Illegal immigration burdens local, state government

November 17, 2010 

Hundreds of thousands of illegal immigrant workers keep the Central Valley's economy humming — at a price.

Even though they help businesses by providing cheap labor and lower the costs of goods and services, they are a burden on local governments because they pay little in taxes, economists say. Their low wages, not their work ethic, are to blame.

That means the rest of us pay higher taxes or must get by with fewer government services to keep illegal immigrants here.

"So you're like, 'I only paid $2 for strawberries' — but then you get a notice about taxes going up, and you might not think those two things are connected," said Steven Camarota, a researcher with the Washington, D.C.-based Center for Immigration Studies, which supports stricter immigration enforcement.

Just how much illegal immigrants burden taxpayers is hotly debated. Even though they have limited access to public services, their U.S.-born children can get a free education and sometimes qualify for welfare and food stamps. Meanwhile, illegal immigrants contribute little in taxes because they are either paid off the books or make bare-bones wages.

The nonpartisan Congressional Budget Office says state and local governments are hit hardest. The Washington, D.C.-based Federation for American Immigration Reform, which advocates for less immigration — both legal and illegal — estimates that the state of California and local governments will spend $21.8 billion this year for services for illegal immigrants and their children.

Illegal immigrants still help the economy because their cheap labor drives down the cost of products and services — an issue The Bee will examine tomorrow. But those savings are canceled out by the cost to government services — at least on a national level, some economists say.

In the Central Valley, both their positive and negative impacts are amplified because of our dependence on them. Businesses benefit in a big way while taxpayers cover the costs.

"Residents have to pick up the tab and employers get away with paying those workers less," said Gordon Hanson, an economics professor at the University of California at San Diego, who grew up in Fresno.

Not every illegal immigrant is a burden to the government. Take Nacho, for example. He snuck across the border 23 years ago, picked grapes in Raisin City for $4.25 an hour and worked his way up to ranch manager. Now he earns about $50,000 a year, owns a house in Kerman, is raising a family and pays his taxes. He doesn't receive government aid.

But Nacho is the exception. The median household income for illegal immigrants nationally is $36,000 — well below the $50,000 median household income for U.S.-born residents, according to the Pew Hispanic Center. Illegal immigrant farmworkers, who usually work only part of the year, earn even less. About one-fifth of adult illegal immigrants and one-third of their children live below the poverty line — almost double the poverty rate for U.S.-born residents.


Although their taxes may be small, illegal immigrants do pay them. That's because most come here to work.

The Center for Immigration Studies estimated that in 92% of illegal immigrant households in 2007, at least one person was working; the same was true for only 73% of households headed by a U.S.-born resident. The Pew Hispanic Center has made similar estimates. Illegal immigrants usually have higher employment rates because they'll work at almost any job and are more mobile than U.S.-born workers and legal immigrants, experts say.

Even though many are paid under the table for housecleaning, yard work and day-labor, most work for companies that deduct taxes from their employees' pay. Illegal immigrants also pay sales taxes and property taxes.

Several research organizations estimate that about 55% of illegal immigrants are paid on the books, with taxes withheld. The Center for Comparative Immigration Studies found that 75% of illegal immigrants in 2006 were taxed.

Many illegal immigrants who file tax returns use Individual Tax Identification Numbers issued by the IRS instead of the falsified Social Security numbers that they often use to get their jobs. A Treasury Department inspector general's report found that in the 2007 tax year, $2.4 billion in child tax credits went to filers using individual ID numbers, most of whom are illegal immigrants. But many don't file returns at all because they don't want to risk government attention, which means they miss out on refunds. That money stays with the government.

A big part of illegal immigrants' tax contributions is in Social Security deductions. Federal law prohibits illegal immigrants from collecting retirement benefits, but the Social Security Administration estimates about half of illegal immigrants pay Social Security taxes. In fiscal year 2007, about $11 billion in taxes withheld from W-2 filings could not be matched with valid Social Security numbers. The government estimated much of that came from illegal immigrants.

But the recession hasn't spared illegal immigrants, which means their incomes and tax contributions have likely decreased. Many who found jobs in construction — which pays more and offers better opportunities for upward mobility than farming — have since returned to lower-paying agricultural jobs.

