In the spring of 2022, New York City began receiving thousands of asylum seekers who had crossed the southern border and travelled north in search of safety and opportunity. The city responded by opening emergency shelters, arranging hotel accommodation, providing food and medical care, and helping families access schools and other essential services. What began as a humanitarian response quickly became an enormous financial responsibility for a city already struggling with expensive housing and a high cost of living.
By the end of the 2024 fiscal year, New York had spent more than $5 billion supporting asylum seekers. Meanwhile, many existing residents were struggling to pay rent, afford groceries and maintain a reasonable standard of living. It was understandable that some would question why the city was spending billions on newly arrived immigrants while its own population faced serious economic problems.
Yet the situation presented a contradiction. Economists have long argued that immigration expands the economy, increases production, supports businesses and contributes to government revenue. If immigration creates so much economic value, why can its arrival feel like a financial burden? Why do employers celebrate access to immigrant workers while some local workers worry about their wages and job security?
The answer is that immigration does not produce one uniform economic outcome. It can make the country richer while leaving particular workers, neighbourhoods or governments worse off. Understanding the economic impact of immigration in the US therefore requires looking beyond national averages to examine how immigration changes labour markets, public finances, business profits, innovation and inequality.
New York’s Asylum Crisis Shows Why Location Matters
The New York asylum crisis illustrates one of the most important distinctions in immigration economics: the difference between the immediate cost of receiving people and their eventual contribution to the economy.
According to the New York City Comptroller’s official asylum-seeker expenditure records, the city spent approximately $1.41 billion in fiscal year 2023 and $3.70 billion in fiscal year 2024 on shelter and related services. Another $3.02 billion was recorded for fiscal year 2025, although accounting adjustments can affect how expenditure totals are presented. These were substantial costs, particularly for a city facing competing demands for housing, education, transport and public services.
The scale of the spending was partly a consequence of how quickly people arrived. Emergency accommodation is generally more expensive than providing services through established systems, particularly when a city relies on commercial hotels and temporary facilities. New York was also dealing with an extraordinarily expensive housing market, where finding affordable accommodation for existing residents was already difficult.
Many asylum seekers initially faced restrictions on their ability to work legally. That created an economic problem: people who might otherwise have supported themselves through employment could instead remain dependent on publicly funded accommodation and assistance. Even when individuals eventually qualified for work authorization, administrative delays and practical barriers could prevent them from immediately finding suitable jobs.
None of this means the spending was imaginary or economically insignificant. A dollar spent on emergency shelter is a dollar that cannot simultaneously finance another public priority, unless additional funding is obtained. Residents are entitled to ask whether the burden was distributed fairly and whether federal immigration decisions were accompanied by sufficient financial support.
However, a city’s emergency expenditure is not the same as the lifetime fiscal impact of immigration.
Consider two people arriving in the United States. One is a young engineer with a job offer, professional qualifications and immediate work authorization. The other is an asylum seeker arriving with children, limited English proficiency and no immediate permission to work. Their initial effects on government finances will be very different, even if both eventually become productive, taxpaying members of society.
The timing of those contributions matters enormously. A family arriving with school-age children may require years of publicly funded education before those children enter the workforce. A skilled worker arriving at 30 may immediately begin paying income and payroll taxes, having received their childhood education elsewhere. An older immigrant may have fewer working years remaining, while a refugee who initially needs considerable support may eventually build a stable career.
The categories used in immigration statistics also conceal important distinctions. The foreign-born population includes naturalized citizens, permanent residents, temporary workers, international students, refugees, asylum seekers and people living in the country without authorization. Their earnings, education, ages, household structures and eligibility for public benefits differ significantly.
These distinctions become even more important when immigration figures are presented as evidence of a permanent trend. The foreign-born share of the American population reached approximately 14.8% in 2024, matching the share recorded in 1890. But the population did not simply continue rising indefinitely. Pew Research Center’s demographic estimates indicate that the immigrant population peaked at an estimated 53.3 million in January 2025, or 15.8% of the population, before declining to approximately 51.9 million, or 15.4%, by June. Pew also cautioned that changes in survey participation could affect the estimates.
A changing national population creates very different pressures across different places. A city receiving thousands of people in a short period must provide shelter and services before employment, tax collection and private investment have time to adjust. A region experiencing gradual immigration over decades has more opportunity to expand housing, schools, businesses and infrastructure.
The level of government responsible for collecting revenue also matters. The federal government receives income and payroll taxes, including revenue from immigrant workers, while local authorities often face immediate costs for schools, emergency services, housing and administration. The government receiving the eventual tax benefit may not be the government paying today’s bill.
This helps explain why immigration can be beneficial to federal finances while placing severe pressure on a particular city. There is no contradiction in those findings because they describe different financial accounts and different periods.
