How does illegal immigration both hurt and help state economies?

Illegal immigration costs the taxpayers of California – which has the highest number of illegal aliens nationwide – $10.5 billion a year for education, health care and incarceration, according to a study released yesterday.

A key finding of the report by the Federation for American Immigration Reform (FAIR) said the state’s already struggling kindergarten-through-12th-grade education system spends $7.7 billion a year on children of illegal aliens, who constitute 15 percent of the student body.

The report also said the incarceration of convicted illegal aliens in state prisons and jails and uncompensated medical outlays for health care provided to illegal aliens each amounted to about $1.4 billion annually. The incarceration costs did not include judicial expenditures or the monetary costs of the crimes committed by illegal aliens that led to their incarceration.

“California’s addiction to ‘cheap’ illegal-alien labor is bankrupting the state and posing enormous burdens on the state’s shrinking middle-class tax base,” said FAIR President Dan Stein.

“Most Californians, who have seen their taxes increase while public services deteriorate, already know the impact that mass illegal immigration is having on their communities, but even they may be shocked when they learn just how much of a drain illegal immigration has become,” he said.

California is estimated to be home to nearly 3 million illegal aliens.

Mr. Stein noted that state and local taxes paid by the unauthorized immigrant population go toward offsetting these costs, but do not match expenses. The total of such payments was estimated in the report to be about $1.6 billion per year.

He also said the total cost of illegal immigration to the state’s taxpayers would be considerably higher if other cost areas, such as special English instruction, school meal programs or welfare benefits for American workers displaced by illegal-alien workers were added into the equation.

Gerardo Gonzalez, director of the National Latino Research Center at California State at San Marcos, which compiles data on Hispanics, was critical of FAIR’s report yesterday. He said FAIR’s estimates did not measure some of the contributions that illegal aliens make to the state’s economy.

“Beyond taxes, these workers’ production and spending contribute to California’s economy, especially the agricultural sector,” he said, adding that both legal and illegal aliens are the “backbone” of the state’s $28 billion-a-year agricultural industry.

In August, a similar study by the Center for Immigration Studies in Washington, said U.S. households headed by illegal aliens used $26.3 billion in government services during 2002, but paid $16 billion in taxes, an annual cost to taxpayers of $10 billion.

The FAIR report focused on three specific program areas because those were the costs examined by researchers from the Urban Institute in 1994, Mr. Stein said. Looking at the costs of education, health care and incarceration for illegal aliens in 1994, the Urban Institute estimated that California was subsidizing illegal immigrants at about $1.1 billion a year.

Mr. Stein said an enormous rise in the costs of illegal immigrants in 10 years is because of the rapid growth of the illegal population. He said it is reasonable to expect those costs to continue to soar if action is not taken to turn the tide.

“1994 was the same year that California voters rebelled and overwhelmingly passed Proposition 187, which sought to limit liability for mass illegal immigration,” he said. “Since then, state and local governments have blatantly ignored the wishes of the voters and continued to shell out publicly financed benefits on illegal aliens.

“Predictably, the costs of illegal immigration have grown geometrically, while the state has spiraled into a fiscal crisis that has brought it near bankruptcy,” he said.

Mr. Stein said that the state must adopt measures to systematically collect information on illegal-alien use of taxpayer-funded services and on where they are employed, and that policies need to be pursued to hold employers financially accountable.

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President George W. Bush in January announced his principles for a temporary worker program and regularization of the status of some of the nation’s 7 million to 11 million undocumented immigrants. Democrats responded with legislation by Sen. Edward Kennedy of Massachusetts and Rep. Luis Gutierrez of Chicago. And the partisan race is on for the increasingly important Latino vote in November.

The issue is of deep interest to Illinois’ business community, which should make itself heard.

Undocumented immigrants play an important economic role: There are some 500,000 undocumented immigrants in Illinois. They fill critical low-wage labor needs. Our agricultural, manufacturing, restaurant, tourism, health care and service industries would grind to a halt without them. We can continue to turn a hypocritical blind eye to the obvious, or address real world problems pragmatically.

Immigration policies that respect the market demand for labor will restore the rule of law in the U.S.: Inflexible immigration policies result in massive flows of illegal labor, with both workers and employers complicit in the hypocrisy. The Illinois economy is global. Over 94% of the net labor-force growth in the Chicago area during the 1990s was attributable to immigrant workers.

Reform will facilitate the movement of skilled workers and business professionals to meet market needs, create a legal flow of temporary workers with strong labor protections and allow the vast underground of hard-working undocumented workers to come out of the shadows.

Legalization will unleash the economic potential of Illinois’ immigrant communities: Chicago’s banking community was shocked by the influx of $100 million in immigrant savings in the few short years since banks began accepting the “matricula consular” (consular ID) issued by the Mexican government to its foreign nationals in the U.S. Several weeks ago, Crain’s wrote about the thriving market in home mortgages for the undocumented, despite the lack of a secondary market. The entrepreneurial engine of the Mexican-American community in Chicago, the 26th Street business district, pays the second-highest amount of sales tax after the Magnificent Mile along North Michigan Avenue.

Security: There is a tiny group of people who would enter this country to hurt us. The existence of large, increasingly sophisticated networks of smugglers of human beings and purveyors of false IDs, serving millions of undocumented who want only to work, is bad for national security. Legalization will reduce the demand for human smuggling and false IDs.

The moral imperative: I come from a tradition of Catholic business people who take their faith seriously. Many in the business community would agree that it is a moral outrage that we have ended up with a large underground of vulnerable workers and children, where a family of four earns on average $10,000 less a year than legal workers. It may be very convenient to have these people cleaning our homes, caring for our children and cutting our grass on the cheap, with no prospect of bettering their lives. But a sense of right and wrong, as much as economic and security imperatives, is a fine reason for the business community to speak out on this issue.

How do the views presented in the articles differ? How does illegal immigration both hurt and help state economies? Do you feel that the author’s of these two articles are ignoring each others side, or is it possible that the Illinois economy is simply better equipped to absorb illegal immigration? Before answering this final question make sure to consider the affiliations of the authors.


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