Pastor Alfred de la Cerda, who oversees an Orosi congregation of about 150 — mostly illegal immigrants — said most worked in the fields when they first got here, but they eventually found jobs as electricians, painters and builders. In recent years, as the economy has soured, he said, "a lot of them went back to the fields."


Although illegal immigrants pay taxes, that revenue doesn't cover all the services they receive — especially for their children.

They can't get cash-aid welfare, food stamps, unemployment, Social Security benefits or Medicare, but their U.S.-born children can. Also, in California, illegal immigrants can receive emergency services and prenatal care through Medi-Cal. In addition, many illegal immigrants are among the uninsured who qualify for some medical services that are paid for by the federal government. They also add to the cost of police, fire and court services.

Here is a sample of what studies have found:

  • In 2002, when there were about 9 million illegal immigrants, the federal government spent $26.3 billion on them and their children and collected $16 billion in federal taxes from them. But barring illegal immigrants from access to government programs wouldn't have saved much money because about half the cost is for their U.S.-born children, who are U.S. citizens. (From the Center for Immigration Studies.)
  • In 2007, illegal immigrant households in California got an estimated $8 to $12 in state services for every $1 they paid in state taxes. They consumed about 22% of the California budget. (From Philip Romero, a business professor at the University of Oregon who advised former California Gov. Pete Wilson on the impact of illegal immigrants on the state budget.)
  • Some researchers have found, however, that illegal immigrants use less public aid than legal immigrants and U.S.-born residents — even when they are eligible for it — because of language barriers, unfamiliarity with the system and fear that they'll have to disclose their legal status.

Studies show:

  • Illegal immigrants are 50% less likely than U.S.-born Hispanics to use emergency rooms in California – even if they have health insurance. (From UCLA School of Public Health.)
  • About 15% of illegal-immigrant farmworkers use public aid. Legal immigrant farmworkers use government aid more than twice as much. (From Anita Alves Pena, an economics professor at Colorado State University.)

Critics have argued that generous government services attract illegal immigrants. But in a study released earlier this year, Pena found that illegal immigrants rarely relocate to other states to take advantage of public aid. Factors such as family ties and job opportunities are more important.

Some illegal immigrants are determined to get by without government help. Maria-Elena cleans homes and raises seven children in Fresno with her husband, who works at a factory. Despite the fact that the family is often short on money, they won't accept welfare for their U.S.-born children. Her husband says they don't need it.

"In his mind, he doesn't want to get any help from the government," she said.


Would deporting all illegal immigrants solve the problem? Some economists say it would just make things worse, especially in the short run.

Because illegal immigrants play such a central role in the economy — especially in places such as the Central Valley — yanking them out all at once would shut down some businesses.

The Perryman Group, an economic analysis firm, estimated that deporting the 8 million illegal immigrant workers would mean $651.5 billion in lost economic output and more than $1.7 trillion in lost annual spending. In addition, estimates for the cost of deporting all illegal immigrants vary from $100 billion to $200 billion.

"Just doing away with them would be harmful from a human point of view and an economic one," said Giovanni Peri, an economics professor at the University of California at Davis.

Similarly, some researchers say that granting amnesty to illegal immigrants would not help — at least in the short run — because immigrants' income depends more on their education level and work experience than their legal status.

Amnesty could stress governments even further because immigrants would have more access to public services such as welfare if they become citizens, which usually takes about five years.

"It's not the solution to our current economic problems" said Magnus Lofstrom, a researcher at the Public Policy Institute of California.

Some argue, however, that amnesty would raise immigrant wages at least modestly.

With legalization, full-time immigrant workers in California would earn about 9.5% more a year and pay $310 million more in state income taxes and $1.4 billion in federal income taxes, the University of Southern California's Center for the Study of Immigrant Integration concluded in a study this year.

Several illegal immigrants interviewed said they believe they could get better, higher-paying jobs — and pay more taxes — if they could get amnesty.

Gracilia, who lives in Orosi and is taking English classes, said she and several other students were interested in applying for jobs with the U.S. Census Bureau earlier this year, but they were turned down because of their legal status. She also wants to work at Head Start, which provides education and health services to low-income children, but she knows she needs to go to school for that — and she can't get financial aid because she is an illegal immigrant.

Said Gracilia: "It's frustrating because if you have papers, you can get a driver's license, you can study and you can get a better job."

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The reporter can be reached at (559) 441-6412 or ccollins@fresnobee.com.