WASHINGTON -- Immigration benefits the U.S. economy
overall and has little negative effect on the income and job opportunities
of most native-born Americans, says a new report by a panel of the National
Research Council. Only in areas with high concentrations of low-skilled,
low-paid immigrants are state and local taxpayers paying more on average to
support the publicly funded services that these immigrants use.
"Immigrants may be adding as much as $10 billion to the economy each year,"
said panel chair James P. Smith, senior economist at RAND Corp., Santa
Monica, Calif. "It's true that some Americans are now paying more taxes
because of immigration, and native-born Americans without high school
educations have seen their wages fall slightly because of the competition
sparked by lower-skilled, newly arrived immigrants. But the vast majority of
Americans are enjoying a healthier economy as the result of the increased
supply of labor and lower prices that result from immigration."
The U.S. Commission on Immigration Reform, a congressionally appointed body,
asked the Research Council to examine the effects of immigration on the
national economy, on government revenues and spending, and on the future
size and makeup of the nation's population. It was not asked to make policy
Each year about 800,000 people immigrate legally to the United States. In
addition, between 200,000 and 300,000 new illegal immigrants stay in the
country each year. In 1990, 43 percent of immigrants came from Latin
America and the Caribbean, 26 percent were from Canada and Europe, 25
percent were from Asia, and 6 percent were from other countries.
Immigrant labor allows many goods and services to be produced more cheaply,
and provides the work force for some businesses that otherwise could not
exist. For example, immigration has helped build and maintain America's
textile and agricultural industries. Other businesses that employ many
immigrants -- such as restaurants and domestic household services -- would
not exist on the same scale without immigrant workers, the panel said.
Most immigrants work in specialized sectors of the economy such as the
manufacturing and service industries, and compete primarily for jobs with
each other and with Americans who don't hold high school diplomas. Through
this competition, in fact, the wages of these native-born Americans may have
fallen some 5 percent over the past 15 years. Yet even in local labor
markets with high numbers of new immigrants, overall job opportunities and
wages for the native-born are not significantly affected by immigration. The
effects may be minor because natives who compete directly with immigrants
may be moving to other areas, and because immigration brings overall
economic benefits to most Americans.
Costs to Taxpayers
The majority of America's immigrants live in six states: California, New
York, New Jersey, Texas, Florida, and Illinois. Using data from California
and New Jersey, the panel estimated how much immigrant households -- those
headed by foreign-born people -- cost state and local taxpayers. This was
calculated by subtracting the costs of services those households use -- such
as public education, police and fire, welfare, and public health -- from the
amount of taxes they pay on an annual basis. These estimates were made
before new laws eliminated welfare benefits for legal immigrants who are not
In California, where many new immigrants live, each native household is
paying about $1,178 a year in state and local taxes to cover services used
by immigrant households, the panel said. In New Jersey, which has a more
established immigrant population, the calculation is about $232 a year.
However, annual estimates of immigrants' impact on state and local taxpayers
may be inflated and should not be used to predict the long-term costs of
admitting new immigrants, the panel said. These calculations do not indicate
how much immigrants and their children will pay in taxes or how they will
use public services over their lifetimes.
On an annual basis, new immigrant families receive more in publicly funded
services than they pay in taxes, the panel said. Most -- especially those
from Latin America -- tend to have more school-aged children and require
more educational services than other households. Although immigrants use
about the same level of government services as native-born residents, most
immigrants pay less taxes because they own less property and have
The panel's long-term estimates indicate that on a national level,
the majority of new immigrants and their descendants will add more to
government reserves than they receive over their lifetimes. The positive
fiscal effects of immigration at the federal level are shared equally by all
residents across the nation. However, residents of a few states such as
California -- with high numbers of new immigrants -- will bear long-term
costs that are concentrated at the state and local level of government.
Immigrants and their children will bring long-term benefits for most U.S.
taxpayers because -- like most Americans -- immigrants use more publicly
funded services in childhood and old age, but they make positive
contributions as working adults. In addition, the majority of immigrants pay
taxes and add revenue for some services -- such as national defense and
interest on the federal debt -- for which they do not impose costs.
The long-term fiscal contributions that immigrants make, however, will vary
depending on such factors as education and age of arrival to the United
States. Immigrants with higher levels of education will pay more taxes in
the long term because they have higher incomes. But immigrants who don't
have high school educations and those who are age 50 or older on
arrival may receive more benefits than they pay in taxes.
Immigrant Jobs and Wages
The wage gap between new immigrants and native workers has grown rapidly in
recent decades, the panel said. In 1990, for example, recently arrived male
immigrants were paid 32 percent less than native workers; in 1970, new
immigrants' wages were 17 percent less. New female immigrants make 22
percent less than native-born women, a gap that has grown by 10 percent
since 1970. This wage gap is growing mainly because more recent immigrants
-- many of whom are from poor countries in Latin America -- have much lower
education and skill levels than most Americans.
New immigrants are more than twice as likely as Americans not to have a high
school degree, the panel said. More than one in three new immigrants have
not completed high school. As a result, a disproportionate number of
immigrants hold the lowest paying jobs in restaurants for instance, or in
domestic positions. In 1990, almost half of all new immigrants earned among
the lowest wages in the United States.
Historically, the wages of immigrants who entered the country when they were
25 or younger eventually equaled those of native workers after immigrants
had been in the work force for about 20 years. However, because new
immigrants are coming to the United States with substantially lower
education and skill levels and are starting with lower wages, it be may more
difficult for them to close the wage gap. In particular, most Mexican male
immigrants, who make among the lowest initial wages, have not seen any
increase in wages relative to those of native workers even after 20 years in
the U.S. work force.
If immigration continues at its present level, the U.S. population will grow
to 387 million people by 2050 -- 124 million more than today, the
panel said. Immigration would account for about two-thirds of this growth.
Under current immigration policy, 26 percent of Americans will be of
Hispanic ancestry, growing from 27 million to 85 million by the year 2050.
About 8 percent will be of Asian heritage, increasing from 9 million to 34
million. In addition, the boundaries between distinct ethnic groups will
become increasingly blurred through intermarriage.