Environmental Valuation & Cost-Benefit News

Link: http://www.charleston.net/stories/?newsID=81627&section=localnews

Luis Aguirre came to the United States from Mexico in 1988, when he was 17. He hoped to make some money, buy a car and return home to continue his education.

In Atlanta, he worked in the construction and restaurant businesses, he got a job as a taxi driver, he saved money, he bought a car. He didn't go back home.

Instead, he became a legal resident, eventually moving to the Charleston area and opening a restaurant with his brother. Taqueria La Nortena, on Remount Road in North Charleston, has been open for three years, he said.

"There's more and more business," he said, "more and more customers."

There are more and more bills, too. Aguirre pays income taxes, sales tax, a business license fee, a hospitality tax, a garbage-pickup fee, overhead, health insurance, building insurance, workers' compensation, supplies, merchandise, produce and meat and salaries. And all of that money is absorbed by the U.S. economy.

As the debate rages in Washington over what to do about increasing numbers of immigrants, two new studies suggest that foreign-born workers contribute to the U.S. economy in ways that benefit employers, consumers and native-born workers. Still, some argue that the cost of immigration exceeds its fiscal contributions and should be limited.

Furthermore, although most immigrants are hard-working, tax-paying contributors to the local and national economy, others not authorized to work in the United States - no one is tracking exactly how many - are filing individual tax returns and receiving refunds, sometimes using fake identification.

The Internal Revenue Service, which has been issuing individual Tax Identification Numbers to a growing number of applicants, processed more than 500,000 tax returns filed by immigrants in 2001, according to a 2004 report, the latest available.

Crunching the numbers

A study released last month by Douglas Woodward, professor of economics at the University of South Carolina's Moore School of Business, sets the stage for continuing research. USC's Consortium for Latino Immigration Studies, a co-sponsor of the study, estimates that South Carolina is now home to about 400,000 Latino immigrants.

Preliminary findings from interviews with 381 Mexican immigrants show that a third of them work in construction; the average annual earnings per person was $21,000, $10,000 less than the statewide average. The vast majority are renters and, on average, they send 16 percent of their wages abroad, which amounted to $148 million in 2004. More than 60 percent said they plan to return to Mexico; and nearly 60 percent said minors live with them.

The study also found that the combination of low wages and high productivity enables private-sector employers to reap higher profits than they would with native-born workers. But the economic benefits could be eroded by an increase in the cost of social services as more immigrants establish themselves in the United States, the study reports.

Steven Camarota, director of research at the Center for Immigration Studies in Washington, D.C., which advocates limiting immigration, said he thinks the cost of illegal immigration has already put the government in the red. He places part of the blame on the business community, which encourages immigration then pressures the federal government when it tries to enforce the law.

For example, bogus taxpayer numbers, a growing problem at the IRS, enable immigrants to receive tax refunds thanks to the complicity of employers who submit fake documents to the government, Camarota said. After the Sept. 11, 2001, terror attacks, the IRS mailed out thousands of "non-match" letters meant to discourage the use of false IDs, but businesses lobbied hard and the government backed down, he said.

"Businesses are not individually culpable because they're following the rules," Camarota said.

Camarota said his recent cost-benefit analysis of illegal immigration shows that undocumented immigrants paid about $16 billion to the federal government in 2002 but used about $26 billion in services, costing the government $10 billion.

"(Immigrant contributions) are trivial to the economy but not to the guy who is the farmer," he said.

A holistic interpretation

Ben Johnson, director if the Immigration Policy Center, part of The American Immigration Law Foundation, said studies such as Camarota's fail to distinguish between the "fiscal" and "economic" impact of immigration. The former "balance-sheet approach" might reveal the high costs of immigration, but it doesn't take into account what Johnson calls the "spillover effect."

"The availability of labor is itself an economic benefit," he said, enabling business owners to open a second store, for example, employ more workers and pay better wages. Immigrants should be recognized not only as consumers of public services, but as consumers and producers of goods, he said.

Johnson argues that most Americans cost more than they contribute financially and that deficit spending is not only common but is the status quo.

"All low-wage workers, whether local or foreign-born, require a certain amount of investment," he said. "We shouldn't ignore the needs of less-skilled (native) workers, but we shouldn't close the door to immigration as a way of dealing with social problems," he said.

A study published last month by the Immigration Policy Center found that native-born workers saw their salaries go up 1.1 percent during the 1990s because of immigration and that most immigrants do not directly displace American workers because "workers with different levels of education perform different tasks and fill different roles in production." Even among workers with the same level of education, foreign-born and natives tend to hold different occupations, the study found.

Impact uncertain

Elaine Lacy, director of research initiatives at the Consortium for Latino Immigration Studies at USC, said immigrant Latinos contribute consistently to the federal treasury and do not yet represent a significant cost burden because many are ineligible for social services. Furthermore, she said, to what extent these immigrants will draw benefits in the future remains unclear because many say they plan to return to Mexico. Indeed, some current population estimates could be exaggerated because they don't factor in immigrants who have left the country, she said.

Still, she said, some sort of economic safety net is needed. The private sector is profiting significantly now, and will likely continue to do so, but the larger economic impact is uncertain.

"The costs, when they eventually do come, will come to the public sector," she said.

Between ringing up sales at his restaurant, Aguirre said he thinks the government should adopt a lenient policy toward immigrants. Some government policies serve only to discourage immigrants from seeking legal status, he said. If one runs the risk of deportation - if families can be torn apart - why risk playing by the rules? Instead, immigrant workers actively contributing to the economy ought to be invited to stay permanently, he said.

"Your kids are born here, and they don't know another life," he said.

Mexicans' Impact:
$20,910 - average annual income
$283 - average sent home
66% - do not have bank accounts
72% - haven't been to Mexico since arriving in S.C.
63% - of South Carolina's Hispanic population is Mexican
34% - have 11+ years education
49% - have 6-10 years education
64% - 6 months to 5 years living in S.C.
1.3% - 15+ years living S.C.
124 - survey respondents working in construction
62 - work in manufacturing
36 - work in restaurants

On the Net
--"Mexican Immigrants: The New Face of the South Carolina Labor Force": www.mooreschool.sc.edu/export/moore/research/presentstudy/latino/latinoreport0306.pdf
--"Immigrants, Skills, and Wages: Measuring the Economic Gains from Immigration": www.ailf.org/ipc/infocus/2006_skillswages.shtml
--"The High Cost of Cheap Labor: Illegal Immigration and the Federal Budget": www.cis.org/articles/2004/fiscal.html

By Adam Parker
The Charleston Post and Courier www.charleston.net
http://www.charleston.net/stories/?newsID=81627&section=localnews