New York’s experience was therefore a genuine warning about the consequences of rapid population growth without adequate housing, work authorization and fiscal coordination. It was not, however, a controlled experiment demonstrating that immigrants are an economic burden wherever they settle.
To understand the wider consequences, we need to examine what happens when immigrants enter the labour market.
An Immigrant Is a Worker, a Customer—and Sometimes a Competitor
The most intuitive economic objection to immigration comes from the law of supply and demand. If more workers become available for the same number of jobs, employers should find it easier to recruit employees and less necessary to raise wages. Workers already competing for those jobs may experience lower pay, reduced hours or fewer opportunities.
That mechanism is real. But it describes a situation in which the number of jobs, the amount of investment and the demand for goods and services remain unchanged. An actual economy does not operate under those conditions.
Immigrants do not arrive solely as workers. They also rent homes, purchase groceries, visit restaurants, use transport, obtain medical care and buy countless other goods and services. Their spending creates demand, encouraging businesses to expand and employ additional people. Immigrants also establish businesses themselves, sometimes creating jobs that would not otherwise have existed.
Imagine a town receiving several thousand new residents. The available workforce increases, potentially making recruitment easier for existing employers. But grocery stores also acquire new customers, landlords gain tenants, restaurants become busier and construction companies receive additional demand for housing. The town’s labour market changes on both sides of the equation.
Economists call this distinction the difference between a fixed-job view of the economy and a dynamic one. There is no predetermined number of jobs that must be divided among the people living in a country. Employment depends on demand, productivity, investment, technology, wages and the ability of businesses to expand.
Immigration also affects the productivity of workers who are already present.
A construction worker can increase the value of an architect’s or engineer’s time by allowing more projects to be completed. An agricultural worker can help maintain a farm that would otherwise reduce production or move certain activities abroad. A childcare or home-care worker can enable another adult to remain employed, potentially increasing that person’s working hours and earnings.
These workers are complements: their activities make other workers more productive. When complementary labour becomes more available, demand for the associated skills may increase.
Other workers are substitutes. Two applicants with similar education, experience, language skills and occupational abilities may compete directly for the same vacancy. If immigration increases the number of such applicants, wages can face downward pressure, especially where employers have considerable bargaining power.
This distinction explains why immigration can help one group of native-born workers while hurting another. The arrival of additional construction labourers may benefit engineers and project managers, but it can intensify competition among labourers already doing similar work.
Workers who migrated previously are often particularly exposed. New immigrants may enter the same occupations, live in the same neighbourhoods and possess similar qualifications to earlier arrivals. Consequently, immigration can create competition among immigrant groups as well as between immigrants and native-born Americans.
The National Academies’ comprehensive assessment of immigration’s economic consequences found that immigration’s long-term effect on the wages of native-born workers overall is generally very small. It also found that negative effects, where they occur, are most likely to affect previous immigrants and native-born workers who have not completed high school.
The same assessment found little evidence that immigration significantly reduces overall native-born employment. That conclusion does not mean the economic experience of every native-born worker is unchanged. A small national average can conceal meaningful losses among people who compete directly with new arrivals.
Economist David Roodman’s extensive review of immigration and labour-market research reaches a broadly similar interpretation. Studies typically find limited average effects, but the results vary across workers and research methods. Close substitutes may face greater competition, and the experience of previously arrived immigrants deserves particular attention.
The distinction between short-term and long-term effects further complicates the picture.
In the short run, a firm gaining access to additional workers may respond by holding wages down. Buildings, equipment, management capacity and local housing supply cannot necessarily expand overnight. The existing stock of capital must be shared among more workers, and the adjustment can be uncomfortable.
Over time, businesses may invest in additional machinery, premises, software and productive capacity. A larger workforce can make expansion more profitable, increasing the demand for labour and potentially offsetting some of the original pressure on wages.
This process is related to the capital adjustment described in economic growth models, including the Solow model. If the supply of workers rises without a corresponding increase in capital, output per worker can initially fall. When capital investment adjusts, productivity and wages can recover.
That is why the commonly repeated claim that immigration can produce a small long-term increase in average native wages does not automatically violate supply and demand. It reflects a model in which demand, capital and the composition of employment change alongside labour supply.
Models nevertheless require scrutiny. Their estimates depend on assumptions about how quickly businesses invest, how easily workers replace one another and how productivity responds. A projected gain of a fraction of a percentage point should not be treated as a directly observed increase in every worker’s wages.
Observational research has difficulties of its own. Immigrants often move toward cities where jobs are already plentiful and wages are rising. A study observing that immigrant-heavy cities have strong employment may therefore confuse immigration’s effect with the economic opportunities that attracted immigrants in the first place.
