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Steven A. Camarota is the Director of Research at the Center for Immigration Studies.
Thirteen years after welfare reform, the share of immigrant-headed households (legal and illegal) with a child (under age 18) using at least one welfare program continues to be very high. This is partly due to the large share of immigrants with low levels of education and their resulting low incomes not their legal status or an unwillingness to work. The major welfare programs examined in this report include cash assistance, food assistance, Medicaid, and public and subsidized housing.
Among the findings:
- In 2009 (based on data collected in 2010), 57 percent of households headed by an immigrant (legal and illegal) with children (under 18) used at least one welfare program, compared to 39 percent for native households with children.
- Immigrant households use of welfare tends to be much higher than natives for food assistance programs and Medicaid. Their use of cash and housing programs tends to be similar to native households.
- A large share of the welfare used by immigrant households with children is received on behalf of their U.S.-born children, who are American citizens. But even households with children comprised entirely of immigrants (no U.S.-born children) still had a welfare use rate of 56 percent in 2009.
- Immigrant households with children used welfare programs at consistently higher rates than natives, even before the current recession. In 2001, 50 percent of all immigrant households with children used at least one welfare program, compared to 32 percent for natives.
- Households with children with the highest welfare use rates are those headed by immigrants from the Dominican Republic (82 percent), Mexico and Guatemala (75 percent), and Ecuador (70 percent). Those with the lowest use rates are from the United Kingdom (7 percent), India (19 percent), Canada (23 percent), and Korea (25 percent).
- The states where immigrant households with children have the highest welfare use rates are Arizona (62 percent); Texas, California, and New York (61 percent); Pennsylvania (59 percent); Minnesota and Oregon (56 percent); and Colorado (55 percent).
- We estimate that 52 percent of households with children headed by legal immigrants used at least one welfare program in 2009, compared to 71 percent for illegal immigrant households with children. Illegal immigrants generally receive benefits on behalf of their U.S.-born children.
- Illegal immigrant households with children primarily use food assistance and Medicaid, making almost no use of cash or housing assistance. In contrast, legal immigrant households tend to have relatively high use rates for every type of program.
- High welfare use by immigrant-headed households with children is partly explained by the low education level of many immigrants. Of households headed by an immigrant who has not graduated high school, 80 percent access the welfare system, compared to 25 percent for those headed by an immigrant who has at least a bachelors degree.
- An unwillingness to work is not the reason immigrant welfare use is high. The vast majority (95 percent) of immigrant households with children had at least one worker in 2009. But their low education levels mean that more than half of these working immigrant households with children still accessed the welfare system during 2009.
- If we exclude the primary refugee-sending countries, the share of immigrant households with children using at least one welfare program is still 57 percent.
- Welfare use tends to be high for both new arrivals and established residents. In 2009, 60 percent of households with children headed by an immigrant who arrived in 2000 or later used at least one welfare program; for households headed by immigrants who arrived before 2000 it was 55 percent.
- For all households (those with and without children), the use rates were 37 percent for households headed by immigrants and 22 percent for those headed by natives.
- Although most new legal immigrants are barred from using some welfare for the first five years, this provision has only a modest impact on household use rates because most immigrants have been in the United States for longer than five years; the ban only applies to some programs; some states provide welfare to new immigrants with their own money; by becoming citizens immigrants become eligible for all welfare programs; and perhaps most importantly, the U.S.-born children of immigrants (including those born to illegal immigrants) are automatically awarded American citizenship and are therefore eligible for all welfare programs at birth.
- The eight major welfare programs examined in this report are SSI (Supplemental Security Income for low income elderly and disabled), TANF (Temporary Assistance to Needy Families), WIC (Women, Infants, and Children food program), free/reduced school lunch, food stamps (Supplemental Nutrition Assistance Program), Medicaid (health insurance for those with low incomes), public housing, and rent subsidies.
Introduction
Concern that immigrants may become a burden on society has been a long-standing issue in the United States. As far back as colonial times there were restrictions on the arrival of people who might become a burden on the community. This report analyzes survey data collected by the Census Bureau from 2002 to 2009 to examine use of welfare programs by immigrant and native households, particularly those with children. The Current Population Survey (CPS) asks respondents about their use of welfare programs in the year prior to the survey,1 so we are examining self-reported welfare use rates from 2001 to 2009. The findings show that more than half of immigrant-headed households with children use at least one major welfare program, compared to about one-third of native-headed households. The primary reason immigrant households with children tend to have higher overall rates is their much higher use of food assistance programs and Medicaid; use of cash assistance and housing programs tends to be very similar to native households.
