$2.0 Billion Annual Fiscal Costs
The Federation of Americans for Immigration Reform (FAIR) has just released a multi-resourced report entitled, The Fiscal Burden of Illegal Immigration on North Carolinians. (See www.fairus.org) With 410,000 illegal immigrants, 4.3 percent of the population, North Carolina ranks 11th among the states impacted. At the end of 2013, the state had 323,000 or 6.9 percent unemployed, ranking 17 out of 50 states in percentage unemployed.
The fiscal costs of illegal immigration in North Carolina are estimated at $2.0 billion per year or 9.7 percent of the state’s $20.7 billion annual budget. This is $578 annually for each North Carolina native or naturalized citizen household. In 2013, the North Carolina General Assembly passed an “immigration enforcement” bill that actually weakened immigration enforcement. This bill, HB 786, was essentially a special interest bill for agriculture, restaurant, hospitality, and construction associations. Both the North Carolina Chamber of Commerce and the North Carolina Farm Bureau lobbied heavily for its passage.
HB 786 was vetoed by Governor McCrory, but his veto was overridden by the General Assembly. The principal fault of the bill was that it widened the gap of non-enforcement of the State’s E-Verify law, which requires employers to check the immigration status of job applicants. Weakening enforcement attracts illegal immigrants.
The bill’s principal sponsors in the NC House (www.ncga.state
.nc.us), sad to say, were Republicans. They actually proposed that illegal immigrants be issued North Carolina driving permits to help them get to and from jobs. This outrageous provision was fortunately defeated by more sensible Republicans.
The $2.0 billion estimate includes $1.3 billion for education of the children of illegal immigrants, including $299 million per year for supplemental English instruction for 90,000 children of illegal immigrants. The state pays approximately 71 percent of this, and county and local governments pay 29 percent.
Healthcare for unlawful immigrants costs $232 million per year, public assistance $79 million, and law enforcement and justice $216 million per year. Another $212 million is incurred for general government services used.
A significant portion of the $2.0 billion annual cost of illegal immigration in NC impacts at the county level, disproportionately affecting counties with high numbers of illegal immigrants.
North Carolina Illegal immigrants pay only $288 million in taxes per year, most of which are sales taxes. They pay less than $14 million per year in income taxes. These taxes do not offset the slightly over $2.0 billion cost, because illegal immigrant workers are effectively displacing American workers who are paid nearly 40 percent more and therefore pay more taxes. In addition, tax fraud and tax avoidance are rampant among illegal immigrant workers. Cheap foreign labor for employers is a sizable fiscal burden on taxpayers.
Any significant amnesty, by the way, would increase annual fiscal costs substantially. Changing an illegal immigrant to a lawful immigrant increases their eligibility for government healthcare and retirement benefits and attracts more illegal immigrants.
Besides the fiscal costs of maintaining 410,000 illegal immigrants, the economic costs to North Carolina workers are considerable. Excessive cheap foreign labor, illegal or legalized, displaces North Carolina workers and drives down their wages. It must also be noted here that illegal immigrant labor is only a fraction of the fiscal and economic burden imposed on America by the combination of illegal immigrant labor plus increasingly excessive and irresponsible legal importation of cheap foreign labor in the face of high American unemployment and record low American workforce participation.
I do not have numbers specific to North Carolina, but according to the research of Harvard labor economist George Borjas, the economic costs of cheap foreign labor to all American workers far exceeds the fiscal costs. According to Borjas, foreign-born labor (both legal and illegal) contributes $1.6 trillion (11 percent) to the GDP of the American economy, but the net benefit is only $35 billion. This $35 billion net economic gain to the economy is more than offset by U.S. annual fiscal costs of illegal immigration (alone), approximately $84 billion in 2009, paid by U.S., state, and local taxpayers.
The immigrants benefit, of course, but the $35 billion benefit to the economy is comprised of an annual loss of $402 billion for American workers and a $437 billion profit for the employers of lower cost imported labor. What is really happening is that there is an annual transfer of $402 billion from American workers, whose wages are driven down by cheap foreign labor competition, to the employers of cheap foreign labor. The economic cost per American worker is about $2,800 per year. The employers are causing even more harm by displacing American workers and pushing many onto unemployment or other government programs paid for by the ever-exploited taxpayers.
It is no wonder lobbyists spend $300 million per year to influence Congress and state legislatures on immigration issues.
A 2006 research report by the University of North Carolina’s Kenan Institute of Private Enterprise is a lesson in how lobbyist pressures can taint corporate and even academic economic studies. This report gave as an argument for cheap and even illegal immigrant labor—specifically citing Latino labor—that $1.0 billion in labor costs had been saved in building 27,000 North Carolina homes in 2004. Wow! What about work for North Carolina workers? This is a near perfect illustration of how American workers are hurt by cheap foreign labor, legal or illegal.
In addition, there are important costs that are extremely difficult to measure. Few issues are as important as public safety, but North Carolina’s $216 million annual expenditures on justice and law enforcement resulting from illegal immigration cannot measure the cost of illegal immigrant crime to its victims. An independent organization, NCFire (www.ncfire.info) is attempting to track these tragic and highly significant statistics.
Unfortunately, most North Carolina voters have not noticed that they are paying a huge burden in taxes, unemployment, lower wages, and increased exposure to crime for the benefit of commercial and political special interests.
Leonard M. (Mike) Scruggs is the author of Lessons from the Vietnam War: Truths the Media Never Told You, 2009; and The Un-Civil War: Shattering the Historical Myths, 2011.