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Immigration has ranked with corn and cars as a mainstay of American economic growth. The traditional theory is simple: energetic workers increase the supply of goods and services with their labor, and increase the demand for other goods and services by spending their wages. A benign circle of growth uncurls as a widening variety of workers create rising riches for each other. Two hundred years of U.S. history seem to confirm this theory. Yet the perception today is that immigration is a drag on the economy, not a lift. In truth, it's both. "The short-term costs of immigration today are much higher," says Michael Boskin, formerly chief economist to George Bush, "but in the long run, immigrants are still great news for our economy."
The NEWSWEEK Poll shows that 62 percent of those surveyed worry that immigrants take jobs away from native-born workers. That can be true in times of high unemployment. In California, where the jobless rate is 9 percent, immigration is soaring and native-born Americans are actually leaving to find work in other states, some temporary displacement may be occurring. But in normal times, any job loss is more than offset by the creation of new jobs stemming from the immigrants' own work. The immigrants' new spending creates demand for housing, groceries and other necessities, and their employers invest their expanding profits in new machinery and jobs. "It is called competitive capitalism," says Tony Carnevale of the American Society for Training and Development, "and it works. It's how America got rich."
Two forces, however, have recently helped to undercut the benefits of immigration: the welfare state and the steep decline in the skill levels of immigrants since 1970. In the last great decade of immigration, 1900 to 1910, public education and a little public health were the only services provided to those migrating to New York and other Northeastern cities. One third of the new immigrants simply failed and moved back home. Today dozens of welfare programs--from food stamps to unemployment compensation--cushion failure and attract immigrants who might otherwise stay home. In California, children born to illegal parents now account for one in eight beneficiaries of one program alone, Aid to Families with Dependent Children (AFDC). The state-run Medicaid program provided $489 million in health care to more than 400,000 illegal aliens last year. Legal aliens got hundreds of millions more.
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Donald Huddle, an immigration expert at Rice University, recently calculated that the 19.3 million legal, illegal and amnestied aliens accepted into the United States since 1970 utilized 850.8 billion worth of government services last year. They paid $20.2 billion in taxes. So the net burden on native-born taxpayers was $30.6 billion--a social-welfare cost per immigrant of $1,585. Huddle projects these immigrants will cost taxpayers another $50 billion a Year on average over the next 10 years.
A decline in the skills of new immigrants helps to explain these numbers. Ninety percent of current immigrants arrive from Third World countries with income and social-service levels one tenth or even one twentieth those of the United States'. Their education levels relative to those of native-born Americans are steadily declining. So are their earnings. George Borjas of the University of California, San Diego, says that in 1970 the average immigrant actually earned 3 percent more than a native-born American but by 1990 was earning 16 percent less. "Each year the percentage is heading downward," says Borjas. What's more, welfare dependency has steadily climbed and is now above that of native-borns. In 1990, 7.7 percent of native Californians received public assistance vs. 10.4 percent of new immigrants.
The welfare costs of immigration should dramatically decrease as the California and U.S. economies recover. The long-term benefits of immigrant labor and business enterprise will then be more apparent. But the age of innocence in the American immigration experience is over. The rise of the U.S. welfare state has placed a cushion under the immigrant experience--and diminished the benefits of immigration to the country at large.
Was immigration a good thing or a bad thing for this country in the past? 59% Good thing 31% Bad thing Is immigration a good thing or a bad thing for this country today? 29% Good thing 60% Bad thing Is the U.S. still a melting pot, or do immigrants today maintain their national identity more strongly? 20% Still a melting pot 66% Maintain identity
THE NEWSWEEK POLL, JULY 29-30, 1993
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