Thursday, April 12, 2007

Cheap labour a ripoff?

An American study has come up with some startling facts about "cheap" labour. It seems that households headed by someone without a high school degree pay on average $9,689 in taxes, but receive between $32,138 and $43,084 in government benefits (the figure varies according to which benefits are included). Therefore, there is an overall cost to the government of at least $22,449 per annum (that's $27,212 in Australian dollars) for each of these households.

There are 17.7 million such households in the US. Half of these are made up of illegal immigrants. Whereas only 10% of the native-born population have no high school degree, about two thirds of illegal immigrants fit into this category.

Therefore, the willingness of illegal immigrants to work for cheap rates isn't really as economically beneficial as it might seem to be. Although the immigrant earns on average only $20,564 per year, the taxpayer then kicks in at least an extra $22,449. It is a labour scheme which is massively subsidised by other Americans. Each year American taxpayers will spend almost US$200 billion subsidising illegal immigrant labour.

Nor is it only America which is facing the financial burden of low-skilled immigration. According to a British newspaper (revealing details of an OECD report):

International migration is eroding Britain's skills base with an exodus of professionals matching the arrival of low-skilled foreign migrants, the Government is to be warned.

The number of Britons emigrating has jumped in recent years, with a growing proportion leaving professional or managerial jobs to work overseas. By contrast, the number of immigrant workers - many of them manual workers - has risen sharply.

British employers are responding faster than the Government:

a report last month by the British Chambers of Commerce revealed that seven out of 10 of its members are now opposed to unchecked immmigration.

David Frost, the organisation's director general, said: "Outside London, we are increasingly seeing large numbers of white, unemployed males wandering the streets. This is not pointing to a bright and positive future. We need to engage with these people once more and get them trained up. Immigration is not solving today's problems but actually postpones them."

David Frost is on the right track. First, it does make sense, as he suggests, to focus on training the existing population of unskilled workers rather than bringing in more from overseas. Second, I think he's to be admired for showing some loyalty to his co-nationals. Perhaps if others take his lead there might be more of a culture of belonging in Britain which might then persuade some of those highly skilled emigrants to think of staying in Britain rather than seeking their fortunes elsewhere.


  1. Do illegal immigrants have access to welfare benefits throughout the USA?
    is it true that someone who enters outside the system then benefits from it? Are you refering to people who have gained legal status through amnesties or other means?

  2. Caroline, I'd need a US reader to confirm this, but my understanding is that adult illegal immigrants in the US do in practice receive various welfare benefits though they don't have the same access to welfare as legal immigrants. However, their US born children are eligible for all forms of welfare assistance. Therefore, the households of illegal immigrants do receive a substantial measure of government spending, whilst paying low rates of tax.

  3. Mr. Richardson,

    Children born to illegal immigrants on US soil are as of now considered US citizens. Also, illegal immigrants are known to frequent the emergency rooms of hospitals across the Southwest where they ARE NOT rejected for whatever ailment (usually non-emergency) afflicts them. There has been a great debate on this because it is bankrupting many hospitals.

  4. To address Caroline Armstrong's question, the rules may vary from one state to another, but in reality, many illegals receive welfare benefits of various kinds. I have heard that this is true via social services workers. Illegals usually possess at least one set of forged IDs, or several, and may even be receiving benefits (cash, food assistance, housing subsidies, medical care) under more than one identity.
    In many localities, officials are forbidden by law from asking illegals about their citizenship or immigration status.
    So yes, they do receive welfare benefits, whether legitimately or not. Some people will try to deny this, but it happens.