Economics

Thoughts on earned legalization and the Heritage immigration study

Image Credit: Shutterstock

Image Credit: Shutterstock

The Heritage Foundation has released a report aimed at scuttling comprehensive immigration reform, much as it helped end the 2007 effort. The report presents overwhelmingly negative estimates of the fiscal cost of granting legal status to unauthorized immigrants.

The report makes a number of valid points and should be commended for its thoroughness. But should we take away from it that Congress should not create a pathway to legal status for the current population of 11-plus million unauthorized immigrants? The answer is no.

What the report reveals is not the broken nature of our current immigrant system — something we already know — but rather the broken nature of our welfare state. The report notes that the average US household headed by someone without a high school degree received, on average, $35,113 more in government benefits than it paid in taxes in 2010. The report then notes that many unauthorized immigrants have low education levels and, if allowed to legalize their status, would eventually become eligible for government benefits just like everyone else. This would result in billions more flowing to those households every year than they pay in taxes.

The problem here is not offering legal status to a population that largely has been working hard, paying taxes, and contributing to the economy. The problem is the growth of government programs, the perverse incentive effects that those programs create, and the failures of our education system.

Unauthorized immigrant men have the highest labor force participation rate of any group in the US. These workers primarily fill arduous and hazardous jobs that many Americans are unwilling to take. The Congressional Budget Office estimates that the majority of unauthorized immigrant workers pay income or payroll taxes despite being ineligible for almost all government transfer programs, including Social Security (although their US-born children are eligible on the same basis as all other US natives).

Consider the alternatives to a legalization program. Should we deport all unauthorized immigrants? Doing so would be costly and would wreak havoc on an already-fragile economy.

Should we increase worksite enforcement in the hopes unauthorized immigrants will leave voluntarily? Tough enforcement policies not accompanied by comprehensive immigration reform are counterproductive. Research shows that worksite enforcement and other measures have forced some unauthorized immigrants into self-employment or the shadow economy, where wages are lower and fringe benefits (such as employer-subsidized health insurance) are scarce. This exacerbates the fiscal cost of unauthorized immigrants by reducing the taxes they pay and increasing their families’ need for public assistance. There’s also little evidence it has prompted immigrants to leave the country in large numbers.

Should we just turn a blind eye toward unauthorized immigrants without offering them legal status? This essentially describes US policy during the 1990s. But accepting the existence of a large unauthorized population is counter to the rule of law. And it misses the opportunity to capture the economic gains from a legalization program.

A legalization program makes the economy more efficient. Beneficiaries of 1986’s IRCA legalization program saw their wages rise by 6% to 13% after earning legal status. Most of those gains resulted from moving into better jobs. This points to efficiency gains: Unauthorized immigrants are stuck in a limited number of sectors because they lack legal status. Acquiring legal status benefits not only them but also the broader economy because it makes better use of the skills of people who are already here and participating in the labor market.

The fact that these immigrants would receive more in benefits than they would pay in taxes if they legalize their status does not mean that the US should not have an earned legalization program — it means that the US should reform its government transfer programs.

Finally, the programs currently being discussed in Congress are earned legalization, not amnesty. Amnesty implies a complete pardon with no negative consequences. S.B. 744, in contrast, requires that participants in its main legalization program pay any back taxes owed and a total of $2000 in fines and fees. S.B. 744 involves specific triggers and lengthy waiting times before most unauthorized immigrants would be able to legalize their status. It’s a tough bill, not an easy ticket to the gravy train.

Editor’s note: This post was initially published missing the last three paragraphs — this was an error on the editors’ part, not the author’s.

11 thoughts on “Thoughts on earned legalization and the Heritage immigration study

  1. Should we continue to pump gas into a tank that is leaking? Yes, the welfare system is screwed up, perhaps even more so than immigration. But that doesn’t mean we should open the immigration floodgates even further.

  2. “Earned legalization” says our laws mean nothing. While many of these people have been here for years, and lax enforcement of our laws had continued to make this illegal immigration status fuzzier, nonetheless they have entered here illegally.
    I do have compassion for these people. They saw that the law wasn’t being enforced, and acted accordingly. And there are multiple areas of Mexico (as an example…I know many other countries are represented) where there are no jobs and dangerous crime.
    As for the “innocent” children of illegal aliens (immigrants refers to a time when people came here seeking refuge, and were proud to become Americans), they are the subject of argument (not born here of two people subject to the laws of this country). For a not so far-fetched analogy: Let’s say my father stole a million dollars ten years ago. I show up with it today. Am I supposed to be entitled to it now, as it was obtained by illegal means? Isn’t that what the current law re. immigration status ignores? Benefit from stolen goods.

    The government is doing an awful job of checking for fraud as it pours our money into people who are not qualified to receive it. Not just illegals. This outrage should be immediately addressed.

