations in which the Russians were heavily represented had lost ground relative to other Israelis. And in fact, they had. But that didn't settle the issue. What if, Friedberg wondered, the Russians had entered less-attractive fields precisely because, as immigrants, they were at the bottom of the pecking order and hadn't been able to find better work? And in fact, she concluded that the Russians hadn't caused wage growth to slacken; they had merely gravitated to positions that were less attractive. Indeed, Friedberg's conclusion was counterintuitive: the Russians had, if anything, improved wages of native Israelis. She hypothesized that the immigrants competed more with one another than with natives. The Russians became garage mechanics; Israelis ran the garages.

After plowing through these studies, a good romance novel, or a spy thriller might be in order, but you'll be glad you put in the effort.



here's some additional reading for those who can't get enough economic studies


Borjas, George J., and Lawrence F. Katz. 2006. Evolution of the Mexican-Born Workforce in the United States. NBER Working Paper No. 11281. Cambridge, Mass.: National Bureau of Economic Research.

Card, David. 2005. Is the New Immigration Really So Bad? NBER Working Paper No. 11547. Cambridge, Mass.: National Bureau of Economic Research.

Card, David, and Ethan G. Lewis. 2005. The Diffusion of Mexican Immigrants During the 1990s: Explanations and Impacts. NBER Working Paper No. 11552. Cambridge, Mass.: National Bureau of Economic Research.

Couch, Jim F., Brett A. King, William H. Wells, and Peter M. Williams. June 2001. Nation of Origin Bias and the Enforcement of Immigration Laws by the Immigration and Naturalization Service. Independent Institute Working Paper. Oakland, Calif.: The Independent Institute.

Cowen, Tyler, and Daniel Rothschild. May 15, 2006. Hey, Don't Bad-mouth Unskilled Immigrants: You Don't Have to Be a Computer Genius to Be Good for the U.S. Los Angeles Times.

__________. June 12, 2006. Blending In, Moving Up. Washington Post.

Friedberg, Rachel M. 2001. The Impact of Mass Migration on the Israeli Labor Market. The Quarterly Journal of Economics 116 (4): 1373-1408.

Friedberg, Rachel M., and Jennifer Hunt. 1995. The Impact of Immigrants on Host Country Wages, Employment and Growth, Journal of Economic Perspectives 9 (4): 23-44.

Gallaway, Lowell E., Stephen Moore, and Richard K. Vedder. 2000. The Immigration Problem: Then and Now. The Independent Review 4 (3): 347-364.

Gandal, Neil, Gordon H. Hanson, and Matthew J. Slaughter. 2000. Technology, Trade, and Adjustment to Immigration in Israel. NBER Working Paper No. 7962. Cambridge, Mass.: National Bureau of Economic Research.

Krueger, Alan B. April 6, 2006. Two Labor Economic Issues for the Immigration Debate. Washington, D.C.: Center for American Progress.

Ottaviano, Gianmarco I.P., and Giovanni Peri. 2006. Rethinking the Gains from Immigration: Theory and Evidence from the U.S. NBER Working Paper No. 11672. Cambridge, Mass.: National Bureau of Economic Research.

Powell, Benjamin. April 30, 2005. Immigration, Economic Growth, and the Welfare State. Oakland, Calif.: The Independent institute.

__________. May 18, 2005. Immigration Reform that Both Sides Can Support. San Francisco Business Times.

___________. April 4, 2006. How To Reform Immigration Laws. Atlanta Journal-Constitution.

___________. December 22, 2005. The Pseudo Economic Problems of Immigration. San Diego Union-Tribune.

Powell, Benjamin, and Peter Laufer. September 21, 2005. Immigration Wars: Open or Closed Borders for America? Transcript of Independent Policy Forum. Oakland, Calif.: The Independent Institute.

Simon, Julian. 1999. The Economic Consequences of Immigration, 2nd ed. Ann Arbor, Mich.: University of Michigan Press.

_______. 1990. Population Matters: People, Resources, Environment, and Immigration. New Brunswick,
N.J.: Transaction Publishers.

Smith, James P., and Barry Edmonston. 1998. The Immigration Debate: Studies on the Economic, Demographic, and Fiscal Effects of Immigration. Washington, D.C.: National Academies Press.

Tabarrok, Alexander. 2000. Economic and Moral Factors in Favor of Open Immigration. Oakland, Calif.: The Independent Institute.

Vedder, Richard K., and Lowell E. Gallaway. 1993. Out of Work: Unemployment and Government in Twentieth-Century America, rev. ed. New York: New York University Press for The Independent Institute.

Read More...

Summary only...