Researchers try to address this problem through historical settlement patterns, comparisons across places, changes in immigration policy and other methods intended to isolate cause and effect. Their findings still depend on assumptions about which workers compete and how businesses respond.
More recent research reinforces the need for caution. A 2026 Federal Reserve study of unauthorized immigration and local labour and housing markets found that immigrant worker inflows increased local employment by approximately the number of arriving workers. Its wage findings were mixed, while the study also found upward pressure on housing costs and lower labour income per capita.
The distinction between labour income per capita and individual wage changes is crucial. A local average may decline because newly arrived workers earn less than established residents, even without equivalent wage cuts for workers already living there. Conversely, a stable average can conceal losses among particular groups if other workers are doing better.
The strongest conclusion is therefore neither that immigration inevitably lowers wages nor that it cannot harm native workers. Immigration expands labour supply, demand and productive capacity simultaneously, but the adjustments occur at different speeds and benefit different people.
For workers with substantial bargaining power, the effect may be barely noticeable or even positive. For those competing in low-paid occupations with limited alternatives, the consequences can be much more serious.
The Crider Plant and the Price of Cheap Labor
In 2006, an immigration-enforcement operation at a poultry-processing plant in Stillmore, Georgia, produced an unusually revealing labour-market experiment.
Crider Inc. employed roughly 900 workers, many of whom were immigrants without legal authorization to work. When immigration agents visited the plant over Labor Day weekend, the company lost approximately three-quarters of its workforce. An employer that had relied heavily on vulnerable migrant labour suddenly needed hundreds of replacement workers.
Crider responded by increasing wages and recruiting locally.
According to the University of California, Davis account of the Crider operation, the company contacted the state Employment Service, which referred approximately 400 job seekers. Crider hired around 200 of them and also worked with a recruitment company called Peacock Poultry to attract Black workers from rural Georgia.
The change in workforce composition was striking. Black employees had reportedly accounted for approximately 70% of Crider’s workers in the mid-1990s, but their share had fallen to about 15% before the 2006 raid. After recruitment efforts, Black workers reportedly accounted for around 65% of the workforce in the autumn of 2006.
Wages also increased. Before the raid, the company was reportedly paying around $6 an hour. Afterwards, reported wages ranged from approximately $7 to $9 an hour, depending on the job and circumstances. The increase provided evidence that at least some positions previously filled by undocumented immigrants could attract local workers when employers offered better compensation.
This directly challenges the familiar claim that immigrants merely perform jobs Americans refuse to do.
People generally do not make employment decisions based on an occupation’s title alone. They consider wages, physical demands, schedules, location, management, safety, transport and whether the job offers a tolerable quality of life. A position that attracts few applicants at $6 an hour may attract substantially more at a higher wage.
But the Crider story did not end with successful recruitment.
Many replacement workers complained about low pay, difficult conditions and how they were treated. Disputes also emerged involving Peacock Poultry, which reportedly cashed some workers’ paychecks, leaving them without documentation needed to establish precisely how many hours they had worked. Employees who believed they had been underpaid sometimes struggled to prove their claims.
The company also experienced high turnover. Workers who had accepted the jobs did not necessarily remain once they experienced the conditions inside the plant.
The initial recruitment demonstrated that wages mattered. The subsequent difficulties demonstrated that compensation was only part of the problem.
Poultry processing is physically demanding work, often involving repetitive tasks, industrial machinery, long shifts and demanding production targets. Employers cannot assume that raising wages slightly will permanently solve recruitment problems if the underlying conditions remain poor.
Crider also illustrated how the availability of vulnerable labour can influence an employer’s willingness to improve jobs.
Workers without legal authorization may fear reporting wage theft, unsafe machinery or abusive supervision because doing so could threaten their employment or expose them to immigration enforcement. Even where legal protections technically apply, the practical ability to exercise those rights may be severely limited.
An employer who knows that workers are afraid to complain possesses bargaining power unrelated to their actual productivity. The resulting advantage can make it easier to maintain low wages and difficult conditions.
Native-born workers can be affected indirectly. If one group of employees is unable to negotiate or report violations, employers may have less incentive to improve standards for everyone performing similar work.
The relevant economic issue is therefore not simply whether immigrants accept unpleasant jobs. It is whether employers benefit from a workforce that cannot bargain on equal terms.
The case also raises difficult questions about employment opportunities for Black Americans.
Historically, Black workers have faced discriminatory hiring practices, exclusion from particular industries and limited opportunities in many regional labour markets. The ability of Crider to recruit large numbers of Black workers after losing access to its previous workforce suggests that employer preferences and wage policies can influence who receives employment opportunities.
