Huddle 1996 study of costs of illiegal iimmigration

Illegal alien workers may increase profits for employers, but they are costly to the American taxpayer. Most illegal aliens have low educational attainment, few skills, and they work for low wages, often in the underground economy where they pay no taxes on their earnings. Since about three million illegal aliens gained legal status in the amnesty of 1986, the flow of illegal immigration has increased, and today that population is estimated at 9-11 million illegal alien residents in the country. The former Immigration and Naturalization Service estimated that the illegal alien population was increasing by about half a million aliens per year in 2000.

The Huddle Study

Because the number of illegal aliens can only be estimated, similarly the fiscal cost (government budget outlays) for those aliens can only be estimated. Dr. Donald Huddle, a Rice University economics professor, published a systematic analysis of those costs as of 1996 (see table below). The study also estimated the tax payments of those same aliens.

At that time, the illegal alien population was estimated to be about five million persons. The estimated fiscal cost of those illegal aliens to the federal, state and local governments was about $33 billion. This impact was partially offset by an estimated $12.6 billion in taxes paid to the federal, state and local governments, resulting in a net cost to the American taxpayer of about $20 billion every year. This estimate did not include indirect costs that result from unemployment payments to Americans who lost their jobs to illegal aliens willing to work for lower wages. Nor did it include lost tax collections from those American workers who became unemployed. The study estimated those indirect costs from illegal immigration at an additional $4.3 billion annually.

During the years since that estimate, the illegal alien population is estimated to have roughly doubled, so the estimated fiscal costs also will have at least doubled. Furthermore, the passage of time is accompanied by inflation in the costs of services, e.g., school budgets continue to climb. Therefore, what was estimated to be a cost to the American taxpayer of $33 billion in 1996 today would be at least $70 billion. Similarly, tax collections would have increased — sales taxes at least — so that the net expense to the taxpayer from illegal immigration would currently be at least $45 billion. The indirect fiscal costs would have also increased, especially during a period of already high unemployment, to perhaps and additional $10 billion annually.

  1996 Costs Table from the Huddle Study 1



 Public Education K-12


 Public Higher Education


 ESL and Bilingual Education


 Food Stamps






 Social Security


 Earned Income Tax Credit




 Medicare A and B


Criminal Justice and Corrections


Local Government


Other Programs


Total Costs


Less Taxes Paid


Net Costs of Direct Services


Displacement Costs


All Net Costs


Other More Recent Estimates

Other estimates have been done on components of the cost of illegal immigration. For example, FAIR estimated in 2003 that the cost of K-12 education for illegal alien children was at least $7.4 billion annually (see Breaking the Piggybank). This would be less than double the about $5.9 billion estimate above, but would be of the same order of magnitude. FAIR’s 2004 report on the medical expenses incurred because of illegal immigration (see The Sinking Lifeboat) shows uncompensated costs in excess of one billion dollars.

The cost of incarceration of illegal aliens in state prisons has also risen rapidly. In fiscal year ’02, the Department of Justice’s State Criminal Alien Assistance Program (SCAAP) distributed $550 million to the states to help defray their expenses, but this was estimated to cover only about one fifth of their outlays. Between FY'99 and FY'02, alien detention increased by 45 percent (from about 69,300 inmate years to over 100,300 inmate years), and that trend is continuing. These expenses do not include the costs of illegal aliens incarcerated in federal prisons, public safety expenditures, detention pending trial, expenses of trial proceedings, interpretation, public defenders, or the incarceration expenses of immigrants for minor offenses that do not meet the standards of the SCAPP reimbursement program. Therefore, it is clear that outlays for Criminal Justice and Corrections costs is today much greater than double the 1996 estimate.

While the cost of outlays for illegal aliens may be shifted by legislation among the levels of government and the private sector, the fact remains that illegal immigration creates an enormous fiscal burden on America and its citizens — a burden that Congress has levied upon us through short-sighted and haphazard immigration policy and succeeding administrations have aggravated by spotty enforcement of the law.

A Call for Action

Americans should demand that Congress and the administration work together to establish control over our borders and the interior of the country so that we have the assurance that aliens, whether immigrants or visitors, are legally present in the country. That objective is of vital importance for the sake of national security as well as for the impact on our tax bills.

[1] The Net National Costs of Immigration: Fiscal Effects of Welfare Restorations to Legal Immigrants, Donald Huddle, Rice University, 1997.

Updated 2/2004