Monday, 7 September 2015

“Poor immigrants are less likely to use welfare than poor natives”

American-based guest post by Alex Nowraseth, with a local point. Don’t build a wall around your country, he says, build a wall around the welfare state.

America’s Center for Immigration Studies (CIS) released a new report on immigrant welfare use concluding immigrants use far more welfare than natives do.

What produced this result is CIS’s methodology, many parts of which are suspect – as we’ve pointed out to CIS multiple times. They also omitted a lot of information that would make for a better comparison between immigrants and natives. Simply put, the CIS study does not compare apples to apples but rather apples to elephants.

** The first issue is that CIS counts the welfare use of households, which includes many native-born American citizens, rather than individuals.
There might be some good reasons to do this but the immigrant-headed household variable CIS uses is ambiguous, poorly defined, and less used in modern research for those reasons. To CIS’s credit they try to separate out households with children but didn’t separate out American-born spouses. There is debate largely over whether to count the American-born children of immigrants as a welfare cost of immigration. If we should count them, shouldn’t we also count the welfare use of grandchildren, great-grandchildren, and great-great-grandchildren of immigrants?  Such a way of counting would obviously produce a negative result but it would also not be informative.

Another problem with counting households rather than individuals is that immigrants and natives have different sized households. According to the American Community Survey, immigrant households have on average 3.37 people in them compared to 2.5 people in native-born households. All else remaining equal, we should expect higher welfare use in immigrant households just because they’re larger. CIS should have corrected for household size by focusing on individual welfare use.

** The second issue with the CIS report is that it does not correct for income.
Since means-tested welfare programmes are designed for those with lower incomes, it makes sense to only compare use rates among those with lower incomes. It is not enlightening to statistically compare the welfare use rates of rich immigrants and Americans like Elon Musk or Bill Gates to poorer immigrants and Americans as the CIS report does.

imageThe interesting question is not whether poor people use more welfare than rich people but whether poor immigrants are more likely to use more welfare than poor natives. Our research found that poor immigrants are less likely to use welfare than poor natives. The CIS report isn’t very useful because it doesn’t correct for this.

** The third issue with the CIS report is that they omitted the cash value of welfare benefits consumed by immigrant and native households.
CIS only analysed the use rates for each welfare program but they do not tell you how much welfare was actually consumed.  For instance, the cash value for many welfare benefits are determined by the number of eligible members living in the household.  If only half of the members of a household are eligible then the benefits are reduced.  Furthermore, CIS does not report how long immigrant households are in these benefit programs compared to natives.  Immigrants could be on these programs more frequently but for shorter periods of time and with fewer beneficiaries per household – which is roughly what we found.

Immigrant welfare usage could be higher but if the value of their benefits is lower then the picture changes.  A Cato report from 2013 written by George Washington University Professor Leighton Ku and lead research scientist and lecturer Brian Bruen included both the individual immigrant use rates of welfare programs and the monetary cost.  It turns out that when poor immigrants use welfare they consume a lower dollar value than poor natives do.  For poor adult Medicaid enrollees, natives consumed $3845 of benefits in 2010 compared to $2904 for immigrants.  Native born poor children enrolled in 2010 consumed $1030 in benefits while poor immigrant children enrolled only consumed $465.  This pattern also holds for food stamps and SSI (but not for cash assistance).

That CIS did not include any information on the monetary value of the benefits received, which is vital to understand the costs and benefits of various welfare programs not to mention fiscal cost estimates, is noteworthy.

** The fourth issue is that this CIS analysis necessarily excludes the largest portions of the welfare state – Medicare and Social Security. 
Social Security and Medicare are not intended for the poor but they are the largest programs in the welfare state. An OECD analysis of immigration’s impact on the U.S. budget found that immigrant net-contributions to Social Security and Medicare from 2007 to 2009 vastly outweigh their net-consumption of means-tested welfare which decreased U.S. government deficits by about 0.03 percent of GDP.image

If you are really concerned about immigrant welfare use, you should be in favour of reforming welfare, eliminating it, or building a wall around the welfare state.  The most successful part of the 1996 Welfare Reform was limiting access to non-citizens – which could be partly responsible for the uptick in immigrant LFPR compared to natives since then. All are easier to do than stopping immigration.  In fact, the last time American immigration laws were well enforced without a large scale guest worker or legal entry program was during the Great Depression and World War II – when nobody wanted to come.

CIS frequently cites the existence of the welfare state to argue against immigration – whether legal or illegal.  By contrast, I frequently use immigration as a means to argue for restricting or eliminating the welfare state.

I also co-authored a policy analysis on how to build a wall around the welfare state with my former colleague Sophie Cole who had to move back to the United Kingdom because of America’s atrocious immigration laws. Rather than removing 11-12 million unlawful immigrants, imposing economically-expensive immigration barriers that are even more onerous than at present, and shrinking U.S. population growth, simply reforming welfare and access to welfare is very cheap and easy to do.

imageAlex Nowraseth is the immigration policy analyst at the Cato Institute’s Center for Global Liberty and Prosperity. is popular publications have appeared in the Wall Street Journal, USA Today, the Washington Post, the Houston Chronicle, the Los Angeles Times, the New York Post, and elsewhere. His academic publications have appeared in the Journal of Economic Behavior and Organization, the Fletcher Security Review, and Public Choice. Alex has appeared on Fox News, Bloomberg, and numerous television and radio stations across the United States. He is the coauthor, with Mark Krikorian of the Center for Immigration Studies, of the booklet Open Immigration: Yea & Nay (Encounter Broadsides, 2014).
This post is based on this post and its update originally posted to the Cato at Liberty blog.



  1. The welfare state thoroughly interferes with the natural process of people immigrating to a new land and bringing with them demand/supply market enablers.

  2. Ironically if the libertarian open door/no welfare policy were implemented NZ would be one of the last places refugees would want to go. Notice how the Syrian refugees had no interest in Hungary and were only interested in moving to Germany because of its generous welfare state.


  4. The refugees from Syria may be poor in a monetary sense,but most are from the educated middle classes. These people want to work in their chosen professions, but as Lindsay points out government and nonsense regulatory issues often stymie them. They can't get work, and are consequently labelled bludgers.

    PS I have been enjoying Tom Petty's songs in a previous post. I recommend Springsteen's "American Land" too. Great lyrics.


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