Why Study Immigrant Welfare Use?
Use of welfare programs by immigrants is important for two primary reasons. First, it is one measure of their impact on American society. If immigrants have high use rates it could be an indication that they are creating a net fiscal burden for the country. Welfare programs comprise a significant share of federal, and even state, expenditures. Total costs for the programs examined in this study were $517 billion in fiscal year 2008.2 Moreover, those who receive welfare tend to pay little or no income tax. If use of welfare programs is considered a problem and if immigrant use of those programs is thought to be high, then it is an indication that immigration or immigrant policy needs to be a adjusted. Immigration policy is concerned with the number of immigrants allowed into the country and the selection criteria used for admission. It is also concerned with the level of resources devoted to controlling illegal immigration. Immigrant policy, on the other hand, is concerned with how we treat immigrants who are legally admitted to the country, such as welfare eligibility, citizenship requirements, and assimilation efforts.
The second reason to examine welfare use is that it can provide insight into how immigrants are doing in the United States. Accessing welfare programs can be seen as an indication that immigrants are having a difficult time in the United States. Or perhaps that some immigrants are assimilating into the welfare system. Thus, welfare use is both a good way of measuring immigrations impact on American society and immigrants adaptation to life in the United States.
Methodology
The information for this Backgrounder is drawn from the public-use files of the CPS. We use the CPS beginning in 2002 because in that year the survey was redesigned and re-weighted by the Census Bureau, including additional questions about use of welfare programs. The survey identifies what the Census Bureau describes as the native-born and foreign-born populations. The foreign-born are defined as persons living in the United States who were not U.S. citizens at birth. In this report we use the terms foreign-born and immigrant synonymously. Immigrants or the foreign-born include naturalized American citizens, legal permanent residents (green card holders), illegal immigrants, and people on long-term temporary visas such as students or guest workers. It does not include those born abroad of American parents or those born in outlying territories of the United States, such as Puerto Rico, who are considered U.S.-born or native-born. We also use the terms native, native-born, and U.S.-born synonymously. Prior research indicates that Census Bureau data like the CPS capture the overwhelming majority of both legal and illegal immigrants. The Department of Homeland Security (DHS) Office of Immigration Statistics estimates that the undercount of immigrants in Census Bureau data is about 5.5 percent. Most of this undercount is of the illegal immigrant population. The undercount of illegal immigrants specifically is thought by DHS to be 10 percent.3
The CPS collected in March of each year oversamples minorities and is considered one of the best sources of information on immigrants. The March CPS is also referred to as the Annual Social and Economic Supplement of the Current Population Survey (ASES). The ASES includes questions on use of major welfare programs and is one of the only sources of information available on differences in immigrant and native use of welfare programs. When we examine use rates by state we combine two years of data (e.g., 2009 and 2010) to get more statistically robust estimates for smaller states.
The eight major welfare programs examined in this report are SSI (Supplemental Security Income for low income elderly and disabled), TANF (Temporary Assistance to Needy Families), WIC (Women, Infants, and Children food program), free/reduced school lunch, food stamps (now called Supplemental Nutrition Assistance Program), Medicaid (health insurance for those with low incomes), public housing, and rent subsidies.4 These programs constitute the core of the nations welfare system.
Why Welfare Use by Households with Children? We concentrate on welfare use for households with children because the nations welfare programs are designed specifically to provide assistance to low-income households with children. However, we also provide statistics for all households and for those without children. Examining welfare use by household means that we are primarily comparing welfare use by immigrants and their young children to welfare use by natives and their young children. Some advocates for expansive immigration argue that this type of analysis understates the benefits of immigration because some day the children who receive welfare may pay back that money as taxpaying adults. But, they argue, this payback is not counted because once these U.S.-born children reach adulthood they are counted as natives. There are a number problems with this argument. First, as we will see, households comprised of only immigrants, with no U.S.-born children, have similarly high use rates. Thus, the presence of U.S.-born children does not explain the high overall welfare use of immigrant households.
