Immigration And Poverty: Updated Facts

Last year, I published this paper discussing the link between immigrant poverty and the 1996 welfare reform legislation. It showed that although the legislation cut the number of immigrants receiving assistance, their poverty rate actually fell. Many of the affected immigrants resorted to good, old-fashioned employment as a means of support.

There have been some rumblings recently about how those results translate in today’s immigration debate. Although the paper was published last year, I actually wrote it years ago, focusing on the period around welfare reform and examining data through 2001. But then I got sidetracked into various other things. (FYI: there are two or three other papers in my computer hard drive awaiting resurrection in the same way).

The current discussion sparked my curiosity: What do immigrant poverty rates look like now?


So I took out the Current Population Survey (CPS) data from 1994 to 2016, the period over which this exercise can actually be done, and proceeded to calculate the poverty rate of immigrants aged 20+. I dropped the children to avoid the complication of whether the US-born children of immigrants should be counted as “immigrants” or “natives.” In any case, a few minutes later I ended up with the graph above.

It is easy to see the post-1996 decline in poverty rates that motivated my paper. But it is also easy to see the very adverse impact that the Great Recession seems to have had on immigrant poverty. Their poverty rates rose substantially, from 14.1 percent in 2007 to 18.7 percent in 2011. The increase was much smaller for natives, from 9.7 to 11.5 percent. It is also interesting that the economic recovery reduced poverty rates much more for immigrants than for natives. I am sure there’s a paper waiting to be written that explains the “excess sensitivity” of immigrant poverty rates to outside shocks.

A number of readers have indicated they like these types of fact-based blog posts, where I use available data to easily compute relevant statistics. So I’m creating a new tag for this type of post simply called “Factoids,” and I’ll try to go back in the archives and recategorize past posts. And for the true geeks, the STATA code that creates the graph is, as they used to say, below the fold.

Continue reading “Immigration And Poverty: Updated Facts”

Who Is A Public Charge?

According to the Washington Post, the Trump administration is considering a number of changes in current immigration policy, focusing more on the economic side of things this time around. That WP article is already cluttered with half-truths (spouted by the usual suspects at Cato and the like), so I thought it’d be a good idea to clarify the muddied waters regarding one particular proposal that is being considered to reduce welfare use in the immigrant population.

Since 1882, the United States has banned the entry of anyone who has the potential of becoming a “public charge.” This is how current law reads:

Any alien who, in the opinion of the consular officer at the time of application for a visa, or in the opinion of the Attorney General at the time of application for admission or adjustment of status, is likely at any time to become a public charge is inadmissible.

Since 1903, the United States has allowed for the deportation of immigrants who became a public charge after they entered the country, and this is how the law now reads:

Any alien who, within five years after the date of entry, has become a public charge from causes not affirmatively shown to have arisen since entry is deportable.

Given these very straightforward–and very old–restrictions, it seems puzzling that we would find many immigrants on welfare. But, as always, the devil is in the details. The law is often not enforced, and the common-sense definition of a public charge that we carry in our heads has little to do with how the immigration regulators have defined it. This is how that definition now reads:

For purposes of determining inadmissibility, “public charge” means an individual who is likely to become primarily dependent on the government for subsistence, as demonstrated by either the receipt of public cash assistance for income maintenance or institutionalization for long-term care at government expense.

Note the big elephant in the room. Immigrants who receive non-cash benefits–including the most expensive benefit of all, Medicaid–are not considered to be public charges. In the words of DHS: “Non-cash benefits (other than institutionalization for long-term care) are generally not taken into account for purposes of a public charge determination.”

If we began to actually enforce the law with a common-sense interpretation of the century-old statutes, the policy shift will affect an awful lot of people. I took data from the March Current Population Surveys (CPS) from 1994 through 2016 to calculate the fraction of immigrant-headed households who receive some type of assistance (either cash, food stamps, or Medicaid). I then divided the foreign-born households into 2 categories–those where the household head is naturalized, and those where the household head is not. Any proposed shift in policy would affect the non-naturalized households. And this is what the trend in the fraction of households receiving assistance looks like:


In 2016, there were 8.9 million households headed by a non-citizen. Almost 42 percent of those households received some type of assistance. Put bluntly, taking the public charge provisions of immigration law seriously could potentially affect 3.7 million households, making the recent kerfuffle over a relatively small number of refugees look like small potatoes.