A widely debated National Bureau of Economic Research working paper by George Borjas, Jeffrey Grogger and Gordon Hanson examined immigration and African-American labour-market outcomes. Its analysis associated increased competition within certain skill groups with lower wages and employment among Black men, particularly those with limited education.
The estimates attracted attention because they suggested that immigration’s negative effects might be concentrated among workers who already faced serious economic disadvantages. The findings cannot simply be dismissed because the overall national effect of immigration appears small.
However, the research remains contested. Economists disagree over how workers should be grouped into competing skill categories, whether immigration flows can be treated as independent of labour-market conditions and how employers respond when labour becomes more plentiful.
For example, an immigrant who accepts a job in a growing metropolitan area may be arriving because employment opportunities are expanding. If researchers fail to account adequately for that expansion, the relationship between immigration and employment can be misinterpreted.
Regional conditions also differ. A manufacturing town with few alternative employers may react to additional labour supply differently from a major metropolitan economy with rapidly expanding services, construction and business formation.
The Crider example does not establish that removing immigrant workers would always raise local wages without broader consequences. A business facing higher labour costs may recruit additional local workers, but it might also invest in automation, raise prices, reduce output or relocate production. The available choices depend on the industry and the employer’s financial position.
Nevertheless, the case exposes a genuine economic tension. Some businesses benefit from hiring workers who accept wages and conditions that stronger bargaining power might force employers to improve.
That benefit may be profitable for the company and convenient for consumers. It is not necessarily beneficial for workers who would otherwise have received higher wages or better treatment.
Crider’s experience is therefore neither proof that all immigration harms native workers nor proof that employers cannot operate without immigrant labour. It shows that immigration policy, wages and labour rights interact in ways that can substantially change who gets hired and under what conditions.
A Bigger Economy Can Still Leave People Behind
When economists say immigration benefits the economy, they are often referring to increases in total production, consumption or national income. These are important measures, but they do not answer the question most people care about: whether their own economic circumstances improve.
A country with more workers and consumers will generally produce more goods and services. Its gross domestic product can increase simply because more people are participating in economic activity. That does not guarantee a corresponding increase in GDP per person, productivity or the earnings of existing residents.
The distinction becomes important when immigration’s benefits are distributed unevenly.
An employer may benefit from having more applicants available for vacancies. Consumers may benefit when lower labour costs allow businesses to charge less for food, accommodation, childcare or services. Owners of land and capital may benefit from additional demand and production.
Some existing workers may gain as well. Managers, engineers, business owners and professionals whose activities complement immigrant labour can become more productive when firms expand.
Other workers may experience reduced bargaining power or slower wage growth. Their losses may be modest in national statistics but substantial relative to their household income.
Economists use the term immigration surplus to describe the net economic gain that immigration can create for the native-born population after accounting for some of these competing effects. In simplified models, the gains to employers and other beneficiaries can exceed the losses experienced by competing workers.
That aggregate benefit, however, may be small compared with the amount of income redistributed.
One influential illustration of the immigration surplus has circulated with estimates of roughly $54 billion in additional economic gains accompanied by approximately $500 billion in wage redistribution. Those figures are model-dependent estimates, not timeless measurements of every year’s immigration outcomes.
Most importantly, the wage-transfer calculation does not mean that $500 billion was literally withdrawn from workers’ bank accounts and deposited into company treasuries. It refers to wages being lower than they would have been under an estimated alternative scenario, with gains appearing elsewhere through profits, lower prices and other economic adjustments.
The distinction matters because the scale of the redistribution can be much larger than the net gain. An economy might become richer overall while a specific group loses purchasing power, job security or the opportunity to negotiate better conditions.
Consider a simplified example. If a policy creates $50 billion in net benefits while competing workers experience $100 billion in losses and other groups gain $150 billion, the economy is richer by $50 billion. The calculation is arithmetically positive, but it offers little comfort to the workers who absorbed the loss and received no compensation.
This is one reason national GDP growth can coexist with widespread economic frustration.
Housing provides another example of how immigration’s benefits and costs can be distributed differently.
Additional residents increase demand for accommodation, particularly in economically successful metropolitan areas where immigrants often settle. Landlords and property owners may benefit from stronger rental demand, while existing tenants face pressure on their housing budgets.
Whether the effect becomes severe depends on how easily new housing can be constructed. In regions where builders can respond quickly, population growth encourages additional homes, infrastructure and construction employment.
In cities where zoning restrictions, lengthy approvals, expensive land or limited infrastructure constrain development, supply may respond slowly. Additional demand is then more likely to appear as higher rents and prices.
This does not mean immigration is the sole cause of America’s housing affordability problems. Interest rates, construction costs, restrictive land-use rules, investment demand and decades of inadequate supply also matter. But additional population can worsen affordability when the housing market is unable to expand.
