Thursday, April 05, 2007

Immigration transfers wealth from natives to migrants in US

The Heritage Foundation's Robert Rector and company have released a report that meticulously presents what is intuitively obvious--unskilled, low-wage earners receive more in government benefits than they contribute in taxes (this is the focus), immigrants (legal and especially illegal) are disproportionately represented among unskilled low-wage earners, and consequently current US immigration policy is a effectively a substantial net wealth transfer from native US citizens to foreign-born migrants:
Strikingly, as Chart 4 shows, low-skill households in FY 2004 had average earnings of $20,564 per household; thus, the average cost of government benefits and services received by these households not only exceeded the taxes paid by these households, but substan­tially exceeded the average earned income of these households.
The simple bar graph nearby depicts the net liability per low-skilled household. The report's authors classify 9% of natives, 25% of legal immigrants, and 50% of illegal immigrants as low-skilled.

Conceptualization isn't difficult. A family of four smuggled across the Rio Grande takes up living in the San Bernandino Valley. The father sweats in the sun for $20,000 a year. If he's not under-the-table, he's paying around $5,000 annually in taxes. His two children, meanwhile, cost $10,000 a pop (add another $2,500 a piece if they are enrolled in ESL at school). The primary education bill alone is setting the government back $20,000. Throw in infrastructure use, fire and police, pollution, social services, healthcare, etc and it's not even close. If the family is using any number of welfare programs the shortcoming is further accentuated. Mean-tested benefits cost the government almost as much as education does ($564 and $590 billion, respectively).

Some who disagree argue that educating the children of the low-skilled justifies the severe benefit-contribution imbalance now because their increased skills will allow them to make up the difference in the future. Children from poorer families are, on average, less intelligent than children from more affluent ones. But even if we accept the blank slatist's assumption that poor children are as equally educable as their more fortunate counterparts, the argument that this makes increasing the size of the low-skilled population sensible is a non sequitur. Educating the children of high-skilled parents is equally beneficial in a fanciful world (in reality, educating the children of the highly-skilled provides a benefit that is actually greater). So why increase the size of the low-skilled?

My hypothetical uses an immigrant family, but the situation for a low-skilled native family is similar. The crucial difference, of course, is that we're stuck with the latter, but the former is preventable. Further, the addition of the foreign-born liability chips away at the already sad fortunes of the poor native family.

Why deliberately increase the size of the population that consumes more in government benefits than it contributes? It unnecessarily increases the burden on established net-taxpayers and cuts into the net-benefits enjoyed by the established US population that consumes more than it contributes. In this way, low-skilled immigration hurts natives across the board, from the single black mother to the to the suburban professional family man. The winners (at least in the short-run) are the corporations that enjoy this corporate welfare through subsidized labor. This isn't the free market at work.

Critics point to Social Security contributions that illegal residents make but will likely never receive back. That argument is flawed for several reasons. For one, we're looking at $7 billion a year in contributions but a net cost in the rest of the federal budget of more than twice that amount, in addition to costs at the state and local levels. And the children of these illegal immigrants, who remain below the national average in educational attainment and skills at least as far as four generations in, are eligible for these benefits if born stateside. In addition, the argument assumes that native workers are going to enjoy social security benefits down the road. I'm not banking on it. Also, there are many congressional and executive creatures who want to grant amnesty to illegal immigrants, thereby making them eligible for social security benefits.

Parenthetically, the report also does a great job laying out the macroeconomic total budgetary situation in easily understandable vernacular:
In fiscal year (FY) 2004, the expenditures of the federal government were $2.3 trillion. In the same year, expendi­tures of state and local governments were $1.45 trillion. The combined value of federal, state, and local expenditures in FY 2004 was $3.75 trillion.[1] ...