The policy challenge is obvious, and the economic and social ramifications will be dramatic. Before we start envisioning deportations by the hundreds of thousands, however, let’s remember that we all respond to incentives. Few economists would be surprised if some of the affected households begin to find other ways of providing for their needs.

Some additional information:

  1. No need to take my word for the graph. The trends are very easy to reproduce by anyone who is willing to spend a little time looking at the publicly available CPS data. Here is the program, the data can be downloaded here; and click here if you are really geeky and want to see the computer output and detailed statistics.
  2. The recent immigration report of the National Academy of Sciences (NAS) has similar statistics on the number of immigrant households on welfare. Table 3-15 shows the fraction of households with children receiving some type of assistance (here’s a screenshot of the table). According to the NAS, 41.8 percent of native households and 55.8 percent of immigrant households receive assistance (but they do not break up the immigrant households according to citizenship status).
  3. The NAS report also calculated the size of the fiscal burden implied by these numbers; that discussion is in Chapters 8 and 9 of the report. See here and here for a User’s Guide to the NAS fiscal impact discussion.
  4. The CPS data are notorious for understating the extent of welfare participation in the population. The Survey of Income and Program Participation (SIPP) is supposed to provide much better measures of welfare use, but it is a much harder data set to manipulate. As I note in We Wanted Workers (Table 9.1), the welfare participation rate of immigrant households implied by the SIPP is far higher than what the CPS suggests (at least 10 percentage points higher).

Republicans and Immigration

I’ve been watching the civil war over immigration in the Republican party with ever-increasing interest. And let’s be honest–this really is a war for the soul of the party as there is almost nothing in common between some of the approaches that the candidates advocate. I’m sure that I’ll have much more to say as the year wears on. (Full disclosure: I am not affiliated with any political party).

Let me start by noting that I really liked this very insightful piece by John O’Sullivan. The article touches on how Donald Trump changed the dynamics of the immigration debate by emphasizing some of the losses from mass immigration. Inevitably, the discussion is leading to increased questioning of the parameters that should reflect the Republican Party’s immigration policy. O’Sullivan notes:

Globalization has struck the bourgeoisie. Increasing legal immigration levels and extra H1-B visas for occupations for skilled occupations mean that computer programmers are quite as likely as low-paid restaurant workers to see immigration as a threat to their jobs and pay levels. And they are more likely to be vocal about it…

One of the internal contradictions of Kemp-style ideological conservatism was the attempt to combine mass immigration with the scaling back of entitlement programs: Keeping wages down through immigrant competition is incompatible with moving away from state welfare entitlements to market provision…More widely, mass immigration builds up a large new constituency for state welfare programs of every kind. ​

As a New York Democrat once remarked, the Republicans have a choice: They can either change their policy on immigration or their policies on everything else. Trump stumbled on that insight earlier this year; it may have transformed American politics forever. Or not.

Continue reading “Republicans and Immigration”

Incentives and Food Stamps

The one thing that economics teaches us over and over again–and the one lesson that those who don’t like the implications ignore over and over again as well–is that incentives matter.

Robert Rector and his colleagues at the Heritage Foundation have written a number of important reports over the years showing how participation in welfare programs respond to changes in incentives. And their latest one is a nice addition to the collection.

In response to the growth in food stamp dependence, Maine’s governor, Paul LePage, recently established work requirements on recipients who are without dependents and able-bodied. In Maine, all able-bodied adults without dependents in the food stamp program are now required to take a job, participate in training, or perform community service.

So what happened?

In the first three months after Maine’s work policy went into effect, its caseload of able-bodied adults without dependents plummeted by 80 percent, falling from 13,332 recipients in Dec. 2014 to 2,678 in March 2015.

It’s evidence like this that restores my faith in humankind. We’ll always do what is best for us.