The economic mechanisms are closely connected to the broader problems explored in why housing is so expensive. Immigration is one contributor to housing demand, while the severity of its effect depends heavily on the institutions governing supply.
The 2026 Federal Reserve research on unauthorized immigration offers evidence of this interaction. The study found that immigrant worker inflows raised local rents and house prices without a corresponding increase in housing supply during the period examined. That finding is especially relevant because housing construction itself relies heavily on labour, including immigrant workers.
The relationship between immigration and inequality is more complicated than simply comparing the incomes of immigrants and existing residents.
American income inequality was high during the early twentieth century, when immigration was also substantial. Immigration fell after restrictive laws were introduced in the 1920s, and inequality declined during the middle decades of the century. Both immigration and inequality subsequently increased during the late twentieth century.
Plotted on the same graph, these trends can suggest a strong relationship. But two variables moving together does not establish that one caused the other.
The United States experienced enormous economic changes during the same period. The postwar decades saw strong industrial employment, influential trade unions, progressive taxation, rising productivity, expanding education and a manufacturing sector strengthened by America’s position after the Second World War.
The rise in inequality from the 1970s onward coincided with technological change, globalization, weakening unions, changes in taxation, financialization, growing market concentration and large rewards for highly educated workers and owners of capital.
Immigration may have contributed to some of these changes in income distribution, but its independent influence cannot be established by the historical chart alone.
There are plausible mechanisms through which immigration can increase inequality. Competition may reduce wages for certain lower-paid workers while business owners and consumers receive the corresponding gains. Highly skilled immigrants may create considerable wealth that disproportionately rewards founders, investors and specialized employees.
Yet immigration can also increase measured inequality without making existing Americans poorer.
A family arriving from a much poorer country may substantially improve its living standards by moving to the United States. Nevertheless, if its income remains below the American median, adding that family to national statistics can increase measured inequality. That is a change in the composition of the population, not necessarily a deterioration in the income of residents who were already present.
The historical experience of Black migration within the United States adds another dimension.
Historian Jeff Cowie has argued that immigration restrictions helped create employment opportunities for Black Americans moving from the rural South to northern industrial cities during the Great Migration. With fewer foreign workers available, some employers became more willing to recruit Black Americans who had previously faced exclusion.
The argument highlights how access to alternative labour sources can affect employers’ hiring practices. However, it does not establish that immigration restrictions alone created the postwar middle class or explain the improvement in Black employment opportunities.
Industrial expansion, wartime production, unionization, changes in racial discrimination and the broader civil-rights struggle were also central to that history.
Today’s economy differs greatly from the manufacturing economy of the mid-twentieth century. Firms can automate tasks, move production abroad, change their business models or close locations that become unprofitable. Restricting labour supply may raise wages in some circumstances, but employers have more potential responses than simply increasing pay.
There is therefore no credible basis for attributing America’s entire inequality problem to immigration. There is equally little justification for treating immigration’s distributional consequences as irrelevant simply because the national economy grows.
The important question is whether the gains from increased production, lower prices and higher profits reach the workers and communities that bear the adjustment costs.
The Welfare Debate Is Really Several Different Calculations
Arguments about immigration and government finances often rely on statistics that appear impossible to reconcile. One study reports that immigrant households are substantially more likely to receive public assistance, while another concludes that immigrants use fewer welfare and entitlement benefits than native-born Americans.
Both results can be valid because they measure different aspects of the same system.
Understanding the apparent contradiction requires distinguishing between households and individuals, between program participation and actual spending, and between current public costs and lifetime contributions.
A fiscal assessment must also account for taxes. Immigrants may pay income taxes, payroll taxes, sales taxes and property taxes directly or through rent. Some unauthorized workers contribute through payroll deductions or tax filings even when they are ineligible for many federal benefits. Conversely, receiving wages and paying taxes does not automatically imply that the taxes exceed the costs of all public services consumed.
The final balance depends on age, income, employment, legal status, household composition, government spending and the period being measured.
Household Participation Is Not Individual Benefit Consumption
A household participation rate asks whether anyone living in a particular household receives assistance from a public program. That is different from asking how many dollars each individual consumes.
The distinction becomes especially important when comparing households headed by immigrants with households headed by people born in the United States.
Immigrant-headed households may contain more children, have lower average incomes and include several people with different citizenship or immigration statuses. A household can therefore qualify for assistance even when the immigrant adult is employed and personally ineligible for some benefits.
The Center for Immigration Studies’ February 2026 analysis of welfare use, based on the 2024 Survey of Income and Program Participation, estimated that approximately 53% of immigrant-headed households participated in at least one major welfare program. The comparable rate among U.S.-born-headed households was approximately 37%.
