California Overpays for Immigrant Welfare

by Ivan Light

California carries more than twice its share of the nation’s burden for the relief of destitute immigrants.  In the United States welfare is a shared federal/state responsibility. Fifty states share financial responsibility for Temporary Aid to Needy Families (TANF) and Medicaid with the federal government, which contributes half of each state’s cost of these programs.  However, in reality five heavily impacted states of which California is the largest (but also New York, Texas, Florida, and Illinois) have borne two thirds of the nation’s immigration-related welfare burden.

This imbalance stems from the heavy clustering of immigrants in just those five states. In 2010, these five states contained 63 percent of the total U.S. immigrant population, but housed only 37 percent of the total U.S. population. California’s share of the total immigrant population of the United States was 26 percent in 2008, but California’s share of the US population was only 12 percent.  If immigrants were evenly distributed among the 50 states, California’s half of the shared welfare burden would be six percent of the national bill (12/2), but it is actually 13 percent (26/2). Clearly, it is fair to devolve welfare responsibility to states when immigrants are evenly distributed among them; it is unfair to do so when 45 states have hardly any immigrants at all, and five are heavily impacted.

Another reason California overpays for immigrant welfare is the celebrated fiscal mismatch between the taxes immigrants pay, and the benefits immigrants receive.  Most of the taxes immigrants pay (two thirds to three quarters) accrue to the federal government as payroll and income taxes. However, state and local governments pay at least half of costs of immigrants for public education and health care.  States get more than their share of immigrants’ costs, and less than their share of immigrants’ taxes. This discrepancy imposes uncompensated costs on high-immigration states like California, and these costs are higher during recessionary periods. The public education that immigrants’ children receive comes from state governments on which immigrants impose heavier-than-average costs while paying lower-than-average taxes. Immigrants pay low taxes to states because of their low and irregular incomes, not because of tax evasion. Ten percent of immigrants earned less than $15,000 in 2008 compared to 5 percent of non-immigrants. Younger and healthier than native–born Americans, poor immigrants have bigger than average families, and they send their children to public schools.  California children residing with at least one immigrant parent represented 28.2 percent of all immigrant children in the United States; thus, California bears more than twice its proportional share of the cost of educating the nation’s immigrant children. Public education is California’s biggest expenditure. Thirty percent of California’s 2010 budget supported K-12 education at a total cost of 36 billion dollars. If California had hosted only 13 percent of all immigrants, the national average, that dollar cost would have been at least two billion dollars lower.

Health care opens into a second mismatch. A higher-than-average proportion of immigrants receive no employer-paid health care.  Thirty-three percent of immigrants lacked health insurance in 2007 as compared to 13 percent of the native-born.  As a result, when injured or ill, uninsured immigrants utilize public emergency rooms for free or at reduced cost. State taxpayers support these emergency rooms. True, immigrants are less likely to be ill than non-immigrants, and they make relatively less use of public emergency rooms than do the native born. But, it nonetheless remains true that states with large immigrant populations face immigration-related health care costs that states with small immigrant populations avoid. 

We are dealing here with a problem of American federalism, not a problem of tax evasion by immigrants.  Congress has the exclusive authority to legislate immigration quotas and immigration enforcement, but states are individually responsible for the costs of immigrant education and for the cost of immigrants’ use of public emergency rooms.

As USC’s Dowell Myers has pointed out, though initially poor, and unreliably employed, within a few decades, immigrants become home owners and taxpayers. The tax mismatch disappears in the long run.  But California’s immigration-related fiscal burden comes early in this multi-generational process, and the low-immigration states are not carrying their share of the nation’s burden now.  California’s added costs from immigration did not cause California’s current insolvency, and redressing those costs will not solve it. Nonetheless, every relief helps. An insolvent state cannot play Santa Claus to the federal government on any issue. California needs and deserves federal compensation for its extra immigration-related costs, a product of its large immigrant population. The California Congressional delegation should strive to obtain compensation from the federal government for the extra costs that immigrant clustering imposes upon California.  

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Ivan Light is Professor Emeritus of Sociology at UCLA. This article condenses his recent article in the California Journal of Politics and Policy, the whole text of which is accessible at