The (Alleged) Costs of Illegal Immigration

A week or so ago, I tried to rebuke the notion that immigrants, and particularly illegal immigrants, take jobs away from Americans.

Another common argument against illegal immigration in particular is that illegal immigrants are a burden on taxpayers. According to this argument, illegal immigrants receive far more benefits from our government coffers than they put in since we don't collect taxes from them.

I've always had a problem with this argument on a couple of grounds:
1. It's a red herring. If the problem is that illegal immigrants don't pay taxes, the solution is to make them legal. Not only that, but we also need to dramatically increase the amount of legal immigration we permit to make sure that immigrants pay taxes.
2. I'm not sure how many government services illegal immigrants actually use. To be sure, they benefit from use of the roads, but that benefit is de minimis in the sense that few illegals own cars and the ones who do typically drive around with like 8 people in the car. Some illegals also certainly use our hospitals free of charge, but again I doubt the cost of this is particularly overwhelming. On the other hand, it is difficult to see how an illegal immigrant would qualify for welfare or Medicaid, for instance.
3. Illegal immigrants create wealth in this country by filling jobs that would not otherwise be filled. Moreover, they spend some of these earned wages here in the US on things like rent, food, and clothes. Rent is, of course, indirectly taxed through property taxes, which means that illegals are in fact contributing to public education. And this says nothing about sales taxes paid by illegals on other goods. Finally and most importantly, taxes on wages in most jobs in this country are withheld from paychecks. It doesn't matter if the employee is legal or illegal, the taxes are still withheld.

Today I came across an article that confirms that illegal immigrants are a net benefit to the government coffers. It is clear that because of paycheck withholding, these illegal immigrants are paying billions in income, Social Security, and Medicare taxes. According to the article, the Social Security taxes alone may amount to as much as $9 billion a year. These Social Security taxes will never be collected by the immigrants when they reach retirement age. Which means that they are helping to prop up our otherwise troubled Social Security system.

The response we hear to this confirmation is a related argument: that illegal immigrants come to the US to take advantage of our welfare system. As a result, they are an even bigger burden on our social services than they pay taxes. This argument is nothing short of preposterous: our welfare system is nothing compared to that of other countries. Moreover, an illegal immigrant would be idiotic to risk exposing themself by applying for welfare. The fact is that illegal immigrants come to the US because they can make a higher wage and can send some of their earnings back home. I've actually known people who were CPAs in their home country who were working for a temp agency here in the US doing warehouse work on a visa because they could make so much more money doing that.

Although the blanket assertion is often made that illegal immigrants take huge sums from our social services, I have never seen any evidence to back this claim up. Again, it is extremely difficult to imagine an illegal immigrant being able to take advantage of our welfare system. Attempting to do so would have a tremendous risk of the immigrant's illegal status being discovered. If that were to happen, deportation would possibly follow soon thereafter. Besides, the goal of most illegal immigrants is to make enough money that they can save some to send back to their homes. If they simply collect welfare benefits, they will be unable to send any money home at all since things like food stamps have no value in foreign countries (although they do admittedly have a reduced resale value here in the US on the black market). With all the benefits an illegal could potentially receive from the government, they are still going to be better off working a regular job 12 hours a day at minimum wage (or even a little less if the employer is particularly insidious).

There's also the fact that in order to get welfare benefits, an illegal will need a fake social security number. But if they can get a fake social security number (as many, perhaps most, can), then they will be able to guarantee they make a half-decent wage that far surpasses any social services benefits.

As I said in my post a few weeks ago, immigrants go where the jobs are. Specifically, they go where there are jobs that few Americans are willing to do. These are jobs for which demand is higher than supply and therefore the wages are often higher than minimum wage. In such an instance, government welfare is a far less lucrative option than just working your tail off.

In the end, the solution to our immigration problems is very simple: get the existing illegal immigrants out of the shadows and dramatically increase the number of unskilled immigrants we allow in legally.

H/T: Sully