Illegal immigrants: Boon or bane?

By: WILLIAM FINN BENNETT - Staff Writer

As the rhetoric rages over the costs versus the benefits of illegal immigration, even the experts have radically conflicting opinions.

Some researchers say the costs of sustaining illegal immigrants far outweigh the taxes they pay into the system and any other benefits they may provide the state or nation -- things like lower labor costs and therefore lower prices to consumers. Other economists say the net cost to society is very small or that the benefits of illegal immigration may even balance out the costs.

Two recent studies highlight those clashing perspectives.

An August 2004 study by a researcher at the Washington-based Center for Immigration Studies -- a hard-line advocacy group for stricter immigration laws and enforcement -- concluded that the costs of illegal immigration represent an annual net cost to U.S. taxpayers of $10.4 billion. That figure translates to $2,700 per illegal household, the study by Steven A. Camarota concluded.

However, a September 2005 study conducted by the Tomas Rivera Policy Institute at the University of Southern California's School of Policy, Planning and Development, reached very different conclusions. The institute's Web site says that it "advances critical, insightful thinking on key issues affecting Latino communities through objective, policy-relevant research and its implications for the betterment of our nation."

That study's authors stated that many studies, such as Camarota's, incorrectly include in their data the cost of educating the U.S.-born children of illegal immigrants. Since those children are American citizens, they should not be included in the calculations, the Tomas Rivera Policy Institute study says.

California's costs

The Rivera study also contradicted Camarota's conclusions that illegal immigrants create a fiscal drain on society because they cost taxpayers significantly more than the tax revenues they provide. The Rivera study focused primarily on California and concluded that the net fiscal cost of illegal immigration to the state was much lower than the cost represented in the Camarota study.

The Rivera study, which used data assumptions from a National Academy of Sciences estimate in 1997, looked at households with both legal and illegal Mexican immigrants. It concluded that based on a net annual cost to the state of $179.2 million and 1.4 million households as reported by the 2000 Census, the average annual cost to taxpayers represented by each of those households was $128.

However, that figure "does not take into account other significant fiscal contributions" and offsets, the report's authors said.

They said one of those contributions is in the form of Social Security tax payments by many illegal immigrants -- payments the workers never take advantage of on the benefits side because they have used fraudulent identification numbers. Those payments go directly into the Social Security Administration's "Earnings Suspense File," the report states. It said that California residents contributed $17 billion to the total amount that went into that file in 2000, and the vast majority of that money was contributed by illegal immigrants.

In 2005, the federal government reimbursed California $121 million to help defray its costs for incarcerating illegal immigrants, but last year, those costs ran an estimated $750 million. Earlier this month, Gov. Arnold Schwarzenegger asked the federal government to pay the difference.

"It is imperative that states receive financial assistance for the continued costs associated with the federal government's failure to secure the border," Schwarzenegger stated in an April 5 news release.

Local costs, jail and school


A spokesman for the San Diego County Sheriff's Department said last week that based on the number of immigration holds by federal officials on county jail inmates, he estimates that illegal immigrants make up about 4 percent of the county's jail population. He said that percentage would put incarceration costs for those prisoners at about $6.8 million last year.

Cmdr. Ken Culver, an official with the Sheriff's Department county detention bureau, said the county received about $2 million last year in federal funding to help defray those costs. The approximate $4.8 million difference came out of the county's general fund.

The costs of educating illegal immigrants or their children are more difficult to determine.

For one thing, federal law prevents schools from asking parents or children about their immigration status. Although no direct connection can be made between the number of children who are classified as English learners and those who may or may not be illegal immigrants or the children of illegal immigrants, San Diego County Office of Education figures show that English learners make up about 120,000 of the approximate 500,000 students studying at public schools in the county.

At the state level, the numbers are even more dramatic. California Department of education figures show that English learners make up 25 percent of the state's approximately 6 million, K-12 public school students.

Local public schools spend an average of about $7,400 a year to educate each student.

However, even if a significant number of those children were illegal immigrants or the children of illegal immigrants, the cost of educating them would have to be put into context, a spokesman for San Diego County Office of Education said last week.

"If they are not in school, then it will be a significant drain on public services," said Jim Esterbrooks. "When we educate students for college, and if they go, it's a good thing for everybody."

Officials with the county's Department of Health and Human Services were not able to provide data last week on that agency's illegal-immigration-related costs.

On the national level, however, Camarota's study said that in 2002 illegal immigrants cost the federal government $26.3 billion.

Among those costs, according to the study, were: Medi-

caid, $2.5 billion; food assistance programs, such as food stamps and free school lunches, $1.9 billion; the federal prison and court systems, $1.6 billion; and federal aid to schools, $1.4 billion.

A 2005 study by the Washington nonprofit Pew Hispanic Center, which calls itself a nonpartisan organization working to improve understanding of the U.S. Latino population, reported that between 2002 and 2004, there were about 12 million illegal immigrants living in the United States. Of those, the report said that 2.4 million were living in California.

