Recent Immigrants - An Increasing Welfare Burden

By Wayne Lutton
Volume 7, Number 1 (Fall 1996)
Issue theme: "'Anchor babies' - the citizen-child loophole"

"Immigration and the Welfare State

Immigrant Participation in Means-Tested

Entitlement Programs"

by George J. Borjas and Lynette Hilton

The Quarterly Journal of Economics

Volume CXI, Issue 2, May 1996, pp. 575-604

Are recent immigrants contributing to our welfare burden? For years, anti-limitationists, such as Julian Simon and Jack Kemp, have argued that immigrants are a boon to the economy and are less likely than native-born Americans to use welfare programs. A new report by Harvard economist George Borjas and co-authored by Lynette Hilton indicates that the United States has indeed become a "welfare magnet" for immigrants from around the world. When both cash and non-cash welfare programs are taken together, by the early 1990s, in typical month 20.7% of immigrant households were using welfare, compared to 14.1% of native households, and 10.5% of white, non-Hispanic native households. In less than a decade, the immigrant-native "welfare gap" more than doubled.

Borjas and Hilton note that focusing only on cash benefit programs badly understates over-all welfare use. Cash benefit programs, such as Aid to Families with Dependent Children (AFDC) or Supplemental Security Income (SSI) account for less than a quarter of the cost of all means-tested programs. Non-cash programs include Food Stamps, Medicaid, and housing subsidies.

Using data taken from the Survey of Income and Program Participation (SIPP), rather than relying only on the Census Bureau, which does not provide any information about non-cash welfare enrollment, the authors found that immigrant households "experience both more and longer welfare spells. Immigrant households spend a relatively large fraction of their time participating in some means-tested program...[I]mmigrant households are more likely to participate in practically every one of the major means-tested programs.@

Immigrants were also found to account for a disproportionately large fraction of the costs of major benefit programs, such as 16.6 percent of the costs of AFDC, 18.4 percent of the cost of SSI, 11.5 percent of the costs of Food Stamps, 14.1 percent of the costs of Medicaid, and 19 percent of the cost of school breakfasts and lunches. All told, the 8.8 percent of persons living in immigrant households accounted for 13.8 percent of our national welfare costs C almost 60 percent more than their percent of the population.

The available data show that Aimmigrants are more likely to be exposed to the welfare system and are also more likely to become >permanent= recipients.@ Moreover, Amore recent immigrant cohorts are more likely to participate in welfare programs than earlier cohorts and ...immigrants in a particular cohort of arrival are more likely to receive benefits the longer they have lived in the United States.@ What seems clear is that immigrants are having little trouble assimilating into the welfare state.

Being an immigrant as such does not explain why they are on welfare at higher rates than native-born Americans. Rather, current U.S. policy allows people into the country who possess socio-economic characteristics that are highly correlated with welfare use. As Borjas and Hilton point out, Aa small number of observable socio-economic characteristics can be used to screen the pool of potential immigrants and to assess the probability that a visa applicant will become a welfare recipient upon entry in the United States.@

As Table IV from their report reveals (reprinted below), various national origin groups tend to receive particular types of welfare benefits. Borjas and Hilton, citing the work of Don Barnett and Norman Matloff, agree that networking is taking place, with particular ethnic communities encou-raging their fellows to participate in select programs.

AImmigration and the Welfare State@ is an important article that should go far in closing the debate on this particular aspect of immigration policy.

It simply cannot be honestly argued that immi-gration is a cost-free benefit to United States taxpayers.

[This journal is taken by many college and public libraries; back issues are $14.00 each and can be purchased from The MIT Press Journals, 55 Hayward Street, Cambridge, MA 02142.]