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The Economics of Immigration Reform

| Feb 12, 2013 | Immigration Reform |

Can our country afford Immigration Reform? That is the question raised by Robert Rector of the Heritage Foundation. He argues making 11 million illegal immigrants eligible for legal status would “generate costs in Medicare and Social Security alone of $2.5 trillion above any taxes paid in.” Rector argues that this is because only 15-20% of eligible illegal immigrants have a degree past that of high school, and only 40% have a high school diploma. Based on these numbers, Rector believes that the average household will put $10,000 into the system, but will take out $30,000 in benefits.The numbers, however, are suspect and do not tell the whole story. First of all, according to the Pew Research Center, 51% of illegal immigrants have a high school diploma, instead of 40% as Rector has claimed More importantly, it calculates the cost only during retirement years (where a household always takes more than it puts in) and did not calculate any taxes paid during working years.Given that the Heritage Foundation has only provided a small part of the picture, it is important to use other research to see the whole. Professor Raúl Hinojosa-Ojeda of the UCLA published research which comes to the opposite conclusion.[8] He argues that once an illegal immigrant is legalized, he will then earn higher wages and will be more likely to spend them on “houses, cars, phones and clothing.” He found that from increased taxes alone, within three years the US government will make “between $4.5 billion and $5.4 billion.”Combined with this, naturalizing a permanent resident adds further economic benefit. Manuel Pastor of the University of Southern California has found that once a lawful permanent resident is naturalized, his or her wages will rise, on average, by 8-11%. According to the Department of Homeland Security, there are 8.5 million people for whom this might apply to. And over 5 years, their naturalization could add between $21 billion and $45 billion to the US economy.Then of course, there is the issue of medicare, as it could be argued that Immigration Reform would be too costly. However, such an argument would still be wrong. First of all, according to the National Research Council, using March 2012 Population Survey data, naturalized citizens take on average 7% less medicare benefits than a natural born citizen. Moreso, an un-naturalized citizen takes 16% less benefits than a natural born citizen. Add to this research done by demographers Jeffrey Passel and Michael Fix. There, they compared welfare participation by natural born citizens to that of lawful permanent residents. Their research found that when comparing the two groups within the same income bracket, lawful permanent residents invariably had similar or lower participation rates. This should be combined with how Immigration Reform will lead to higher wages and more educational opportunities. As such, the claim that Immigration Reform will somehow bankrupt medicare, or be an economic drain on the United States, is at worst false and at best, misleading.

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