The $3.75 trillion in government expenditure is not free but must be paid for by taxing or borrowing economic resources from Americans or by borrowing from abroad. In general, government expenditures are funded by taxes and fees. In FY 2004, federal taxes amounted to $1.82 trillion. State and local taxes and related revenues amounted to $1.6 trillion.[4] Together, federal, state, and local taxes amounted to $3.43 trillion. At $3.43 trillion, taxes and related revenues came to 91 percent of the $3.75 trillion in expenditures. The gap between taxes and spending was financed by government borrowing.

Building a wall, enforcing tough punitions on employers who use illegal subsidized serf labor, and targeted deportations in tandem with the institution of a merit immigration system that grants residency to immigrants who will better the US' financial situation instead of worsening it, will go a long way in ameliorating this shortfall. Implementing a national consumption tax will do so as well.


JSBolton said...

It's good that this study was done, highlighting the difference between different classes of immigrants.
Even so, it would have been easy to get the median personal income of foreign-born, which has for many years been more than 30% below the national median.
Household size variation unnecessarily complicates the picture, obscuring the low-income , and net public subsidy-absorbing
character of all but a fairly small percentage of foreign-born.
Add into this, that immigrants, because of their age ranges being different from that of the total population, have twice as many children in public school; and it should be obvious that today's immigration cohorts cause, each year, a major increase in the plundering of the net taxpayer.
It is an exercise in freedom-for-aggression, with officials gleefully taking away more each year, of our freedom-from-aggression.
They make it work by smearing all objectors to this process as racists, nazis, xenophobes, etc.
If only smears can be used in support of a policy, doesn't this tell us that rational arguments are either completely unavailable, or considered much too weak to secure public support?
Suppose I were to switch to the mass-immigrationist side. I would say that there is convenience and utility in having ambitious people recruitable for bad jobs, rather than have to use the marginally employable, who don't appreciate their opportunity. This argument is a weak one, though, since it's open to the reply that what makes those jobs undesirable is the presence of excess low-qualified immigrants with very low standards.

Anonymous said...

This situation exists for 2 main reasons. First, big corporations and elites want cheap labor, meatpacking, lawncare, service industry stuff etc... Secondly, the left loves illegal immigration because it provides them with ready votes and screws white people at the same time. If American blacks have to suffer, well, just don't look at that too closely. Of course, people like you and me get to pay for the whole thing.
Even if the pattern is the same with low-income American families, the money stay in this country, not wired to Latin America. And why do we need more high-school dropouts anyway. If, as I keep hearing, we are going to need an increasingly intelligent workforce to compete in the world economy, we should be kidnapping Japanese, Koreans and Chinese and Jews from Isreal. So basically when economists who want both mass immigration of dullard 3rd worlders and then turn around and tell me that we are entering an age when the US needs an even smarter workforce to compete are either liars or don't know what the fuck they are talking about.
As I always say, if the situation continues, we will be facing severe problems and I don't just mean higher taxes. If our economy tanks because we cannot compete, then watch out. I have the uneasy feeling that many problems in this nation are kept from boiling over because of our prosperity, yet elites keep turning up the heat, so to speak. Nobody believed it could happen in Yugoslavia, but a pretty prosperous people engaged in brutal warfare and al the attendant insanity. I've been there it it was no joke. If the US follows suit, it could make stuff like that look like a picnic.
And if immigrant activits are so concerned about these poor illegals paying into Social Security and then not getting any return, I propose we ship all of these people back to their own lands so they won't be expolited by the horrible American and their rapacious system. What those assholes want is for me to feel bad that some illegal Guatemalan doesn't have a chance to get a social security check. It is all based on emotion. Get the current asshole out of the White House and deport illegals and build a Morice Line across our southern border. It worked in the 1950's in Algeria, so when someone says a wall won't work her, they are lying. Tell them to go crack open a history book and screw off.

agnostic said...

Even if people want to help the plight of the Mexican down-and-out, we should transfer money to them conditional on their remaining in Mexico, and build a fence to make sure.

