Commentary

Errors About Immigrants: The government spends much more on the native born.

By Julian L. Simon
June 25, 1997

In their May 28 Washington Post op-ed column, “Immigrants, Welfare and the GOP,” Reps. E. Clay Shaw Jr., chairman of the House human resources subcommittee, and Lamar Smith, chairman of the House immigration subcommittee, wrote that a “Harvard study” showed that “alien households … are more likely to receive welfare than households with only citizens.” Smith elsewhere claims that immigrants “live at taxpayers’ expense” on welfare programs.

But last month the National Research Council released a study concluding that immigrants put more into the public coffers than they take out. How does this square with Smith’s and Shaw’s assertions?

Expenditures commonly called “welfare” are about $150 per year greater per immigrant than per native, and have been higher since as far back as the turn of the century. But the welfare expenditures are only a drop in the bucket of total government social outlays on both groups. The relevant totals are roughly $3,800 for natives and $2,200 for immigrants. The piddling welfare expenditures on immigrants are a red herring. The following elements tell the story.

· Narrow Welfare Expenditures. From census and federal administrative data, Rebecca Clark of the Urban Institute calculated expenditures for immigrants and natives on Aid to Families with Dependent Children (AFDC), food stamps, supplemental Security Income (SSI) and General Assistance. Foreign-born persons taken together have perhaps a 15 percent higher probability of obtaining these goods and services than do natives. From her data, I estimate that federal expenditures average $404 per year per immigrant, while the average native receives $260. The data on these four federal welfare programs do not, however, include most government payments to the elderly or expenditures for local public schooling.

· Payments to the Elderly. Social Security and Medicare, by far the most expensive government transfer programs, are paid mainly to natives. This is because immigrants typically arrive when they are young and healthy, and also because older recent immigrants do not qualify for Social Security.

These expenditures are difficult to estimate for immigrants because the payments differ greatly among age groups. Total federal expenditures of $305 billion in 1992 for Social Security and $133 billion for Medicare indicate expenditures per native of $1,305 and $566 respectively. Authoritative 1975 data suggest that Rue average receipt per immigrant who arrived within the past 25 years is less than one-fifth of the average expenditure per native—say, for argument, $261 and $113 respectively. (Some allowance for the public support of the immigrant aged is embodied in the relatively heavy SSI payments that substitute for Social Security.) These programs dwarf welfare programs.

· Schooling Costs. Estimates by Rebecca Clark imply $522 per capita for immigrants, and $992 per capita for natives. The expenditures are lower for the immigrant population because the proportion of children among the total immigrant population is smaller than among the total native population. I consider it prudent, however, to assume schooling costs for immigrants equal to those of natives.

· Unemployment Compensation. Safely assume similar expenditures of $138 per capita for immigrants and natives, based on earlier solid data.

· Medicaid. It is reasonable to assume higher expenditures for immigrants than for natives, because immigrants are somewhat poorer on average than natives. Federal and state Medicaid expenditures are about $90 billion and $70 billion respectively, so expenditures per person are about $627 for natives and, say, $752 for immigrants.

· Totals. Adding together all the above transfer payments plus schooling costs-is the appropriate measure of government expenditures for an assessment of the costs and benefits of immigration. Total expenditures on natives per capita are much greater than the expenditures on immigrants per capita, roughly $3,800 versus $2,200.

It is quite astonishing that the estimates for natives are so much higher than those for immigrants. The gap derives mainly from the costs for the elderly. These data are rough because of the age composition of the immigrant population—more of whom came in recent years—and other uncertainties in the estimates. But two conclusions are sure:

(1) The slightly greater expenditures for immigrants on the narrowly defined welfare programs are more than offset by other categories—indeed, dwarfed by them. Therefore, the welfare programs alone deserve no attention.

(2) Overall expenditures for immigrants are not greater than for natives. Rather, expenditures for immigrants are much less those for natives.

Julian L. Simon is a professor at the University of Maryland and a senior fellow at the Cato Institute.