The proposed Wall/fence that dominates the news right now is at least partly about economics. People who make it across the border are then entitled to make an asylum claim and live in the U.S. for years of administrative processing and, if successful, live in the U.S. forever. They can collect welfare while doing this. Their children and grandchildren born on the U.S. side of the border can collect welfare as well. Advocates for an open border (“A wall, in my view, is an immorality.” — Nancy Pelosi) say that taxes paid by migrants exceed the welfare cost. Let’s look at this…
A reader of an earlier post cited “The Economic and Social Outcomes of Refugees in the United States: Evidence from the ACS” (NBER) as evidence that we are running a profit on our refugee industry:
“By the time refugees who entered the U.S. as adults have been here for 20 years, they will have paid, on average, $21,000 more in taxes to all levels of government than they received in benefits over that time span, according to a working paper released Monday by the National Bureau of Economic Research that examined the economic and social outcomes of refugees in the U.S.”
So if we believe the expert economists at NBER and don’t dig into the paper, we make a profit of $1,050 per year on every refugee who arrives as an adult. The Federal deficit of $779 billion for FY2018, therefore, could be wiped out if we simply admitted 741,904,761 adult refugees, e.g., by asking most adults in India or China to move here and spin an abuse yarn.
When we dig a little deeper, though, it seems that the economists have had their thumbs on the scales (or somewhere else?). An “adult” is defined by the researchers as 18-45, but refugees are admitted without any age limit. A disabled 70-year-old has the same right to asylum as an able-bodied 22-year-old.
Suppose that all refugees were actually aged 18-45 and the economists had gotten the rest of the analysis correct. Would refugees yield a net profit? They’re paying more than they’re taking so they’re not “takers,” right? The Abstract reveals one question to explore: “After 6 years in the country, these refugees work at higher rates than natives but they never attain the earning levels of U.S.-born respondents.” Even for this cherry-picked age subset, the idea is that we’ll become richer overall by having lower earnings on a per-capita basis (and of course anyone in the U.S. income inequality industry will have an uglier statistic to wave around). Can that work?
The paper looks at six government welfare programs: “There are six social insurance programs that account for the majority of government payments to U.S. citizens: welfare, Supplemental Security Income (SSI), Social Security, food stamps, Medicare, and Medicaid.”
What if we subtract the cost of these programs from the total cost of running local, state, and federal government and then see if $1,050 per year per person will pay for the remainder? If we budget the above subset of welfare at $2 trillion per year and subtract from about $7.5 trillion per year in total spending (source) we get $5.5 trillion. Divide by a population of 328.4 million (popclock) and we find that it takes $16,748 per person to fund our government minus these headline welfare programs.
Each refugee paid a net $1,050 per year and consumed an additional roughly $15,700 in government services (roads, schools, libraries, police and fire protection, etc.). Over a 20-year period, then, the refugee took approximately $314,000 from other taxpayers.
Did the economists even begin to do a full cost accounting, though?
As of 2012, there were 79 Federal means-tested welfare programs (Heritage). The NBER looked at only 6.
Since the refugees never get to the median U.S. income, the typical refugee never gets above the 400 percent of poverty disqualification threshold for Obamacare health insurance subsidies. The typical refugee would also be eligible for public housing, a program that can be worth $60,000+ per year per family in the NBER’s home town of Cambridge, Massachusetts and yet they didn’t think it was worth including.
If we assume $5,000 per year in health insurance subsidies and $20,000 per year in public housing subsidies per refugee, over a 20-year period the best-case refugee now costs $814,000. That best-case refugee showed up during his or her core working years.
Once across the border, of course, the best-case refugee or asylum seeker should live for longer than 20 years. Would it be fair to round up the total cost to $2 million? Therefore if $5 billion is spend on an immoral wall/moral fence it has to stop 2,500 migrants in order to pay for itself in pure economic terms?
[Of course, there is more to life than money. We might have other reasons for wanting an open border, e.g., superior morality, loneliness if the U.S. population remains stuck near 330 million, etc.]
Readers: Did I miss anything? Or is $814,000 over 20 years a reasonable estimate? Also, how can people imagine that someone who pays a net $1,050 per year in tax is going to be of any real help in keeping the U.S. government going?