Second, a large body of prior research has examined the fiscal impacts of immigration, including their use of public services by household. Perhaps the largest study of its kind was done by the National Research Council in 1997. The NRC states, Since the household is the primary unit through which public services are consumed and taxes paid, it is the most appropriate unit as a general rule and is recommended for static analysis.5 Because this report is focused on the static, or current, use of welfare, it makes sense to report use by household. In their study of New Jersey, Deborah Garvey and Thomas Espenshade also used households as the unit of analysis because households come closer to approximating a functioning socioeconomic unit of mutual exchange and support.6 Borjas and Hilton, in their 1996 examination of welfare use by immigrants and natives in the Quarterly Journal of Economics, also relied on a household-level analysis of immigrant and native welfare use.7 The Census Bureau has itself reported welfare use for immigrant and native households.8 A more recent study from the Heritage Foundation, The Fiscal Cost of Low-Skill Households to the U.S. Taxpayer, also reported use of welfare programs by households.9
The primary reason researchers have looked at households is that eligibility for such programs is based on the income of all family or household members. Or, as the aforementioned NRC study observed, the household is the primary unit through which public services are consumed. Thus, a child can only be enrolled in Medicaid or free/reduced school lunch if the total income of his or her family or household is below the eligibility threshold. Moreover, most welfare benefits can be consumed by all members of the household. Food purchased using WIC or food stamps is available to anyone in the household as a practical matter. Likewise, public housing subsidies benefit everyone who lives in the housing unit. Again, this is part of the reason the total income of all those who reside in the household is used to determine eligibility.
Though obvious, it is also important to remember that money is fungible. If the government provides food or health insurance to children, then their parents will not have to spend money on these things, allowing them to spend it on other items. This is a clear benefit to parents. Finally, the CPS is collected by household. Like almost all other government surveys, the CPS is a survey by proxy. This means that one person in the household responds to all the questions about each individual in the household. Thus the primary unit of analysis in the CPS is the household. It is the basis on which data is collected.
It must also be remembered that the comparisons in this report are between native and immigrant households with children. As such, we are comparing welfare used by immigrants and their children with welfare used by natives and their children. The findings show that a much larger share of immigrants are unable to support their children and turn to the nations welfare system to support themselves or their children. This would seem to be an important finding in itself because it is an indication that our immigration system is allowing in immigrants who are not able to support their own children.
It is also worth noting that any hoped-for tax benefit from the U.S.-born children of immigrants when they reach adulthood is a long way off. Therefore, even if this benefit does exist, it does nothing to offset the fiscal costs created by their welfare use at the current time. Finally, if receipt of welfare by the U.S.-born children of immigrants should not be considered because some day the children may pay the money back as taxpayers, then the same must also be true for welfare programs used by the children of the native-born. A large share of welfare costs (cash and non-cash) in this country is for children. If welfare received by children should not be counted as a cost because someday the child may pay it back, then many of the costs of the welfare system should not be counted. Of course this makes no sense. Taxpayers and public coffers are out the money spent on children and the costs are real. Arguing that the child of an immigrant, or a native for that matter, may possibly pay the money back some time in the future does not change this fact. Given the reasons listed above, most researchers who have examined welfare use have done so by household. We follow this generally accepted practice in this report.
Unreported Welfare Use. Although almost all other researchers in this field have relied on self-reporting in the CPS or some other government survey, one limitation of this approach is that it understates welfare use. It is well established that respondents to the CPS tend to understate their use of social services. One reason for this seems to be the survey by proxy methodology used to collect the data, which is discussed in the methods section of this report. While the methodology is practical and generally produces reliable information, it has its problems. One problem seems to be that the person responding to the CPS may not be aware of all of the programs or the size of the payments that are received by every individual in the household.
The problem of under-reporting of welfare is well known by the Census Bureau and has been studied for some time.10 For example, a comparison of administrative data on Medicaid to the results in the CPS shows that the survey reports at least 10 million fewer persons on the program than there actually are.11 Use of cash and food programs is also under-reported in the CPS. This problem, however, should not prevent comparisons between immigrants and natives because there is no clear evidence that immigrant or natives are more likely to under-report welfare use.12 So the undercount should be similar for both groups, making comparisons possible. What this does mean is that the welfare use reported in this analysis is too low, and the actual use rates for immigrants and natives alike are higher.