The difference is substantial and should not be dismissed.
The report found particularly pronounced gaps in food assistance, Medicaid and the Earned Income Tax Credit. It estimated food-program participation at roughly 35% among immigrant-headed households compared with 22% among U.S.-born-headed households, while Medicaid participation was approximately 39% versus 27%.
It also estimated that around 59% of noncitizen-headed households participated in at least one major program, with differences between legal and unauthorized immigrant households.
These figures demonstrate that public assistance reaches a larger proportion of immigrant-headed households under the study’s definitions. They do not, however, establish that the average immigrant adult personally receives more government money than the average native-born adult.
Many immigrant-headed households include U.S.-born children who are American citizens. Those children may qualify for Medicaid, nutritional support or other benefits even when their parents face eligibility restrictions.
Including the children’s benefits in the immigrant-headed household total is reasonable when examining the fiscal needs associated with that household. It becomes misleading if those benefits are then described as assistance personally received by undocumented immigrant adults.
Household size creates another statistical problem.
Suppose one household contains two adults and one child, while another contains two adults and four children. Even if the probability of any individual receiving assistance were identical, the larger household would be more likely to contain at least one beneficiary.
A household participation statistic therefore reflects family structure as well as individual eligibility and economic circumstances.
This is not an argument for disregarding household-based data. Governments do spend money educating, feeding and treating children, regardless of their parents’ immigration status. Those expenditures are real and must be considered when estimating the fiscal consequences associated with immigration.
The question is what the statistic is being used to prove.
A household-level measure is useful for understanding the prevalence of public assistance among different kinds of families. It is less useful for determining the average dollar amount consumed by a foreign-born individual.
The Cato Institute’s January 2026 analysis of welfare and entitlement consumption approached the issue differently. Rather than treating the entire household as the unit of comparison, it estimated the value of benefits consumed by individuals in 2023.
Under that methodology, immigrants consumed approximately 24% less in welfare and entitlement benefits per person than native-born Americans. The report estimated average immigrant consumption at $8,234, compared with $10,772 for the native-born population.
The difference was particularly pronounced among noncitizens, whose estimated per-person consumption was approximately 53% lower than that of native-born Americans.
Naturalized citizens presented a different pattern. Cato estimated that naturalized immigrants consumed roughly 20% more in benefits per person than native-born Americans, partly because naturalized immigrants tend to be older and therefore participate more heavily in Social Security and Medicare.
This demonstrates why immigrants cannot be treated as one homogeneous population.
The result also reflects the definition of welfare used in the analysis. Social Security and Medicare are enormous entitlement programs associated primarily with old age. A younger immigrant population may consume much less from these programs than an older native-born population, even if some immigrant households participate heavily in means-tested assistance.
When Cato separated means-tested welfare from old-age entitlements, its estimates still showed lower average consumption among immigrants, but the difference in means-tested spending was considerably smaller.
The two studies therefore answer different questions.
CIS is principally examining how frequently households receive particular public benefits. Cato is estimating how much spending can be attributed to individuals of different nativity groups. Their different findings arise partly from the unit of measurement, program definitions and allocation of assistance within mixed-status families.
Neither measure alone establishes whether immigration makes taxpayers richer or poorer.
A complete fiscal calculation must also include the cost of public education, infrastructure and government administration, along with tax payments, employment and future earnings.
It must consider whether a beneficiary is a child who may eventually become a productive taxpayer, an older person who will consume age-related services, or a working adult who receives temporary assistance while contributing taxes.
Even the classification of the Earned Income Tax Credit deserves care. It is a refundable tax credit available to eligible workers with earnings, not simply a payment for remaining outside employment. Counting it as public assistance is defensible, but interpreting participation as evidence of unwillingness to work would be incorrect.
The CIS report itself noted that most immigrant-headed households contain at least one worker. Receiving means-tested support can therefore reflect low earnings rather than a complete absence of employment.
Similarly, eligibility restrictions vary by immigration status, length of residence and program. Some recent lawful immigrants face waiting periods for certain federal benefits. Unauthorized immigrants are generally excluded from many federal assistance programs, although exceptions and state-funded arrangements exist, and eligible U.S.-citizen children in their households may receive support.
Reducing the entire debate to one participation percentage overlooks these legal and economic distinctions.
Federal Gains Can Coexist With State and Local Losses
Even after establishing how much public assistance immigrants receive, the fiscal question remains incomplete. Governments collect taxes throughout people’s working lives and provide services at different stages of life, so current spending cannot be treated as the final lifetime balance.
Age at arrival is one of the most important variables.
An immigrant arriving at 25 may begin working and paying taxes after receiving education financed by another country. An immigrant arriving at 65 has fewer potential working years before requiring age-related services. A child arriving at five may require extensive public education but can later contribute taxes for several decades.
