The Cost of Immigration

July 2003

Our 2017 estimate that illegal immigration is costing US taxpayers $116 billion per year may be found in our publication The Fiscal Burden of Illegal Immigration on United States Taxpayers.

Most immigrants are poor; indeed, that is why they come here. Through present immigration policy, we are admitting over one million mostly poor people into our society every year —a society that is already challenged to deal with the poverty of its natives.

The cost of immigration to our society is enormous. The most recent estimate places the net cost of post-1969 immigrants at $61 billion in 2000 alone ($35 billion from legal immigrants and $26 billion from illegal immigrants).¹ This is after immigrants’ contribution in taxes has been subtracted. As high as the cost is now, the rising tide of immigration will lift it even higher in years to come. By the end of 2002, the annual net cost of immigration will have risen $66 billion.²

A study from the National Bureau of Economic Research, based on the Census Bureau’s Survey of Income and Program Participation, analyzed the cost of immigrants based on their specific use of means-tested welfare (both direct and indirect) and found that the total immigrant receipt of benefits in 1996 came to $180 billion.³ That annual amount is sure to grow as the population of legal and illegal immigrants receives over one million new people a year.

The real costs are probably even higher than these estimates, which do not take into account the effects of immigration in displacing American workers from their jobs and depressing wages. Whatever the annual cost, it is sure to grow as the population of legal and illegal immigrants—now at 31 million—receives over a million new people every year. With immigration policy skewed toward admitting relatives from underdeveloped countries and away from skilled admissions, the flow of immigrants is increasingly composed of the unskilled and undereducated. As a result, “immigrants arriving in the past decade or so are earning less compared to native-born Americans than immigrants who arrived in earlier decades.”⁴ In other words, the overall earning power of the immigrant population will continue to deteriorate, making them an even bigger drain on taxpayers.

Occasionally, there have been studies that have claimed to find that immigrants create less of a deficit (or even a surplus). But these studies are marred by common flaws, such as using old data on the immigrants of 20 or 30 years ago and the omission of whole categories of less skilled immigrants.⁵

Unreimbursed Medical Expenditures

Many public hospitals in the United States, especially in the Southwest, are facing major financial difficulties because of the services that they are rendering to indigent alien patients (many of whom are in the country illegally). As a response, Rep. Mark Foley (R-FL) introduced legislation in July 2002 to require the federal government to compensate the hospitals for these expenses so that the burden would not be borne only by local taxpayers.

State Costs of Incarceration

The Department of Justice’s State Criminal Alien Assistance Program (SCAAP), begun in 1994, compensates states and local jurisdictions only for incarceration of illegal aliens who are serving time for a felony conviction or at least two misdemeanors.  However, the level of compensation appears to be falling, leaving more and more of the costs to be borne by state and local taxpayers.

In 1999, the latest year for which full data is available, states claimed expenses of $1.484 billion for 69,502 illegal alien detention-years through SCAAP. (An illegal alien detention-year may mean the detention of one or several illegal aliens, the latter case occuring when an alien is incarcerated for less than a full year.)  The SCAAP program compensationed states and local jurisdiction for only 39 percent of that amount, leaving nearly $911 million to be paid by the state and local taxpayers.

The partial data available for 2002 indicates that the level of compensation to the states has fallen still more, to less than 20 percent of expenses in 2002.⁶ Adding to the problem, there has been an increase in criminal aliens in detention. Between FY'99 and FY'02, alien detention increased by 45 percent (from about 69,300 inmate years to over 100,300 inmate years). For 2003, the support to the states was still further reduced, as the funds for SCAAP were cut from $550 million in 2002 to $250 million.

(These expenses do not include the costs of public safety expenditures, detention pending trial, expenses of trial procedings, interpretation, public defenders, or the incarceration expenses of immigrants for minor offenses that do not meet the standards of the SCAPP reimbursement program.)

While the cost of taking care of poor immigrants may be shifted by legislation among the levels of government and the private sector, the fact remains that 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.

Americans should demand that Congress reduce the immigrant flow and alter the criteria for admission to ameliorate the cost of immigration to our society.