Findings
Overall Use Rates. Figure 1 shows the share of immigrant- and native-headed households with children (under age 18) using at least one major welfare program from 2002 to 2009. Overall, the figure shows that immigrant households with children have used welfare programs at consistently higher levels than natives for most of the last decade. In 2001, 50 percent of all immigrant households with children used at least one welfare program, compared to 32 percent for native households. By 2009, that had grown to 57 and 39 percent, respectively. Figure 1 also shows that the rate for Hispanic immigrant households with children is much higher than that for native households and immigrants generally.
Figure 2 provides a detailed breakdown by type of welfare program. The figure shows that immigrant households with children use welfare at much higher rates than natives for food assistance programs and Medicaid. Use of cash and housing programs tends to be very similar to natives. Table 1 shows a detailed breakdown of the same information for all years, 2002 to 2009. The table shows that the pattern of higher immigrant use of food assistance and Medicaid has existed since 2002.
Households Comprised Only of Immigrants. As already discussed, by examining welfare use by household we are primarily comparing immigrants and their children to natives and their children. But we can also examine immigrant households with children in which all persons in the household are foreign-born. The top of Table 2 reports the use rates for households comprised entirely of immigrants. The table shows that these immigrant-only households have use rates similar to all immigrant-headed households 56 percent. Use of cash assistance is a little lower for immigrant-only households, while use of public housing is a little higher. The difference in use of food assistance programs is somewhat higher for immigrant-only households than for all immigrant-headed households. The difference for Medicaid is significantly lower for immigrant-only households than for all households headed by immigrants with children, though it is still higher than that of native households. This indicates that, at least for that program, the presence of U.S.-born children makes a significant difference.
Working Households. Table 2 also reports welfare use for households with at least one individual who worked during the year. The table shows that for both immigrant and native households with children, the presence of a worker does not make much difference in terms of welfare use. It is also important to note that the nations welfare system is designed to assist low-income workers with children. The vast majority (95.1 percent) of immigrant households with children had at least one worker in 2009. As a result, almost all of the welfare used by immigrant households is used by households with at least one worker. Work and welfare, particularly non-cash programs, do go together. The stereotype of someone not working and accessing a welfare program is simply mistaken.
Welfare Use by Household Size. Immigrant households with children tend to have somewhat more children than native households. The average native-headed household with children has 1.85 children, compared to 1.96 children for immigrant-headed households. So having somewhat larger families could account for some of the observed difference in welfare use. When we control for the number of children in a household, however, the large difference in welfare use remains. Table 2 reports use of welfare programs based on the number of children (under age 18) in the household.
As we have seen, the overall difference in welfare use for immigrant and native households with children is 17.9 percentage points. Table 2 shows that for households with only one child, the gap between immigrant and native household use is 11.3 percentage points. So it might be the case that some of the reason for the higher welfare use rate among immigrant households with children is larger families. However, the percentage-point gap for those with two children is 19.6 percentage points; 24.9 for those with three children; and 21.4 for those with four or more children. Thus the gap does not narrow even when we control for the difference in the number of children.
Refugee and Non-Refugee-Sending Countries. A longstanding part of U.S. immigration policy has been to admit persons for humanitarian reasons. As these individuals are fleeing persecution, they are likely to be the immigrants least prepared for a new life in this country. Moreover, refugees have somewhat more generous welfare eligibility than other legal immigrants.13 Thus, those admitted on humanitarian grounds would be expected to have the highest welfare use rates. Table 2 shows welfare use for households with children headed by an immigrant from a major refugee-sending country.14
Overall, Table 2 shows that households with children headed by immigrants from refugee-sending countries actually have somewhat lower welfare use rates than those from non-refugee-sending countries. However, a closer look at the programs reveals a more complex pattern. Refugee-sending countries tend to have higher use of cash and housing programs than non-refugee households. In contrast, use of food assistance is actually higher for non-refugee immigrant households and Medicaid use tends to be very similar for both groups. What we can say from the table is that the overall use rates for immigrant households with children are not significantly higher than those of native households because of refugees. If we exclude the primary refugee-sending countries, the share of immigrant households with children using at least one welfare program is still 57 percent.