Education and earnings also influence outcomes. Higher-paid immigrants generally contribute more income and payroll taxes, making a positive fiscal balance more likely. Lower-income workers can contribute meaningfully through taxes while still receiving more in certain public services than they directly finance.
These relationships do not mean that a low-income immigrant produces no economic value. A worker may generate benefits for employers, consumers and complementary workers that are not fully reflected in the government’s tax accounts. Fiscal balance and total economic contribution are related but different questions.
The distinction between generations matters as well.
The National Academies found that the second generation—the U.S.-born children of immigrants—was among the strongest fiscal contributors in the population. Education provided during childhood can become a long-term public investment if those children later enter productive employment.
But assigning the economic outcomes of descendants to their immigrant ancestors introduces difficult methodological questions. Ignoring future generations can understate the effects of immigration, while attributing every descendant’s success to the original immigration decision can overstate them.
Fiscal research must choose how far into the future to look and whose contributions to count.
This is one reason long-term estimates can vary dramatically even when researchers begin with similar demographic information.
Some widely discussed lifetime models have produced estimates ranging from approximately $58,000 in positive net fiscal contributions per immigrant to negative balances under alternative assumptions. Applied mechanically to a population of around 55 million, these figures have been used to generate contrasting national totals, including gains approaching $3.2 trillion and losses exceeding $6 trillion.
The impressive size of these numbers can create a false sense of certainty.
They are not historical accounts of money already received or spent. They are extrapolations based on assumptions about taxes, earnings, public services, population characteristics and government policy over exceptionally long periods.
One particularly consequential assumption concerns public goods.
Consider national defence. The United States maintains military forces, equipment, institutions and commitments that serve the population collectively. If one additional immigrant enters the country, military expenditure does not necessarily increase by the average defence spending assigned to an existing resident.
A fiscal model that treats much of this spending as fixed can attribute relatively little additional defence cost to an immigrant. Another model may allocate a proportional share of defence expenditure to each additional person.
Both methods can be useful for different questions. The first estimates the marginal cost associated with adding another resident; the second allocates existing public spending across the population.
They are not interchangeable.
If researchers take an apparently favourable lifetime fiscal projection and assign additional shares of defence, national debt interest and other collective expenses to immigrants, the estimated balance can change substantially.
Further changes to long-term assumptions about government spending and tax policy can produce even larger differences.
This sensitivity is an important warning. It means the fiscal outcome depends heavily on how the question is defined and what assumptions are made about the future.
It does not mean the most pessimistic model must be correct because it produces the largest projected cost. Nor does it mean a positive projection should be accepted without examining its treatment of public spending.
Forecasts stretching over many decades cannot predict every recession, technological change, tax reform, demographic development or political decision. Their purpose is to examine plausible consequences under stated assumptions, not to reveal the exact government balance sheet generations in advance.
The government receiving the revenue is another essential part of the calculation.
Federal authorities collect income and payroll taxes, while state and local governments finance a large share of public education, transport, emergency health care and other local services. A working immigrant can improve federal revenue while a municipality bears significant costs educating their children or providing housing assistance.
The National Academies’ assessment identified this pattern: immigrant fiscal effects can be more favourable at the federal level than at the state and local levels, especially when the education of children is included.
New York’s asylum spending provides a concrete example. The city needed to finance shelter and services immediately. The potential future federal tax contributions of people receiving those services did not automatically create equivalent cash for the city budget.
The Congressional Budget Office’s July 2024 analysis of the immigration surge offers another illustration of why fiscal estimates must be read carefully.
CBO projected that the increase in immigration associated with the 2021–2026 surge would add approximately $1.2 trillion in federal revenues between 2024 and 2034. It also projected around $300 billion in additional mandatory spending and debt-interest costs, producing a net reduction in federal deficits of approximately $900 billion.
The projected economic effects were also substantial. CBO estimated that the surge would increase cumulative nominal GDP by approximately $8.9 trillion over the period.
But these were estimates of the incremental effect of a particular immigration surge, not a fiscal accounting of all immigrants already living in the United States.
The budget calculation also had important boundaries. It focused on federal revenues, mandatory spending and debt-interest effects. It did not comprehensively include discretionary spending decisions or provide an equivalent calculation for state and local budgets.
CBO explicitly acknowledged uncertainty, including the likely fiscal pressures associated with education, health care, housing and other services outside the federal calculation.
The projected $900 billion benefit must therefore not be interpreted as proof that immigration creates no local costs. Equally, New York’s expenditure cannot be treated as proof that CBO’s federal estimate was necessarily wrong.
The two calculations describe different populations, expenditures, governments and time horizons.
