Discussion: (11 comments)
Comments are closed.
A public policy blog from AEI
View related content: Economics
The Heritage Foundation has released a report aimed at scuttling comprehensive immigration reform, much as it helped end the 2007 effort. The report presents overwhelmingly negative estimates of the fiscal cost of granting legal status to unauthorized immigrants.
The report makes a number of valid points and should be commended for its thoroughness. But should we take away from it that Congress should not create a pathway to legal status for the current population of 11-plus million unauthorized immigrants? The answer is no.
What the report reveals is not the broken nature of our current immigrant system — something we already know — but rather the broken nature of our welfare state. The report notes that the average US household headed by someone without a high school degree received, on average, $35,113 more in government benefits than it paid in taxes in 2010. The report then notes that many unauthorized immigrants have low education levels and, if allowed to legalize their status, would eventually become eligible for government benefits just like everyone else. This would result in billions more flowing to those households every year than they pay in taxes.
The problem here is not offering legal status to a population that largely has been working hard, paying taxes, and contributing to the economy. The problem is the growth of government programs, the perverse incentive effects that those programs create, and the failures of our education system.
Unauthorized immigrant men have the highest labor force participation rate of any group in the US. These workers primarily fill arduous and hazardous jobs that many Americans are unwilling to take. The Congressional Budget Office estimates that the majority of unauthorized immigrant workers pay income or payroll taxes despite being ineligible for almost all government transfer programs, including Social Security (although their US-born children are eligible on the same basis as all other US natives).
Consider the alternatives to a legalization program. Should we deport all unauthorized immigrants? Doing so would be costly and would wreak havoc on an already-fragile economy.
Should we increase worksite enforcement in the hopes unauthorized immigrants will leave voluntarily? Tough enforcement policies not accompanied by comprehensive immigration reform are counterproductive. Research shows that worksite enforcement and other measures have forced some unauthorized immigrants into self-employment or the shadow economy, where wages are lower and fringe benefits (such as employer-subsidized health insurance) are scarce. This exacerbates the fiscal cost of unauthorized immigrants by reducing the taxes they pay and increasing their families’ need for public assistance. There’s also little evidence it has prompted immigrants to leave the country in large numbers.
Should we just turn a blind eye toward unauthorized immigrants without offering them legal status? This essentially describes US policy during the 1990s. But accepting the existence of a large unauthorized population is counter to the rule of law. And it misses the opportunity to capture the economic gains from a legalization program.
A legalization program makes the economy more efficient. Beneficiaries of 1986’s IRCA legalization program saw their wages rise by 6% to 13% after earning legal status. Most of those gains resulted from moving into better jobs. This points to efficiency gains: Unauthorized immigrants are stuck in a limited number of sectors because they lack legal status. Acquiring legal status benefits not only them but also the broader economy because it makes better use of the skills of people who are already here and participating in the labor market.
The fact that these immigrants would receive more in benefits than they would pay in taxes if they legalize their status does not mean that the US should not have an earned legalization program — it means that the US should reform its government transfer programs.
Finally, the programs currently being discussed in Congress are earned legalization, not amnesty. Amnesty implies a complete pardon with no negative consequences. S.B. 744, in contrast, requires that participants in its main legalization program pay any back taxes owed and a total of $2000 in fines and fees. S.B. 744 involves specific triggers and lengthy waiting times before most unauthorized immigrants would be able to legalize their status. It’s a tough bill, not an easy ticket to the gravy train.
Editor’s note: This post was initially published missing the last three paragraphs — this was an error on the editors’ part, not the author’s.
Comments are closed.
1150 17th Street, N.W. Washington, D.C. 20036
© 2016 American Enterprise Institute for Public Policy Research