Welfare Use by Year of Entry. The CPS asks immigrants when they came to the United States. Using responses to that question in 2010, Table 2 reports welfare use based on when the household head said he or she came to the United States. The table reports the figures by decade. Figure 3 reports the same information by more detailed year of arrival.15 Taken together, the year of arrival data in Table 2 and Figure 3 show that welfare use for immigrant households with children remains higher than for natives even after they have been in the country for many years. Figure 3 shows that welfare use tends to rise over time, hitting a peak when immigrants have been in the country for about 15 years. It seems that many immigrants assimilate into the welfare system.
Welfare Use by Education Level. Table 3 reports welfare use by the education level of the household head. Not surprisingly, the table shows huge differences in welfare use by educational attainment. Those with higher education tend to have lower welfare use, while those with the lowest education tend to have higher use of welfare programs. Among immigrant households with children headed by a person with less than a high school education, 80.4 percent accessed at least one welfare program. The figures for the least-educated native households with children are correspondingly high at 76.3 percent a 4.1 percentage point gap. This is dramatically smaller than the 17.9 percentage-point gap that exists for all immigrant- and native-headed households with children. A much larger share of immigrant households with children are headed by someone who has not completed high school. The 2010 CPS shows that 31.9 percent of immigrant households with children are headed by someone who has not graduated high school, compared to 8.9 percent for native households with children. This is an indication that the lower average educational attainment of immigrants explains a good deal of their higher welfare use.
However, the difference between immigrant and native households with children in the more educated categories is still quite wide. For example, 65.3 percent of immigrant households with children headed by a person with at least a high school education use at least one welfare program. This compares to 52.1 percent for native households with children headed by a person with the same level of education. This is a 13.2 percentage-point gap. The gap for those with some college is 10 percentage points and the gap for those with at least a college degree is 12 percentage points. Thus, even when we control for education, immigrant welfare use is still a good deal higher for the three educational categories above high school.
One way to compare the differences between immigrant and native households with children is to assume that households headed by immigrants have the same education level on average as those headed by natives, but retain their welfare use rates by education. In this way we can at least measure the impact of educational attainment by itself. If immigrant households with children had the same education level as those headed by natives (but retained their education-specific welfare use rates,) then 50.5 percent would access at least one welfare program. This is less than the 56.6 percent that actually do access these programs, but is still a good deal higher than the 38.7 percent for natives. Put more precisely, if the heads of immigrant households had the same educational attainment as native households, two-thirds of the gap with natives in welfare use would still remain. Thus, the lower education level of immigrant households only explains about one-third of the difference in welfare use for immigrant and native households with children. These results indicate that, while education does matter, other factors matter even more.
Tax Payments. The focus of this report is use of major welfare programs by households with children. However, the CPS also provides estimates of tax liability. Federal income tax liability is reported in Figure 4. The data show that 50 percent of immigrant households with children have no federal income tax liability, compared to 33 percent of native households with children.16 The Census Bureau bases tax liability on income, number of dependents, and other factors as reported in the CPS, but not legal status. It is simply an estimate of what would be paid if the law is followed having tax liability does not necessarily mean the household actually paid any federal income tax. If we look at only those households with tax liability, it shows that the average for immigrant households with children was $11,666; for native households with children it was $12,347. This is not a huge difference, but it does mean that not only are immigrant households with children less likely to pay any federal income taxes, when they do pay such taxes their average payment is less than that of native-headed households. Welfare programs are primarily funded by the federal government through income tax contributions. High tax contributions would be one way immigrants could offset the high welfare use rates, but that appears not to be the case, at least for households with children.
The Earned Income Tax Credit. The Census Bureau calculates whether workers qualify for the Earned Income Tax Credit (EITC) based on income and number of dependents.17 Those without valid Social Security numbers (SSNs) are not eligible for the program, so illegal immigrants should not receive it, unless they are using a stolen or otherwise acquired SSN. Figure 4 does not directly measure use of the program. This is in contrast to the welfare programs reported earlier in this report, which are based on self-reporting in the CPS.
