Cost of Illegals and Legals

Some people mistakenly think that immigrants are not eligible for welfare. Several years ago, Congress did attempt to render immigrants ineligible for most forms of welfare. However, subsequent backpedaling by Congress and the executive branch has undone most of those reforms. Furthermore, many immigrant families get welfare through the eligibility of their U.S. citizen children. (It is also important to realize that even when immigrants are ineligible for federal welfare programs, the burden of their support is simply shifted over to the state and local welfare agencies.) Although it may defy popular perception, low-income workers, particularly those with children, can create very large costs for taxpayers despite being employed.

Average Payments. In addition to receipt of welfare programs, the Current Population Survey provides a limited amount of information on how much each household or individual receives in services or payments for welfare programs. In most years, the food stamp program, TANF, SSI, and Medicaid are the only programs for which payment or cost information is provided. There is no information in the survey for the costs of providing free/reduced school lunch, WIC, rent subsidies, and public housing. Moreover, the 2010 data do not yet have any information on the size of the payments for food stamps or the cost of Medicaid, as these have to be calculated and added to the data by the Census Bureau after the survey is collected. At some point, the Census Bureau should add this information to the public-use file of the March 2010 CPS, but at the time of this analysis the information was not available.

Compared to under-reporting whether a welfare program is used, under-reporting of payment size seems to be even more pronounced in the CPS. For example, the total payout (not including administrative costs) under the food stamps program is roughly $39 billion, but the total value of food stamp use reported in the CPS (2009 data) is only about $23 billion. Similar problems exist in the data for cash payments received. Under-reporting of payments is partly due to the fact that the CPS is a survey by proxy. It seems that the individual filling out the CPS for the rest of the household is more likely to know if a program is being used than the actual size of the payment received.

It is still possible to look at average payments in the CPS data, but doing so means we have to ignore the substantial problems with the payment information. The 2010 CPS shows that the average payment received for immigrant households with children using a cash program is almost identical — $6,253 a year for immigrant households and $6,297 for natives. To find an average payment for food stamps and Medicaid, the 2009 CPS must be used. The 2009 data for food stamp payments show that for households with children using food stamps, the average payment is very similar for immigrants and natives — $3,250 and $3,275. For Medicaid, the 2009 estimated costs for immigrant-headed households with children using the program are significantly lower than for native-headed households with children — $6,303 and $7,404, respectively. This means that although immigrant households with children are more likely to have someone in the household using Medicaid, the average cost of the program is lower for immigrant households.¹⁸ No payment information is available in the CPS for free/reduced school lunch, WIC, rent subsidizes, or public housing.

Welfare Use by Country of Birth. Table 4 and Figure 5 report welfare use for households with children based on the country of birth of the household head. Table 4 also includes data for regions of the world. Both Table 4 and Figure 5 show very large differences in use rates. Immigrant households with children with the highest use rates are those from the Dominican Republic (82 percent), Mexico and Guatemala (75 percent), and Ecuador (70 percent). Those with the lowest use rates are from the United Kingdom (7 percent), India (19 percent), Canada (23 percent), and Korea (25 percent). These figures remind us that although the overall use rates for immigrant households with children are quite high, this is not the case for all immigrant-sending countries and regions.

Welfare Use by State. Table 5 reports welfare use by state. Two years of data (2009 and 2010) are averaged together in the table in order to provide more statistically robust estimates. Figure 6 shows overall welfare use for immigrant- and native-headed households with children by state. The states with the highest use rates are Arizona (62 percent); Texas, California, and New York (61 percent); Pennsylvania (59 percent); Minnesota (56 percent); Oregon (56 percent); and Colorado (55 percent). These states also tend to be the ones where the gap between immigrant and native welfare use tends to be the largest. In these same states, immigrant households with children have an average 24 percentage-point gap with their native-born counterparts. In fact, for almost every top immigrant-receiving state, Table 5 and Figure 6 show that use rates for immigrant households with children are much higher than use rates for natives.

Welfare Use by Legal Status. So far this report has examined welfare use for the entire foreign-born population. But it is possible to estimate welfare use for households based on the legal status of the household head. It is well established that illegal aliens do respond to government surveys such as the Current Population Survey. While the CPS does not ask the foreign-born if they are legal residents of the United States, the Urban Institute, the Department of Homeland Security (DHS), the former INS, the Pew Hispanic Center, and the Census Bureau have all used socio-demographic characteristics in the data to estimate the size of the illegal-alien population. We follow this same approach. Our best estimate is that the March 2010 CPS included 9 to 9.5 million illegal aliens.¹⁹ By design, this estimate is consistent with those prepared by the Department of Homeland Security and others.²⁰ It must be remembered that this estimate only includes illegal aliens captured by the March CPS, not those missed by the survey. The Department of Homeland Security assumes an undercount of 10 percent in Census Bureau data.²¹

Table 6 reports welfare use based on the legal status of the household head. The estimates show that 51.8 percent of households with children headed by legal immigrants used at least one major welfare program in 2009. For households with children headed by an illegal immigrant, 71 percent are estimated to use at least one program. One important thing to note about these estimates is that immigrant households can only be placed into one of two categories — legal or illegal. This means that if the methodology for assigning legal status has resulted in an overestimation of welfare use for one category, it must be the case that it has underestimated welfare use for the other. To understand this, it may be helpful to remember that the welfare use rate for all immigrant-headed households with children of 56.6 percent represents the average for immigrant households headed by legal and illegal immigrants together. This means that anyone arguing that the welfare use rate in Table 6 is too high for one category, must also believe that the welfare use rate is too low for the other category.