    The job market comments above are duly noted.

  3. The only logical conclusion to your arguments is that legalization should only be an option after welfare reform is implemented. Is that what you are advocating? It doesn’t look like it.

  4. In her article in Blaze, Professor Zavody argued,
    “Immigrants who do not have a high school diploma are more likely to be working than Americans who have not graduated from high school. These low-skilled immigrants fill an important niche in the labor force, taking dirty, dangerous and dull jobs that few Americans are willing to do, especially when there are myriad welfare programs they can turn to instead.”
    The existence of welfare programs was implied to be inevitable, and argued to be a reason why low-skilled immigrants were needed. But now when Heritage points out “immigration reform” increases the number of people eligible for welfare programs, Professor Zavody states that the existence of such programs is the problem.
    Professor Zavody also argues that it is unrealistic to expect voluntary repatriation after immigration enforcement. She may be right about this, but isn’t abolishing the welfare state even more unrealistic?

  5. What if we (the taxpayers) paid 100,000 unauthorized immigrant households $10,000 each in conditional moving expenses, in order to facilitate voluntary repatriation? My program would cost $1 billion, but if Heritage’s analysis is correct, then in the long term my program would save taxpayer money.

  6. Why spend trillions on illegals??? Is there a shortage of welfare bums who won’t speak English and take our jobs for half the pay? Who should our politicians put first: citizens or criminal foriegners? This amnesty program will destroy our country and why are we doing it? So the Democrats can increase their voter base.

  7. I’m glad we get to see Professor Zavodny’s last 3 paragraphs. If amnesty increases wages for unauthorized immigrant workers, then I agree with Professor Zavodny that this is a positive effect and a reason to support amnesty. (One can support the idea of amnesty while strongly opposing the Gang of Eight proposal, which lacks effective enforcement provisions and which expands legal immigration, including harmful “guest worker” schemes.) However, research by Ottoviano and Peri shows that ongoing immigration substantially LOWERS wages for previous immigrant workers. So if we are concerned that unauthorized immigrants are being paid too little, then we should end ongoing immigration.

  8. I agree with Professor Zavodny that “the US should reform its government transfer programs”, but I don’t know what kind of reform she has in mind.
    How will welfare reform fix the problem Professor Zavodny acknowledges, namely that “these immigrants would receive more in benefits than they would pay in taxes if they legalize their status”?
    Does Professor Zavodny want to abolish Medicaid? County hospitals? County health departments? Bilingual services? Head Start? Public education?

  9. Some of what you say makes sense, but this argument is garbage:

    “These workers primarily fill arduous and hazardous jobs that many Americans are unwilling to take.”

    It is pretty sad when David Frum (David Frum!!), who said the following, gets it and AEI doesn’t:

    “The great unspoken question in the immigration debate is whether this “living in America” wage premium is a benefit to be cherished or a problem to be overcome. To a startling extent, political leaders agree: the wage premium is a problem—and immigration is the answer.

    That point of view is seldom phrased quite so bluntly. Instead we hear concern about “labor shortages,” “skills mismatches,” and “jobs Americans won’t do.” In a market economy, however, there are no shortages. There is always a price at which supply will rise to meet demand. Sometimes that price takes the form of higher pay. Sometimes it takes the form of capital investments to reduce a job’s difficulty or danger.”

  10. Can we agree that basic rationality involves choosing policies for the world you DO live in, rather than the world you would like to live in?

    Isn’t a lack of realism about incentives and other things a hallmark of Liberalism? E.g., pretending that criminals are just nice people who have to steal a loaf of bread for their families, who will behave well if we just treat them properly?

    What do we think of people who pick policies based on such dreamwork reasoning?

    They inspire our contempt.

    Ditto for choosing an immigration policy by pretending that the rest of our society is some libertarian dreamworld country that has never existed and has zero chance of materializing.

    Why is it not obvious to you, Ms. Zavodny, that a rational argument has to deal with the world as it is, not the world as Ms. Zavodny would have it be?

    Sheesh.

  11. Immigration Revelation…
    A solution to assist in the Immigration Debate:
    A commitment for each Congressman(and the President) that votes for any bill to give “amnesty” or ANY worker program to illegal immigrants should have to sponsor a percentage of those illegal immigrants to ensure that they should not be burdens to the state.
    For any LEGAL immigrant that applies to the US must be able to prove that it will not be a burden upon the state. One way to ensure solidarity is to have a sponsor. This sponsor would pay for legal fees, keep the immigrant off of welfare, and ANY would assist in any monetary need.
    This should result in 1 Govt Congressman to 25 to 30K SPECIALIZED immigrants. (Even 10K would be a great number)

    I oppose any form of Amnesty or Program so lets place some true responsibilities upon our congressmen to make them think about what unforeseen consequences are.

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