The EITC is the nations largest cash assistance program for low-income workers, particularly those with children. The total costs of the program will exceed $40 billion for 2010. Those receiving the EITC pay no federal income tax and instead receive a check from the federal government. The payment can be quite large. For example, in 2010 a family with three children earning $16,000 a year would receive a top payment of nearly $5,700. Figure 4 shows that a much larger share of immigrant-headed households with children are eligible for the EITC than are native-headed households.
The EITC can be seen as a welfare program, but we did not include it as such in this report. What is important to understand is that the low income of so many immigrants coupled with the presence of children means that a very large share of immigrant households qualify for this program based on income. It is important to point out that to receive the EITC one has to work. The high rate of EITC eligibility reported in Figure 4 for immigrant households with children reflects in part the very large share of immigrant households with at least one worker. So unwillingness to work is not the reason for the results in Figure 4. Although it may defy popular perception, low-income workers, particularly those with children, can create very large costs for taxpayers despite being employed.
Average Payments. In addition to receipt of welfare programs, the Current Population Survey provides a limited amount of information on how much each household or individual receives in services or payments for welfare programs. In most years, the food stamp program, TANF, SSI, and Medicaid are the only programs for which payment or cost information is provided. There is no information in the survey for the costs of providing free/reduced school lunch, WIC, rent subsidies, and public housing. Moreover, the 2010 data do not yet have any information on the size of the payments for food stamps or the cost of Medicaid, as these have to be calculated and added to the data by the Census Bureau after the survey is collected. At some point, the Census Bureau should add this information to the public-use file of the March 2010 CPS, but at the time of this analysis the information was not available.
Compared to under-reporting whether a welfare program is used, under-reporting of payment size seems to be even more pronounced in the CPS. For example, the total payout (not including administrative costs) under the food stamps program is roughly $39 billion, but the total value of food stamp use reported in the CPS (2009 data) is only about $23 billion. Similar problems exist in the data for cash payments received. Under-reporting of payments is partly due to the fact that the CPS is a survey by proxy. It seems that the individual filling out the CPS for the rest of the household is more likely to know if a program is being used than the actual size of the payment received.
It is still possible to look at average payments in the CPS data, but doing so means we have to ignore the substantial problems with the payment information. The 2010 CPS shows that the average payment received for immigrant households with children using a cash program is almost identical $6,253 a year for immigrant households and $6,297 for natives. To find an average payment for food stamps and Medicaid, the 2009 CPS must be used. The 2009 data for food stamp payments show that for households with children using food stamps, the average payment is very similar for immigrants and natives $3,250 and $3,275. For Medicaid, the 2009 estimated costs for immigrant-headed households with children using the program are significantly lower than for native-headed households with children $6,303 and $7,404, respectively. This means that although immigrant households with children are more likely to have someone in the household using Medicaid, the average cost of the program is lower for immigrant households.18 No payment information is available in the CPS for free/reduced school lunch, WIC, rent subsidizes, or public housing.
Welfare Use by Country of Birth. Table 4 and Figure 5 report welfare use for households with children based on the country of birth of the household head. Table 4 also includes data for regions of the world. Both Table 4 and Figure 5 show very large differences in use rates. Immigrant households with children with the highest use rates are those from the Dominican Republic (82 percent), Mexico and Guatemala (75 percent), and Ecuador (70 percent). Those with the lowest use rates are from the United Kingdom (7 percent), India (19 percent), Canada (23 percent), and Korea (25 percent). These figures remind us that although the overall use rates for immigrant households with children are quite high, this is not the case for all immigrant-sending countries and regions.
Welfare Use by State. Table 5 reports welfare use by state. Two years of data (2009 and 2010) are averaged together in the table in order to provide more statistically robust estimates. Figure 6 shows overall welfare use for immigrant- and native-headed households with children by state. The states with the highest use rates are Arizona (62 percent); Texas, California, and New York (61 percent); Pennsylvania (59 percent); Minnesota (56 percent); Oregon (56 percent); and Colorado (55 percent). These states also tend to be the ones where the gap between immigrant and native welfare use tends to be the largest. In these same states, immigrant households with children have an average 24 percentage-point gap with their native-born counterparts. In fact, for almost every top immigrant-receiving state, Table 5 and Figure 6 show that use rates for immigrant households with children are much higher than use rates for natives.