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MYTHS AND REALITIES ASSOCIATED WITH UNDOCUMENTED IMMIGRANTS
Photo: Embassy of Mexico
Todays Contribution is from the The Embassy of Mexico in Washington DC
The presence of undocumented immigrants in the United States has increasingly led to a passionate and polarizing debate, characterized by worrisome and inaccurate portrayals of immigrants, particularly during the November 2010 midterm elections. Therefore, it is even more urgent today to engage all social actors in an informed and objective discussion about the real costs and benefits of migration for the United States. The following sets straight some of the most common myths associated with this issue.
1. Myth: Undocumented immigrants are getting government services for free.
REALITY: They actually give more than they take. Over the past two decades, most studies that have tried to estimate the fiscal impact of immigration in the United States have concluded that the tax revenue generated by immigrants —both legal and undocumented— exceeds the cost of the services they use. Thus, an Economic Report of the President published in 2005 estimated that all immigrants, regardless of status, paid on average US$80,000 per capita more in taxes than the cost of the government services they were expected to use over their lifetime. Stephen C. Goss, the chief actuary of the Social Security Administration, said that by 2007, the Social Security trust fund had received a net benefit of somewhere between US $120 billion and US $240 billion from undocumented immigrants. That represented 5.4% to 10.7% of the trust fund’s total assets of US$2.24 trillion that year. The Social Security Administration estimates that two-thirds of unauthorized immigrant workers (about 5.6 million people) were paying into the system in 2007. Unauthorized immigrants paid a net contribution of US$12 billion in 2007 alone.
2. Myth: Undocumented workers do not pay taxes.
Reality: They do, and in several different ways. According to the Internal Revenue Service (IRS), the majority of undocumented immigrants pays income tax using, among other mechanisms, Individual Taxpayer Identification Numbers (ITIN’s), while most employers withhold federal, state and local taxes from such workers. In fact, between one-half and three-quarters of undocumented immigrants pay federal and state income taxes, Social Security, and Medicare taxes.Undocumented immigrants pay the same real estate taxes—whether they own homes or taxes are passed on to them through rents—and the same sales and other consumption taxes as everyone else. The majority of state and local costs for schooling and other services is funded by these taxes. Additionally, the U.S. Social Security Administration has estimated that three quarters of undocumented immigrants pay payroll taxes, and that they contribute US$6-7 billion in Social Security funds that they will be unable to claim (Porter 2005). This amount, moreover, keeps accumulating, generating US$6 to US$7 billion in Social Security annual tax revenue, and an additional US$1.5 billion in Medicare taxes. This money, according to the 2008 annual report of the Social Security Board of Trustees, will help reduce the SSA’s projected longterm
deficit by 15%, which is equivalent to a 0.3% rise in the pay roll tax.
3. Myth: Undocumented workers are a burden on the U.S. economy.
Reality: Immigrants not only pay taxes, but they also contribute significantly to the economy.
In a 2007 report, the White House Council of Economic Advisers concluded that, because immigrants increase the size of the total labor force, they complement the U.S. born workforce, and stimulate capital investment by adding workers to the labor pool. Immigration increases the U.S. Gross Domestic Product (GDP) by roughly US$37 billion each year.9 Given that employment has been the main driver behind undocumented immigration to the U.S. in recent decades, it should come as no surprise that this group is particularly hard working and has a high employment rate (96%).10 Moreover, beyond undocumented immigrants, the Hispanic community as a whole has increasingly contributed to the U.S. economy. According to the U.S. Department of Commerce and the U.S. Census Bureau, Hispanic owned firms increased by nearly 44 percent between 2002 and 2007, growing from 1.6 million businesses to 2.3 million. Employment at Hispanic-owned firms also grew by 26 percent from 1.5 million to 1.9 million workers, a growth rate significantly higher than that of non-minority-owned firms. Hispanic-owned businesses generated US$345.2 billion in sales in 2007, up 55.5 percent compared with 2002. And finally, of all Hispanic-owned firms with multiple employees, approximately 44,000 have revenues of more than US$1 million, representing an increase of more than 51 percent over 2002.
4. Myth: Undocumented immigrants are taking jobs away from Americans.
REALITY: Undocumented Immigrants differ from U.S. citizens in their economic sectors and occupation.
