FALSE CHARGE THAT IMMIGRANTS EXPLOIT GOVERNMENT Julian L. Simon Representative Lamar Smith of Texas), chairman of the immigration subcommittee, says that he sponsored the upcoming legislation to reduce immigration because legal immigrants "live at taxpayers' expense" on welfare programs. Even the pro- immigration camp has now come to believe that government expenditures on recent immigrants are greater than expenditures on natives. And the Journal on November 27, Peter Brimelow asserted that immigrants are more "significantly into welfare" than natives. But this assertion is false - completely false, viciously false. True, expenditures commonly called "welfare" are about $150 per year greater per immigrant than per native, and have always been higher. But the welfare expenditures are only a drop in the bucket of total government social outlays on both groups. The relevant totals are roughly $3800 for natives, and roughly $2200 for immigrants. The piddling welfare expenditures on immigrants are a very red herring in policy debate. From census and federal administrative data Rebecca Clark of the Urban Institute calculated expenditures for immigrants and natives on Aid to Families with Dependent Children (AFDC), food stamps, Supplemental Security Income (SSI) and General Assistance. Foreign-born persons taken altogether have perhaps a 15 percent higher probability of obtaining these goods and services than do natives. From her data I estimate that federal expenditures average $404 per year per immigrant, while the average native receives $260. These data for the early 1990s are shown at the base of the immigrant and native graph columns in Figure 1. [There is some evidence that post-1970 entrants use more of these welfare programs than do pre-1970 entrants (but lesser use by 1987-1990 than by 1970-1986 entrants; recent entrants require some time to learn about such programs.) Greater use of welfare by immigrants than by natives is an old story, however. As of 1975 the Census Bureau's authoritative Survey of Income and Education showed that immigrants had higher welfare receipts than natives. And it was also true in the first decade of the century, according to a federal commission on immigration. [Non-refugees who enter legally through quotas are not per- mitted to receive public assistance for three years, and may be deported if they obtain such assistance. Hence they cannot have a high rate of use of these programs. And illegals are often afraid to seek such assistance. Refugees, however, are entitled to such assistance immediately upon entry, which (together with their needy circumstances) explains a much higher rate of use of welfare soon after arrival. [Among foreign-born persons aged 65 years and over, a mean- ingfully greater - and growing - proportion receive welfare than among natives. This has attracted much finger-pointing. But this is the result of some immigrants having arrived too late to qualify for Social Security benefits; the welfare is simply a substitute for Social Security, and does not indicate disproportionate use of government transfer payments. The data on the four federal welfare programs mentioned above do not, however, include most government payments to the elderly, or expenditures for local public schooling. One must include those large categories to reach sound conclusions about total government expenditures on various cohorts of immigrants and natives. Social Security and Medicare, by far the most expensive government transfer programs, are paid mainly to natives. This is because immigrants typically arrive when they are young and healthy, and also because older recent immigrants do not qualify for Social Security. Expenditures on immigrants for Social Security and Medicare are particularly difficult to estimate because the payments differ greatly among age groups. And the sizes of the various age groups of foreign-born residents differ greatly because of the deaths of older immigrants and the increasing rates of immi- gration in recent years. Nevertheless, I shall make rough esti- mates for arrivals since about 1970. Then I will explain why data for aged immigrants who arrived earlier are not relevant here. Total federal expenditures of $305 billion in 1992 for Social Security and $133 billion for Medicare indicate expendi- tures per native of $1305 and $566 respectively. The authorita- tive 1975 data suggest that the average receipt per immigrant who arrived within the past 25 years is less than a fifth of the average expenditure per native - say $261 and $113 respectively, for argument. (Some allowance for the public support of the immigrant aged is embodied in the relatively heavy SSI payments that substitute for Social Security.) In the graph, these pro- grams dwarf welfare programs. Schooling costs estimated by Ms. Clark imply $522 per capita for immigrants, and $922 per capita for natives. The expendi- tures are lower for the immigrant population because the propor- tion of children among the total immigrant population is smaller than among the total native population. (Separate data for recent cohorts probably would show higher immigrant expenditures.) In light of other data, however, I think the schooling costs estimated by Clark are misleadingly low, though I do not doubt that her calculations are correct. I consider it is more sensible to think of schooling costs for immigrants as being to those of natives than Clark's calculations imply; both are shown in the graph. For unemployment compensation we can safely assume similar expenditures of $138 per capita for immigrants and natives, based on experience with unemployment compensation in the 1970s. For Medicaid it is reasonable to assume higher expenditures for immigrants than for natives in the same proportion as for the welfare programs above; both programs must reflect immigrants being somewhat poorer on average than natives. Federal and state Medicaid expenditures are about $90 billion and $70 billion respectively, so expenditures per person are about $627 for natives and $752 for immigrants. Now we can add together all transfer payments plus schooling costs. This is the appropriate measure of government expendi- tures to use in any assessment of the costs and benefits of immi- gration. The graph shows that the expenditures on natives per capita are much greater than the expenditures on immigrants per capita - roughly $3800 versus $2200. For immigrants who arrived 1970-1990, the total might be $100 higher due to higher schooling costs. It is quite astonishing that the estimates for natives are so much higher than those for natives. The gap derives mainly from the costs for the elderly. Of course these estimates are very messy because the age composition of the immigrant population - more of whom came in recent years - and other uncer- tainty in the estimates. But one can draw two conclusions with great surety: 1) The slightly greater expenditures for immigrants on the narrowly-defined welfare programs are more than offset by other categories - indeed, dwarfed by them; therefore the welfare programs alone deserve no attention. 2) Overall expenditures for immigrants are not greater than for natives. Rather, expenditures for immigrants are much less those for natives. Julian L. Simon teaches business administration at the University of Maryland and is the author of The Economic Consequences of Immigration. 301-951-0922, fax 301-951-8468, 110 Primrose St., Chevy Chase, Md. article5 immcstsh November 21, 1995 page 1