Foreign aid isn't a bad thing (not that Mexico will be first in line based on need), but bringing the Mexican underclass here imposes all manner of externalities on the natives "on the ground": bullies in school, gangs in school & in general, ESL lessons, turning a decent neighborhood into an eyesore (and earsore), drug trafficking, and everything else you mentioned.

al fin said...

Latin america is a quasi-apartheid region. As much as the race baiters complain about US racism, latinos flock to the US for opportunity. If you can create more opportunity in latin america, you remove much of the impetus to emigration.

As for expecting any other US president to be more aggressive in limiting illegal immigration--that is simply fantasy.

crush41 said...


I highlighted the study because it is easy to comprehend and carry even for those not immersed in the details of the US immigration debate. The squishy center tends to be unenthusiastic about many of the social externalities surrounding Hispanic underclass immigration, but assumes that it is counterbalanced by some economic benefit (ie cheaper heads of lettuce). The argument framed in this way helps refute the latter part of their opinion.


I wish you were with me in the course I had to take on contemporary US social philosophies. It would've been nice to have someone else to absorb some of the ire and provide a good deal of polemic heft.


In addition to the other problematic aspects of the underclass Hispanic migration is in its effects on magnanimous types that become more misanthropic the closer the problem gets. I'm well short of selfless, but I'm amenable to the idea of sending effective foreign aid to clean up Mexico City. I become much less so, however, as Los Angeles increasingly comes to resemble Mexico City.

Al Fin,

Should you be that pessimistic? The Bush Administration has become a little less reckless over the last year or so. McCain, among the worst of all offenders, is effectively DOA. Tancredo raised more than a million in the first quarter, and Duncan Hunter has snagged a couple of straw polls. Mitt Romney appears to take a position along the lines of the Inductivist. I'm cautiously optimistic.

al fin said...

If you look at Mexico's recent election and how close the country came to total leftist radicalization--you might get a whiff of why Bush has been very tentative in his dealings with the Mexican border. If you think the problem is bad now, what do you think would happen under a radical leftist government in Mexico? You have not seen bad. You think you are seeing bad. You have not seen bad.

John Edwards, Barak Obama, Hillary Clinton. I give one of them at least a 50:50 chance of being the next US president. If you think Bush is irresponsible on immigration, just wait. The US Democratic Party actually wants to flood the country with impoverished third world immigrants--for political reasons

mantra77 said...

"Liberals and respectable conservatives say there is this RACE problem. Everybody says this RACE problem will be solved when the third world pours into EVERY white country and ONLY into white countries."

"The Netherlands and Belgium are more crowded than Japan or Taiwan, but nobody says Japan or Taiwan will solve this RACE problem by bringing in millions of third worlders and quote assimilating unquote with them."

"Everybody says the final solution to this RACE problem is for EVERY white country and ONLY white countries to "assimilate," i.e., intermarry, with all those non-whites."

"What if I said there was this RACE problem and this RACE problem would be solved only if hundreds of millions of non-blacks were brought into EVERY black country and ONLY into black countries?"

"How long would it take anyone to realize I’m not talking about a RACE problem. I am talking about the final solution to the BLACK problem?"

"And how long would it take any sane black man to notice this and what kind of psycho black man wouldn’t object to this?"

"But if I tell that obvious truth about the ongoing program of genocide against my race, the white race, Liberals and respectable conservatives agree that I am a naziwhowantstokillsixmillionjews."

"They say they are anti-racist. What they are is anti-white."

"Anti-racist is a code word for anti-white."

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green card visa said...

There should definitely be stronger penalties incurred for corporations employing immigrants who do not have a green card visa. As The Audacious Epigone clearly explains, the profits of the corporation are indirectly coming at the expense of taxpayers money -primarily those taxpayers who strengthen the government rather than drain it for personal handouts. I still find it hard to blame the immigrant family struggling to make end's meat; I am merely pointing out that corporations' bottom line should remain unchanged, regardless of the ethnicities the workers hired.