Mexican Immigrants are a Bargain for the Welfare State


One of the most potent arguments against relaxing U.S. immigration policies, especially toward countries south of the border, is the fear that importing poor foreigners will mean more strain on the welfare state. But a new Cato study

using the most recent census data has found that compared to low-income native born, foreigners are a bargain. Conducted by Leighton Ku and Brian Bruen of George Washington University, the study finds: 

Low-income non-citizen immigrants, including adults and children, are generally less likely to receive public benefits than those who are native-born. Moreover, when non-citizen immigrants receive benefits, the value of benefits they receive is usually lower than the value of benefits received by those born in the United States. The combination of lower average utilization and smaller average benefits indicates that the overall cost of public benefits is substantially less for low-income non-citizen immigrants than for comparable native-born adults and children.

Go here for the whole study.

A couple of observations:

One: Although these findings are consistent with many previous studies, it is at odds with those of restrictionist outfits such as the Center for Immigration "Studies." Why? Because these outfits include naturalized citizens in their data. But if naturalized citizens use the same benefits as the native born, then that's an argument against naturalization, not against immigration per se. (I am not endorsing this, just pointing out the logical limits of how far anti-immigrant organizations can stretch their case.)

Two: As foreigners move into the lower class, Cato's Dan Griswold brilliantly pointed out here, the native-born move into the middle class. Cheaper goods and services due to foreign labor boost the real-wages of all Americans, of course. But a foreign-born lower class also means that the native born no longer have to do backbreaking, menial work. That's  because their native language and other cultural skills become relatively scarcer, hence commanding a better premium in the labor market. They get pushed up into supervisory jobs that require more customer interaction, for example. (I discuss this point at greater length here.) This expanded income mobility of the native born means that they consume less welfare too.

In short, it is far cheaper for the country to have a foreign born lower-class not only because it consumes less welfare than the native born, but also because it lowers the welfare use by the native born.

So, I say, let 'em in: It's a win-win-win.

Update: David Friedman just informed me that he made an argument identical to the one above about the foreig-born fueling the class mobility of natives in his Machinery of Freedom. Money quote:

The new immigrants will drive down the wages of unskilled labor, hurting some of the present poor. At the same time, the presence of millions of foreigners will make the most elementary acculturation, even the ability to speak English, a marketable skill; some of the poor will be able to leave their present unskilled jobs to find employment as foremen of 'foreign' work gangs or front men for 'foreign' enterprises.