National Academy of Sciences Immigration Study

October 1997

A 1997 study by a National Academy of Sciences panel of demographers and economists details how immigration fuels U.S. population growth and the fiscal costs and negative social policy effects of the current large-scale immigration. The authors of the report The New Americans: Economic, Demographic, and Fiscal Effects of Immigration, say that the study shows a positive economic benefit from immigrants. While that is true in a narrow sense, the study’s finding of a possible economic benefit of from $1 billion to $10 billion is outweighed by the costs to the American taxpayer in budget outlays.

FAIR recognizes that some immigrants benefit the economy, but we and the authors of this study would agree that this does not mean that we should open the door to everyone who wants to come. The study documents that the nation would be much better off if we were to make a serious effort to control our borders and to reshape the size and characteristics of current immigration.

…[W]e have been distressed to hear public officials repeatedly misrepresent [the NAS study’s] findings as the immigration debate has evolved in the last seven months….these officials make it seem as if immigration is a free lunch for Americans.

Low-income workers and taxpayers in immigrant states lose; those who employ immigrants or use immigrant services win, as do the immigrants themselves. The critical issue is how much we care about the well-being of immigrants compared with that of the Americans who win and the Americans who lose. - George J. Borjas and Richard B. Freeman, Harvard Univ. economists and NAS study panelists, New York Times, Dec. 10, 1997.

Among the NAS study findings are:

• Immigration is the driving force behind rapid population growth.
• Immigration has a negative impact on lower-skilled, less-educated Americans.
• Immigration is exacerbating the wealth gap.
• Immigration has contributed to the increase in high school dropouts.
• Immigrant-headed households use more in government services than they contribute in state and local taxes.
• Immigration is a substantial tax burden to native households, especially in states with large immigrant populations, and, on average, for the nation as a whole.

The study is silent on the issue of whether current immigration contributes to or detracts from the per capita GNP—which is really the determining factor in assessing the economic effect of immigration. However, the data are available in the study to document that the effect is negative on the per capita level.

The study illogically offers immigration as of possible help with the long-term solution to the insolvency of the Social Security system. If today’s cohort of aging baby boomers pose a looming problem to the Social Security system, why won’t an aging cohort of immigrants, whose contributions into the system likely will have been less, pose a similar, but potentially greater problem a few years later? The answer is that it will, but that it could defer the problem for a while.

To come up with its findings the panel of academics acknowledged they had to make some questionable assumptions. One of them was that the nation’s policy makers will correct the Social Security systems’ looming insolvency by decreasing benefits and increasing contributions. They did this at a point in the future —in about twenty years — when this would reduce the benefits received by today’s immigrants and increasing the contributions paid by their children. The authors acknowledge that if their assumption is incorrect, that immigrants could remain a liability to the nation’s fiscal balance and the social security system.

Those who read the report (and do not rely on the headlines used to herald it) will discover that the NAS report notes that, on average, immigrants earn lower incomes than natives, but have larger families, pay less in taxes, and receive more in public assistance. The report also contains Orwellian double speak, aimed at disguising reality. For instance, it says that African Americans are not suffering economically from the effects of immigration, except for those who happen to live in areas with high immigration. That is about as sensitive to the impact of immigration on a vulnerable population as saying that dropping the atomic bomb didn’t have negative consequences on people, except for those who happened to live in Hiroshima and Nagasaki. Similarly, the NAS study implies that African Americans have a favorable attitude toward immigration because only 57 percent of blacks want immigration reduced, versus 68 percent of whites.

The most glaring gap in the study is examination of the costs of a rapidly growing population. The study notes that immigration currently accounts for 37 percent of U.S. population growth (and when the children of immigrants born here are included, the Census Bureau says that raises the share of population growth to over 50 percent). Projecting population growth based on current immigration to the middle of the next century, the study documents that immigration will account for two-thirds of the additional 120 to 150 million people that we are supposed to accommodate.

The American people who live in areas where there are already large concentrations of immigrants are concerned about their school budgets and the quality of education of their children, about the impact on municipal services and crime rates. These immigrant-related issues are ignored in the study.

The study’s authors focus primarily on macroeconomic issues. Nevertheless, the data presented make clear that current high-level immigration is having a disproportionate negative impact on some states and some sections of the wage force. Californian taxpayers are picking up the tab for a net annual fiscal cost from immigration budget outlays minus tax payments of $1,178 per native-born household. For the nation as a whole, the net fiscal drain on the American taxpayers is stated in the study as $166 to $226 per household. That is a total cost to those taxpayers of $15 to $20 billion dollars, much higher than the economic benefits.

The study also makes clear that there doesn’t need to be that cost. Because immigration is a discretionary policy and the effects of immigrants vary widely based on the selection criteria, if immigration were restructured, newcomers could be admitted on the basis of their being able to contribute to the high-skills, high-wage economy that we want for the 21st century.

Also documented in the study is the fact that current immigration is driving down earnings for low-wage workers. FAIR believes that most Americans would agree that poor workers are a population that we should be protecting from unfair competition rather than exposing them to it. It would be callous and irresponsible to suggest that the economic advantage the well-off receive from the wage depressing effects of current immigration should have priority over the economic hardship this produces for the less fortunate. In the absence of reform, the report acknowledges that “the losers may be the less-skilled domestic workers who compete with immigrants and whose wages will fall.”

The NAS Report may be accessed here.