However, a 2005 study conducted by New York's Bear Stearns Asset Management Inc. reported that the number of illegal immigrants currently living in the United States could be as high as 20 million. Bear Stearns officials said that most studies rely on U.S. Census data.

They say that because the Census Bureau's counting process does not account for the large number of immigrants who "avoid responding to census questionnaires," the official estimates are not accurate. To arrive at its totals, Bear Stearns used other data sources such as school enrollments, foreign remittances, border crossings, and housing permits, the study says.

Bear Stearns officials said they decided to do the study because illegal immigration "is becoming one of the most significant economic themes of this decade."

"We believe most investors are underestimating the magnitude and significance of this theme," Bear Stearns officials said in the report.

Jobs, wages and consumer prices


Many complain that illegal immigrants are taking jobs that could be filled by U.S. citizens and the result is depressed wages, in turn causing an even greater burden on low-income Americans. A study released in March by the Pew Hispanic Center breaks down illegal immigrants' participation in the economy by job sector.

The study found that illegal immigrants make up 24 percent of all workers in the agricultural sector, 14 percent of all workers in construction and 12 percent in food preparation.

Last month, the Pew Hispanic Center reported that illegal immigrants now make up 1 in 20 workers in the United States. The report said there are about 7.2 million illegal immigrant workers in the country.

The Pew report went on to say that Mexicans make up 56 percent of the 11.5 million to 12 million illegal immigrants that organization estimates are living in the United States.

U.S. workers appear to be getting hit with a double whammy. As more and more jobs are exported overseas, economists say that is increasing business owners' leverage for reducing labor costs. At the same time, the competition for jobs posed by illegal immigrants is suppressing wages for American workers, some economists say.

A paper published by Harvard economics professor George J. Borjas in May of 2004 concluded that "any sizable increase in the number of immigrants will inevitably lower wages for some American workers."

The study found that the increase in labor supply due to illegal immigration reduced the average annual earnings of native-born men by about $1,700, or roughly 4 percent. And among those Americans without a high school education the effect was even greater, lowering their wages by 7.4 percent.

"The negative effect on native-born black and Hispanic workers is significantly larger than on whites because a much larger share of minorities are in direct competition with immigrants," Borjas wrote.

However, an economist with Washington-based Economic Policy Institute said there is a flip side to those statistics.

"If immigrants weren't there, then some of those higher costs would be passed on to consumers," said economist Jared Bernstein in a Tuesday phone interview.

The Tomas Rivera study went even further in its assessment of what could happen if not for illegal immigrants.

The study cited Harvard's Borjas himself in saying, "Certain industries in the country -- such as California's agriculture industry -- would likely disappear if immigrant labor were not available."

That would mean the loss of a $30 billion dollar sector of California's economy, a sector that according to a 2005 report from the University of California Davis, creates a domino effect of more than $70 billion in economic activity in the state each year.

The Borjas report goes on to say, "These industries are maintained because immigrants accept jobs at wages much lower than what native-born workers would accept."

Also mentioned in the Rivera study was the economic benefit of the purchasing power of illegal immigrants who help to sustain retailers, service providers and producers. The study said that in 2000, immigrant purchasing power totalled approximately $51 billion.

Legalization's potential impacts


The Camarota study warned that if the United States legalizes those who are living illegally in the United States, Americans can expect to see the $10.4 billion net cost of illegal immigration triple, because of the increased use of social programs by newly legalized immigrants who would no longer be afraid of reaching out for government aid.

"If illegal aliens were given amnesty and began to pay taxes and use services like households headed by legal immigrants with the same education levels, the estimated annual net fiscal deficit would increase from $2,700 per household, to nearly $7,700, for a total net cost of $29 billion," Camarota wrote.

But, in a Tuesday interview, UC San Diego economist Gordon Hanson disputed Camarota's conclusions on the possible effects of legalization.

"He makes unrealistic assumptions about the services that newly legalized immigrants would use," Hanson said.

A 2005 report authored by Hanson stated that between 1994 and 1996, the percentage of immigrants on welfare programs actually fell at a faster rate than it did for native-born U.S. residents. Native use of social assistance fell by 2.2 percent, while immigrant welfare use dropped by 4.6 percent.

Hanson said that while Camarota's estimations are probably correct on the current net cost of illegal immigration to taxpayers, that estimated $10.4 bill to taxpayers represents less than one-tenth of one percent of the nation's entire 2005, $12.4 trillion gross domestic product.

"The political heat surrounding illegal immigration is far out of proportion to its real effects on the economy," Gordon said.

Contact staff writer William Finn Bennett at (760) 740-5426, or wbennett@nctimes.com.

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Understand where it's coming from.

Maybe some of you can shoots some holes in this waterbucket?

Ever wonder why they sound so desperate to spin this?

Elections, perhaps?