Dear Costs of 'Cheap Labor' for California
Tuesday, July 8, 2003
By: Dan Stein

San Jose Mercury News

There is no simple or single explanation for the kind of gaping budget deficit currently facing California. However, it would be naive in the extreme to ignore the impact of large-scale legal and illegal immigration on a $38.2 billion shortfall in this year's state budget.

It is virtually impossible to set an exact dollar figure on the cost of immigration because money flows in and out of state coffers in so many different ways and, because the issue is so politically sensitive, most politicians eschew efforts to even come up with cost estimates.

The most recent effort to assess the cost of immigration in California was made by the National Academy of Sciences in 1997, which estimated that costs associated with immigration added approximately $1,300 a year to the tax liability of the typical California household. At the time these estimates were made, the state had fewer immigrants, and the economy was reaching the zenith of the high-tech boom.

Most recently, Los Angeles County, which is experiencing a full-blown health care crisis, estimated that caring for uninsured illegal aliens now costs $350 million a year. The state health budget is projected to encounter $3 billion in unreimbursed health care costs for illegal immigrants over the next five years.

Drain on basic services

The obvious conclusion is that the state is paying dearly for its massive influx of “cheap” labor. California's large and rapidly growing army of poorly educated, low-wage workers (many of whom work off-the-books for cash) pay little in direct taxes and rely heavily on the basic services that are provided by the state and local governments. In fact, many immigrant workers send more money to their homelands in the form of remittances than they send to Sacramento in the form of taxes.

The “cheap” workers often have children who require expensive education -- more than $5,000 per year, per child. No one blames the kids for needing an education, but it is a reality that whatever meager taxes their parents contribute do not offset the cost of a single child in California's schools, much less multiple kids. With virtually every school district in the state experiencing overcrowding, Census data indicate that all of this increase is a direct result of immigration.

What must also be factored into the equation is the long-term cost of educating these children as poorly as many California school districts are now doing. There is both a human and dollar cost that will be paid somewhere down the line. In addition, many middle-class California families, frustrated by the overcrowding and poor quality, are pulling their kids out of the public schools and investing in private education. Under these circumstances it will be virtually impossible to convince taxpayers to shell out even more money to fix schools that their own kids no longer attend.

Benefits increasing still

Health care and education are the two most significant costs to the state resulting from mass legal and illegal immigration. There are countless other costs -- housing assistance, nutrition programs and incarceration, to name just a few -- that contribute mightily to California's massive budget deficit. Under pressure from the immigrant lobby, the state and local jurisdictions keep adding new benefits, like in-state tuition subsidies for illegal immigrants, even as they drown in red ink.

Just because no one can say precisely how much of California's $38.2 billion shortfall is directly due to mass immigration does not mean that the state can go on blithely ignoring its enormous fiscal impact. The inescapable conclusion is that California is being bankrupted by cheap immigrant labor.