Expensive Aliens: How Much Do Illegal Immigrants Really Cost?

May 21, 2010 — -- It's all about money.

That's what it seems to come down to in the most recent flare-up of the immigration debate. Policy makers and pundits who want tougher policies against illegal immigrants argue that they cost American taxpayers billions of dollars. Those on the other side of the debate counter that illegal immigrants create demand and jobs that promote economic growth.

So which one is it?

The Federation for American Immigration Reform (FAIR), a conservative advocacy group that favors tighter immigration laws, argues that the answer is clear: illegal aliens cost U.S. taxpayers more than $100 billion each year.

Jack Martin, director of special projects for FAIR, says the group is still working on its estimate, but believes undocumented workers leave taxpayers with a fat bill, considering that the government spends money on the workers, and they almost never pay income taxes.

"The study of the fiscal effects of illegal immigration clearly demonstrates that it is a burden on the American taxpayer," says Martin. More forceful implementation of immigration laws could save each U.S. household "in the neighborhood of a couple of thousand dollars a year."

Cost estimates usually only measure the fiscal cost, which weighs government spending (such as on public schools, medical care, incarceration and unemployment benefits) against government income (from income, property and sales taxes.) All those interviewed for this story said they can only make rough estimates, since it's almost impossible to gather accurate data about illegal residents.

Martin argues that more than half of the country's illegal immigrants work in the "underground economy," meaning that they are paid cash under the table, without paying any kind of taxes.

Arizona's Gateway For Illegal Immigrants

States usually bear the brunt of the burden.

Arizona state treasurer Dean Martin says his state loses between $1.3 billion and $2.5 billion each year on illegal immigrants. In addition to the fiscal costs of incarcerating and educating illegal immigrants and their families, Arizona also faces a variety of other indirect costs, says Martin, who favors Arizona's controversial new immigration law.

Arizona has higher car insurance rates, he says, because illegal immigrants who cross the border often steal cars that they use to move further into the country. Undocumented workers are also more likely to perpetrate hit-and-run accidents, he says, because they are afraid of being deported if they are caught. Not only does this add to car insurance rates, but it also stretches police resources, he says.

"Unfortunately we are the gateway for illegal immigration, and that puts a bigger strain on our economy than other states," he says.

Illegal Aliens' Economic Contributions Count Too

Analysts on the other side of the debate, however, disagree with the math behind those numbers.

Wendy Sefsaf, a spokeswoman for the Immigration Policy Center which favors a lenient immigration policy, says that conservative analysts overestimate the costs because undocumented workers don't even qualify for unemployment or medical benefits.

At the same time, those whose jobs are paid legally – at least fifty percent, by some estimates – end up paying social security and other payroll taxes without ever collecting benefits. Since illegal immigrants are believed to constitute up to 5 percent of the U.S. economy, their tax contributions will mean a revenue windfall for legal residents.

Advocates of more lenient immigration policies also disagree with the purely fiscal approach. Simply weighing tax receipts against public spending doesn't show the full picture, they say, since illegal immigrants also create tremendous economic value.

"Illegal immigrants are good for our economy," says IPC's Sefsaf. "They make our labor force and our economy bigger. Sure, you could kick them all out, but then you would have to shrink the economy."

Sefsaf also doesn't buy the traditional argument that illegal immigrants are stealing U.S. jobs: most legal residents work in middle-rung jobs and would not want to take low-paying jobs as fruit pickers or nannies.

After weighing the financial pros against the cons, she says the U.S. economy comes out slightly ahead due to the presence of illegal aliens.

The Cost of Illegals: A Moot Point?

Jeffrey Passel, a senior demographer at the Pew Hispanic Center, takes the debate one step further. He points out that most attempts to find a meaningful number are usually futile, since the data are so difficult to collect. And anyway, he says, what is the point?

"We don't generally ask these questions about anybody else," says Passel. He points out that using the "cost" argument, one could make a case against parents who generally benefit more from public schools than the taxes they pay. "It's not a subject that there is a definitive answer to."