The Fiscal Impact of Immigration

I have worked on the issue of immigration’s fiscal impact for a long time, having presented my first academic paper on the subject at the annual meeting of the American Sociological Association almost two decades ago. I can thus say with confidence that the Heritage Foundation’s recent report on the fiscal cost of illegal immigrants is the most detailed and exhaustive ever done on this topic.

The report’s lead author is Robert Rector, intellectual godfather of welfare reform. Rector finds that illegal-immigrant households use about $55 billion more in services than they pay in taxes each year. Under the Schumer-Rubio bill, they would begin to get permanent legal status (green cards) in about ten years and would access more programs; then, the annual costs would balloon to $106 billion a year. The total fiscal costs over the lifetime of illegal immigrants, if they receive amnesty, would be $6.5 trillion. Some, even on the right, have criticized his analysis, but the basic findings are unassailable for reasons I will explain...

Education matters so much to the illegal-immigration debate because all researchers agree that about half of adult illegal immigrants have less than a high-school education, and another quarter have only a high-school education. The Heritage study identifies this as the key reason that letting illegal immigrants stay creates huge fiscal costs. As illegal immigrants are on average only 34 years old, the cost over the next five decades will be enormous.

As the Heritage study points out, the average household in America receives more than $31,000 in government benefits and services — federal, state, and local, minus pure public goods such as defense and interest on the debt. Very roughly, this is the median income of a household headed by an immigrant with a high-school education or less. There is no way for these households to pay enough in taxes to cover even the average consumption of public services.

What’s more, these households are relatively large and on average receive a good deal more in public services than $31,000. Until government is cut by at least half, the less educated will be a significant fiscal drain...

...as the Heritage study makes clear, when the ten-year window expires, the costs explode...

Heritage’s study, as well as common sense, makes clear that advocates of smaller government have to oppose amnesty and support very selective immigration policies until the day that government spending is cut dramatically. Otherwise the fiscal cost will be enormous.