Illegal Immigrant Employment and Benefit Use

Illegal immigration has become even more of a hot-button issue in our country due to the Arizona law and in Massachusetts from the proposed budget amendments on immigration.  I am researching the facts about the immigration situation in Massachusetts, and this post will explore the linked issue of immigrant employment and welfare use.

The subjects of immigrant employment and the cost of giving welfare benefits to immigrants are linked because an easy assumption to make is that immigrants cost the government money when they don’t work.  However, the reality is that immigrants usually do work, but also often cost the government money because they need benefits in addition to their low-wage jobs.

A study by the Urban Institute, a non-partisan research organization, found that labor force participation is higher among undocumented-immigrant men than for legal-immigrant or native men.  This study did not give exact figures as to exactly how much higher this participation is, possibly because it’s difficult to know exact employment figures for undocumented workers.  The higher rate of employment is only true for men, as illegal immigrant women usually stay home to care for children.  Only 32% of illegal immigrant workers are women.

Immigrants are over-represented among low-wage (less than 200% of minimum wage) workers.  According to the Urban Institute study, immigrants make up 11% of the U.S. population, 14% of the U.S. labor force and 20% of the low-wage labor force.  Undocumented immigrants are disproportionately likely to be low-wage workers, as they make up 40% of the immigrant low-wage workforce and 8% of the total low-wage workforce, while they are only about 3.5% of the US population as a whole. Nationwide, the percentage of immigrants who are employed (out of all immigrants, not just those who are looking for a job) is 69.3%, about the same as the 70.1% for natives.

The data show that many of these immigrant workers are working as well as receiving government benefits.  A study by the Center for Immigration Studies (CIS), a research organization that some view as being on the side of the issues against amnesty and benefits for illegal immigrants, showed that among recipients of any of four welfare programs (Medicaid, Food Stamps, General Welfare/TANF, and Supplemental Social Security for the disabled), immigrants had a higher employment rate than natives.  That is, in 2001, almost 80% of immigrant households on one of the four programs had at least one person working, while only 65% of native households on one of the programs did.

Nationally, illegal immigrants had a higher rate of welfare use than either legal immigrants or natives, at 24% to 22% and 14% respectively. The vast majority of this welfare is Medicaid. 23% of illegal immigrants in the US use Medicaid, while the use of the other three programs is under 5%.  This is important because illegal immigrants mainly get benefits because their children are eligible as US citizens even though the parents are undocumented.  For benefits such as general welfare and food stamps, if the children are eligible the benefits effectively go to the whole family, including the undocumented parents.  However, with Medicaid, the citizen children would have insurance cards and be able to get care while the undocumented parents wouldn’t.

In Massachusetts, unlike in the country as a whole, illegal immigrant welfare use is lower than that for legal immigrants or natives, at 11% to 17% and 14% respectively.  Massachusetts has the lowest illegal immigrant welfare use of any of the states surveyed by the CIS.

Furthermore, the average payment to illegal immigrants who do receive one of the four welfare programs is $596 per year, much less than what other states pay to illegal immigrants and much less than the $1, 928 average Massachusetts payment to native households receiving welfare in 2001.

CIS estimates that in 2001 there were 6,000 illegal immigrant families in Massachusetts receiving one of the four welfare programs, usually Medicaid.  Since the average payment to these families is $596, that is a total of about $3.5 million spent on illegal immigrant benefits from the four programs studied in Massachusetts in 2001.  The numbers are rising though, as in 1996 there were only 2,000 families receiving an average of about $200 in benefits.

A second study by CIS shows that illegal immigrants often do pay taxes.  It estimates that half of illegal immigrant workers work “on the books” and pay payroll taxes.  On average, illegal immigrants pay $4,212 in federal taxes per year, compared to an average of about $15,000 per year for natives and legal immigrants.  The study estimates that the federal government pays out about $7,000 per year per illegal immigrant household through Medicaid, education funding, treatment for the uninsured, etc.  This means each illegal immigrant household causes a federal deficit of about $2,700.  In total, the study estimates this is $26.3 billion per year in costs to the federal government and $16 billion in tax revenue, for a $10.3 billion deficit.  The study also estimates that if amnesty were granted to all illegal immigrants in the US, both tax revenue and cost to the government (due to increased eligibility and use of government services) would rise so that the deficit per illegal immigrant would not go down.