Table 6 shows that the overall high welfare use rate for immigrant households with children is not simply due to legal status. Both legal and illegal immigrants tend to make use of the welfare system. Illegal immigrant households with children primarily use food assistance and Medicaid, making almost no use of cash and housing programs. In contrast, legal immigrant households with children tend to have relatively high use for every type of program. In addition to legal status, Table 6 also reports welfare use for different types of legal and illegal households. The Department of Homeland Security estimates that more than half of all illegal immigrants come from Mexico.²² The table shows that households with children headed by Mexican illegal immigrants tend to have somewhat higher welfare use rates than do illegal immigrant households with children from all countries. As for legal immigrants, Table 6 shows that the inclusion of refugee-sending countries in the data does not make much difference to overall welfare use rates for legal immigrant households with children. Use rates for households headed by legal immigrants from non-refugee-sending countries are very similar to those for legal immigrant households when refugees are included. Refugee-sending countries are a small share of the total and, as we have seen, their use rates are not different enough from non-refugees to impact the overall results in a meaningful way.

Less-Educated Legal Immigrants. One of the most important findings in Table 6 is the use rates for less-educated legal immigrant households. Less-educated is defined in the table as having no more than a high school education. As we saw in Table 3, welfare use varies significantly by the education level of the household head. Table 6 shows that households with children headed by a legal immigrant with no more than a high school education have extremely high overall welfare use rates — 71.8 percent. This is important because it shows that legal status is no guarantee of avoiding welfare use. The table also shows that households with children headed by legal immigrants from Mexico have a similarly high welfare use rate. This partly reflects the relatively lower education levels of legal Mexican immigrants. The high rate of welfare use by less-educated legal immigrant households with children indicates that legalizing illegal immigrants would likely increase their welfare use. While Table 6 shows that the overall use rate for any welfare program is very similar for less-educated legal and illegal immigrant households (71 percent vs. 71.8 percent), the rate for cash and housing programs is much higher for less-educated legal immigrants. For example, use of cash programs for illegal immigrant households with children is only about 1 percent, but for less-educated legal immigrants it is roughly 11 percent. Thus, use of cash programs can be expected to rise significantly with legalization. A similar situation exists for housing programs.

At present, the bar on illegal immigrants directly using welfare programs likely reduces their use of some programs, making some illegal immigrants reluctant to apply for welfare programs, even when their U.S.-born children are eligible. However, upon legalization some of this reluctance would almost certainly be reduced. Moreover, while the terms of any amnesty legislation will likely bar the newly legalized from directly accessing programs themselves for at least a few years after legalization, it can be expected that eventually the newly legalized will be eligible for more programs. Thus, legalization would likely increase welfare use. This is because a very large share of legalized illegal immigrants would, in effect, become less-educated legal immigrants. For 2010, we estimate that 80 percent of adult illegal immigrants have not completed high school or have only a high school education. Other research has found similar results.²³ As Table 6 shows, less-educated legal immigrant households with children have extremely high rates of welfare use. And legalization would create a very large number of new less-educated legal immigrants.

It bears repeating that the figures in Table 6 are not the result of less-educated legal immigrants’ unwillingness to work. The overwhelming majority of all types of immigrant households with children have at least one worker. The results in Table 6 reflect in part the lower education level of many immigrants with children. There is no single better predictor of income in the modern American economy than education levels. Low incomes, coupled with the presence of children under age 18 are the reason for the results shown.

Illegal Immigrant Welfare Use by State. Table 7 averages two years of data to estimate welfare use for illegal, legal-, and native-headed households with children. Using two years of data at the state level provides more statistically robust estimates, particularly for small states. It should be noted that the national figures (at the bottom of Table 7) for illegal and legal immigrant households do not exactly match those in Table 6 because that table uses only one year of data, while Table 7 averages 2009 and 2010 together.

Overall, households with children headed by legal and illegal immigrants have higher use rates than their native-born counterparts in most states. However illegal immigrants across the county tend to have very low use rates for cash assistance programs. On the other hand, households with children headed by illegal immigrants tend to have much higher use rates for food assistance and Medicaid than natives. For legal immigrant households, use of cash assistance is more varied, but in general it tends to be higher than for natives. Use of food assistance and Medicaid for legal immigrant households tends to be significantly higher than for natives in almost every state.

The variations across states in welfare use in part reflect differences in welfare eligibility at the state level, as well as differences in the characteristics of the immigrant populations by state. In addition to the impact on public coffers, variations in immigrant welfare use from state to state likely have significant political implications. In states like Arizona where immigrant use of welfare is typically much higher than for natives, immigration is likely to be a much more salient political issue than in a state like Virginia where immigrant welfare use tends to be similar to that of the native-born.

Posted via email from Global Politics