Immigrant workers of Minnesota without documents pay more than they get back!

by Heather Fisher

Minnesota is divided over whether to censor or to welcome undocumented immigrant workers. Should border controls be strengthened and immigration laws enforced, or should undocumented immigrant workers be offered amnesty and a path to citizenship?

Consider the facts about undocumented workers’ participation in Minnesota’s economy.

The drain on Minnesota’s economy Minnesota’s undocumented immigrant population is currently estimated to be somewhere between 109,000 and 125,000, with thousands more arriving each year. The State of Minnesota estimates that 60,000 to 85,000 undocumented immigrants are part of Minnesota’s workforce. The number of undocumented immigrants has increased substantially over a very short period of time and Minnesota has a higher undocumented immigrant population than at least 20
other states.

Currently it’s estimated to cost Minnesota taxpayers $345 million annually to provide education, emergency medical care and incarceration for the undocumented immigrant population.

The estimated cost of health care for undocumented immigrants in Minnesota is $35.5 million, with approximately half of that covered by federal tax revenues, and $17.3 million paid by the state. Minnesota Emergency Medical Assistance, which covers all emergency services, including labor and delivery, cost $16.3 million last year. The state and federal government each paid 50 percent of these costs.

Minnesota State Children’s Health Insurance Program (SCHIP) cost $15.5 million. The state paid 35 percent of these costs and the federal government paid 65 percent. SCHIP covers medical costs for pregnant women without other health insurance through the month of birth. Minnesota Medical Assistance program’s state non-citizen pregnant women medical fund cost $3.7 million. The state paid the entire amount.

Those costs are just the beginning. They only account for people who truthfully disclosed their status. The state costs also don’t include $120 million a year in uncompensated care provided by Minnesota’s hospitals. Undocumented immigrants are responsible for an unknown portion of those costs, which are ultimately paid through federal tax dollars and rising health insurance premiums. Despite legislative changes in 2003 that made Minnesota’s public health benefits unavailable to undocumented immigrants, it still allows exceptions for pregnancy and emergency care.

Regarding costs associated with education in Minnesota, undocumented immigration has the greatest cost impact on the K-12 education system. Students without legal immigrant status continue to be ineligible for federal financial aid, although states are required to provide K-12 public education as a result of a 1982 Supreme Court decision. An estimated 94 percent of undocumented children attend public schools. The state figured that $118.14 million to $157.53 million of the taxpayers money is spent on educating undocumented children or children born in the United States to undocumented parents.

More recent estimates state that educational expenditures for undocumented immigration was costing Minnesota taxpayers $276.6 million annually. This cost was partially for educating students who were themselves illegally in the country ($115.2 million) and in part for the education of their siblings born in the United States to illegal residents ($161.3 million).

Incarceration costs in Minnesota receive partial compensation under the federal State Criminal Alien Assistance Program (SCAAP), which was established in 1994 to compensate the states and local jurisdictions for incarceration of “undocumented” aliens who are serving time for a felony conviction or at least two misdemeanors.

The jails are crowded and overflowing with individuals who are not citizens. The recent estimated cost of incarcerating, processing and deporting undocumented immigrants is $14 million. SCAAP payments covered $1.205 million, leaving the state the net cost of $12.765 million.

Other claims of costs to Minnesotans: Undocumented workers arguably displace American workers, which contributes to lost jobs and wages. The large increase of undocumented immigrants has the net effect of keeping the wage rate below that considered by some to be a living wage, as well as extensively burdening the state infrastructure (schools, medical care, law enforcement) and contributing to unsafe working conditions. Minnesota county commissioners say that the cost of medical care for uninsured immigrants is too high for local government to bear without federal help. Minnesota expects a $4.2 billion budget shortfall over the next two years.

There are about a dozen clinics providing health care for undocumented immigrants in the Twin Cities. Chronic diseases such as diabetes and asthma are common among undocumented patients. Economists say that undocumented immigration has negatively impacted wages, especially for low-skilled native-born Americans, and some feel undocumented immigrants are taking jobs from legal citizens. Employers pay immigrant workers a lower wage than they would have to pay for non-immigrant labor. In other words, why would employers pay more when immigrants are willing to work for less? Undocumented immigrants get a far higher wage here than they would be getting wherever they are from. As long as those dynamics don’t change, immigrants will continue to come here.

The contribution to Minnesota’s economy
The IRS created the Individual Tax Identification Number. It was created to collect taxes from wealthy foreigners with investments in the United States. The IRS soon realized it could also use the number to collect taxes from undocumented immigrants. Using an ITIN number, at least 8,000 undocumented workers file state income taxes to add to the state’s resources. Some may also use false social security numbers to pay state income taxes. Because they do not file tax returns, these funds are kept by the state and federal governments. Undocumented immigrants also pay property, sales and excise taxes. The economic benefit of undocumented immigrants is estimated at $3.8 billion annually,* or 2.4 percent of Minnesota’s Gross Domestic Product (GDP).

Although undocumented workers can place stress on the American workforce system, they also fill a demand for low-wage labor that’s crucial to the American economy. Undocumented workers may eagerly take low-paying jobs that others don’t want. This may be a relief to employers who try to fill these jobs, but they also carry the risk of a government raid and the deportation of their workers if they hire undocumented immigrants.

Under new rules, employers who are notified that an employee’s name and SSN do not match government records will have 90 days to resolve the discrepancy. If they can’t, they must fire the employee or risk legal liability. Companies who receive federal contracts must verify the employment eligibility of their workforce through a computer-based system. Also, civil fines for knowingly hiring illegal immigrants will be increased by 25 percent.

Conclusion
The bottom line is that, according to the above research, the State of Minnesota gets more in taxes from undocumented immigrant workers than it gives them in services.

* The author cited five sources where she encountered the figure $3.8 billion as the annual contribution of undocumented workers to the Minnesota economy.
They include: Minnesota State Demographer Tom Gillaspy in the Dec. 20, 2008, Business Central Magazine. An article of the Archdiocese Office of Social Justice stating: “At a Senate hearing on February 27 ( 2006), economist Jim Kielkopf estimated that about 60,000 undocumented people in Minnesota work as farm laborers, in the food industry, in construction and maintenance businesses. They pay taxes, add 3.8 billion dollars to the state economy, and without them, he says, agri-business in southern Minnesota would collapse. They have a higher rate of employment than their counterparts who are citizens, and statistically commit no more crimes than other people. Yet, they are without educational opportunities, civil rights, or health care.
A study by the research group HACER at the University of Minnesota’s Humphrey Institute of Public Affairs.