Among unauthorized immigrants in the labor force, 30% are service workers and 21% are construction workers. An additional 15% are production and installation workers. Two-thirds (66%) of unauthorized immigrant workers are employed in these three broad categories; by contrast, only 31% of U.S.-born workers perform those jobs. Unauthorized immigrants provide an important source of manpower in agriculture, construction, food processing, building cleaning and maintenance, and other similar jobs, at a time when the share of low-skilled, U.S.-born individuals in the labor force has fallen dramatically. Not only do unauthorized immigrants provide an important source of low-skilled labor, but they also respond to market conditions in ways that legal immigration presently cannot. Undocumented inflows broadly track economic performance, rising during periods of expansion, and stalling during downturns. Undocumented immigration is sensitive to labor market demand. Immigrants are more likely to work in seasonal activities, such as agriculture, which suffer the largest job losses during downturns. Therefore, the size of the immigrant population changes in response to economic downturns or expansion. Immigration is not the cause of today’s high unemployment rates. In fact, reliable estimates show that immigration levels —both undocumented and applications for H-1B visas for high-skilled professionals— have fallen along with the economic downturn. In the longer term, however, the U.S. economy is also likely to need immigrant labor as the fertility rate in the United States, according to the U.S. Bureau of Labor Statistics, is projected to fall below the replacement level by 2015-2020. The number of workers age 55 and over will likely increase by 49%, compared to projected increases of only 5% among those 25 to 54 and 9% among the 16 to 24 age group, creating a gap in the population pyramid between the economically active population and those in retirement age that is likely to be filled by immigrants.
5. MYTH: Undocumented immigrants are a burden to the healthcare system.
REALITY: Quite the contrary, immigrants contribute more than they take.
Federal, state and local governments spend approximately US$1.1 billion annually on healthcare costs for undocumented immigrants, aged 18-64, or approximately US$11 in taxes for each U.S. household. This compares to the US $88 billion spent on all health care for non-elderly adults in the U.S. in 2000. Foreign-born individuals tend to use fewer health care services because they are relatively healthier than their U.S.- born counterparts. For example, in Los Angeles County, “total medical spending on undocumented immigrants was US$887 million in 2000, 6% of total costs, although undocumented immigrants comprise 12 percent of the region’s residents.” A 2007 study based on data from the 2003 California Health Interview Survey found that “undocumented Mexicans and other undocumented Latinos reported less use of health care services and poorer experiences with care compared with their U.S.-born counterparts.” In 2007, the Oregon Center for Public Policy estimated that undocumented immigrants pay state income, excise, and property taxes, as well as federal Social Security and Medicare taxes, which “total about US$134 million to US$187 million annually.” In addition, “taxes paid by Oregon employers on behalf of undocumented workers total about US$97 million to US$136 million annually.” As the report goes on to note, undocumented workers are ineligible for the Oregon Health Plan, food stamps, and temporary cash assistance. A study by the Iowa Policy Project concluded that “undocumented immigrants pay an estimated aggregate amount of US$40 million to US$62 million in state taxes each year.” Moreover, “undocumented immigrants working on the books in Iowa and their employers also contribute annually an estimated US$50 million to US$77.8 million in federal Social Security and Medicare taxes from which they will never benefit. Rather than draining state resources, undocumented immigrants are in some cases subsidizing services that only documented residents can access.”
6. MYTH: Undocumented immigrants are responsible for higher crime rates.
REALITY: Current and historical studies show instead that immigration is associated with lower crime rates and lower incarceration rates.
Since the early 1990s, as the immigrant population, especially the undocumented one, increased to historic highs, the rates of violent crimes and property crimes in the United States decreased significantly, in some instances to historic lows - as measured both by crimes reported to the police and by national victimization surveys. Moreover, data from the Census and a wide range of other empirical studies show that for every ethnic group without exception, incarceration rates among young men are lowest for immigrants, even for those who are the least educated. This holds true especially for the Mexicans, Salvadorans, and Guatemalans who make up the bulk of the
undocumented population. These patterns have been observed consistently over the last three decennial censuses, a period that spans the current era of high immigration. One can also recall similar national level findings reported by three major government commissions during the first three decades of the 20th century. The lowest incarceration rates among Latin American immigrants are seen for the groups who account for the majority of the undocumented: the Salvadorans and Guatemalans (0.52 percent), and the Mexicans (0.70 percent).
THE BOTTOM LINE: Undocumented immigrants are an important component of the U.S. economy. They meet the labor demand in sectors in which they do not directly compete with U.S.-born workers. The great majority of migrant workers are taxpaying, hardworking, and law-abiding people who are integrating into U.S. society.