Immigrants a Net Economic Plus, Study Says

A major federally mandated study destined to be cited by both sides in the explosive immigration debate has concluded that immigrants are a net boost to the U.S. economy, adding up to $10 billion each year while providing a crucial work force and lowering consumer prices.

But the authoritative, 500-page report from the prestigious National Research Council also provided compelling new evidence Saturday that taxpayers in California bear an unequal burden in providing services for both legal and illegal newcomers and their families, especially in education and health care.

In an estimate sure to resonate in the state, the authors set this tax burden at a substantial $1,178 annually for each California household headed by a U.S. native--by far the highest such price tag in the nation. In fact, the study stated, residents in the vast majority of the country enjoy a net tax gain, because immigrants are concentrated in just six states but their taxes mostly go to the federal government.

“We benefit a lot from immigration in Los Angeles and California, but there’s a real budget problem in providing services for immigrants whose taxes do not cover the local costs,” said James P. Smith, senior economist at the Santa Monica-based Rand Corp., who served as chairman of a high-powered panel of 12 academic experts who authored the report.

Moreover, high immigration will probably trigger broad changes in the U.S. population’s makeup over the next half century--with whites representing only half the nation’s people and Latinos one-fourth by 2050.

Though finding that immigration aided the economy as a whole, the report also acknowledged “gainers” and “losers” in current U.S. policy. The clear losers are low-skilled U.S.-born workers who suffer falling wages and job displacement because of competition from immigrants. The “winners”: the immigrants themselves, employers and other workers who benefit from their labor, and consumers who purchase goods produced by immigrant labor.

Immigrants, the panel said, do not significantly reduce job opportunities and wages for most Americans.

The report rejected the oft-asserted assumption that African Americans suffer disproportionately from the inflow of low-skilled immigrants, stating that most U.S.-born blacks live away from where immigrants are concentrated. At the same time, the authors conceded that immigrant competitors have displaced some low-skilled, native-born workers, including African Americans, especially in Southern California and other areas where newcomers are concentrated.

Overall, the study found that competition from immigrants had depressed the wages of native-born high-school dropouts about 5% since 1980.

“It’s naive to think no one is hurt by this immigration,” Smith said.

Beyond economic and fiscal questions, the panel also scrutinized the huge impact that immigration is exerting on the size and composition of the U.S. population.

Its sweeping demographic findings, though in line with current research, will probably surprise many unaware of just how dramatically immigration is reshaping the national makeup. The transformation is most vivid in California, where one in four residents is now foreign born, by far the nation’s highest proportion. (The foreign-born account for 9.3% of the U.S. population, almost double the total in 1970, according to census estimates.)

Assuming current levels of immigration, the panel projected that the nation’s population will approach 400 million by 2050, an increase of almost 50% over 1995. Given low native-born fertility rates, new immigrants and their descendants will account for a startling two-thirds of the U.S. growth during the next half century.

As a consequence, the proportion of people of Asian and Latin American ancestry will rise dramatically. Latinos will far outpace blacks as the major minority group. Meanwhile, intermarriage will continue to blur the distinctions among groups.

The study, two years in the making and subjected to peer review by independent experts, was funded by the U.S. Commission on Immigration Reform, a bipartisan, congressionally appointed panel that provides policy advice to Congress. Its estimated cost was $800,000. The commission directed the National Academy of Sciences, parent body of the National Research Council, to examine the effects of immigration on the economy and labor market, the fiscal impact on government and its role in the U.S. population.

The academy was not asked for policy recommendations, and none are included. The commission is expected to incorporate the new findings into its final report and recommendations to Congress later this year.

The council’s study amounts to a consensus look by leading scholars at a time when immigration is at near-record levels, Congress is debating the direction of U.S. policy and polls show public unease nationwide with high immigration. Its findings generally mirror those of other mainstream research efforts into a contentious arena that is increasingly the focus of scholarly, government and private research.

Nonetheless, the report’s breadth, its academic pedigree and its inevitably controversial conclusions seem sure to thrust it to the forefront of debate.

Indeed, observers on both sides of the issue quickly seized on the findings as evidence for their diametrically opposite points of view.

“This should put to rest a lot of the more irresponsible studies published by anti-immigrant groups and demonstrate that by and large this country has benefited from its generous tradition of welcoming immigrants,” said Cecilia Munoz of the National Council of La Raza, a Latino advocacy group.

But others said that, notwithstanding the report’s broadly positive conclusions, many specific findings amount to a scathing indictment of high immigration. Detractors label contemporary immigration a subsidy for low-wage employers and a penalty for the U.S.-born working class.

“This confirms the generally critical view that immigration is a policy that enriches those who have and takes away from those who have not,” said Mark Krikorian, executive director of the Center for Immigration Studies, a Washington-based research organization that favors reductions in immigration levels.

Sean Walsh, a spokesman for Gov. Pete Wilson, criticized the study for considering legal and illegal immigrants together. He described lawful immigrants as a net gain for the state, while characterizing the undocumented as the true burden on taxpayers.

“It’s shameful and wrong to lump legal immigrants, who contribute to our well-being, with illegal immigrants, who drain badly needed services,” Walsh said.

But Smith of Rand said the evidence shows that both legal and illegal arrivals used more in state resources than they pay in taxes in California, in large part because they earn less and have larger families than other residents. “Immigrants have lower wages and they have more kids, and that’s true for legal and illegal immigrants in California,” Smith said.

In total, the study found immigrants adding up to $10 billion in annual wages and investments, though the authors concede that is a relatively modest amount in an economy approaching $8 trillion. Savings, investment and many other factors loom larger than immigration in economic importance, the authors stated.

Immigrant labor, the study said, does help keep the domestic economy competitive by allowing many goods and services to be produced more cheaply, while providing an essential work force for many businesses--notably the textile and agricultural industries, and service-sector outlets such as restaurants, hotels and janitorial concerns.

But there is a dark side, including the wage depression and job displacement for low-skilled native workers.

The one group that appears to “suffer substantially,” the study concluded, is earlier immigrants who often find themselves in competition with new arrivals willing to work for less.

In another problematic area, the study found that the wage gap between new immigrants and native workers had grown rapidly in recent years, largely because of an influx of new arrivals--including many illegal immigrants from Mexico--with substantially lower education and skill levels than U.S. natives.