The immigration outlook has also changed since the 2024 analysis. The CBO’s 2026 budget and economic outlook incorporates substantially lower net immigration projections than earlier forecasts, reflecting policy changes and enforcement measures.
That matters because projected tax revenues, government spending, labour-force growth and economic output depend on how many people are expected to enter and remain in the country.
The newer outlook does not mean that the historical $900 billion estimate has simply become an observed loss or should be mechanically replaced with its opposite. It means that projections based on a larger expected population cannot be treated as permanent forecasts when the underlying immigration assumptions have changed.
The fiscal picture is further complicated by differences among immigrant groups.
Refugees may initially require considerable support while learning English, obtaining qualifications or establishing themselves in employment. Highly skilled workers with immediate job offers can contribute substantial taxes from the beginning. Unauthorized workers may pay payroll and sales taxes while remaining ineligible for many benefits, although their families may still use public services.
Family immigrants can provide childcare, support household businesses and enable other relatives to work more, creating indirect economic benefits that individual earnings data may not fully capture.
These contributions matter, but they do not remove the need to finance public services efficiently.
The most defensible conclusion is that immigration does not have one universal fiscal balance. Its effects depend on who arrives, when they arrive, their subsequent employment, the services they use, the taxes they pay and the assumptions used to compare those amounts.
Any confident statement that immigrants always pay more than they receive, or that they inevitably impose a net burden on taxpayers, ignores crucial differences in measurement and circumstance.
America’s Talent Advantage—and Its Visa Bottleneck
While the effects of immigration on wages and public finances can vary widely, the economic argument for attracting highly skilled workers is particularly strong.
The reason is not simply that highly educated immigrants earn larger salaries or pay more income tax. Their knowledge can create benefits that extend far beyond their individual employment.
A scientist developing a medical treatment can improve health outcomes and enable other researchers to make further discoveries. An engineer designing better semiconductors can make businesses more productive across entire industries. A founder creating a successful company may employ thousands of workers and encourage the development of suppliers, competitors and related technologies.
Economists describe benefits that spread beyond the original worker or firm as spillovers. They are important because the total value created by a skilled immigrant may be much greater than the wage that person earns.
The United States has been exceptionally successful at attracting international talent and converting it into commercially valuable knowledge.
According to the National Science Board’s 2026 assessment of the American STEM workforce, approximately 22% of U.S. workers in science, technology, engineering and mathematics occupations were foreign-born in 2024. That represented around eight million people out of a STEM workforce of approximately 37 million.
The foreign-born share was even higher in science and engineering occupations, reaching approximately 28%.
These workers contribute across research laboratories, universities, healthcare-related technical fields, software companies, engineering firms and other knowledge-intensive industries. Their importance is not limited to filling existing positions that employers struggle to staff.
Some of the strongest evidence concerns invention.
An NBER study on the contribution of high-skilled immigrants to American innovation found that immigrants accounted for approximately 16% of inventors in the research data but produced around 23% of patents. When patent output was weighted by its estimated market value, the immigrant contribution was approximately one-quarter of the total.
A related analysis of the data reported immigrant inventors as approximately 16.5% of inventors while accounting for around 25.2% of estimated patent market value.
This disproportionate contribution is economically important because patents can represent new technologies, production methods and products that increase productivity beyond the original invention.
The research also found evidence of knowledge spillovers to collaborators, including native-born inventors. Immigrants brought connections to international research networks and foreign technological knowledge, which could help other American researchers become more productive.
The benefit was therefore not confined to patents personally produced by immigrant inventors. Their presence could influence the work of colleagues and the broader innovation environment.
Those findings require an important qualification. The study focused on identified inventors over a particular historical period, using a method for inferring immigrant status. Its results should not be interpreted as a universal measure of the productivity of every highly educated immigrant or every foreign-born worker.
Nevertheless, the research illustrates why immigration can generate economic gains that are difficult to capture through immediate wage comparisons.
Immigrant entrepreneurship provides another example.
Sergey Brin immigrated from the Soviet Union and later co-founded Google. Jensen Huang, born in Taiwan, co-founded Nvidia, which became a central company in the development of advanced computing and artificial intelligence. Elon Musk, born in South Africa, founded SpaceX and helped build Tesla into a major electric-vehicle manufacturer.
These individual examples are familiar partly because their companies became extraordinary successes. They do not prove that every immigrant entrepreneur produces similar outcomes, and selecting famous founders can exaggerate the experience of the average immigrant.
However, broader business data reveal a substantial long-term pattern.
The American Immigration Council’s 2026 Fortune 500 analysis found that 229 of the 500 largest American companies by revenue had been founded by immigrants or their children. Together, those companies generated approximately $9.8 trillion in revenue during fiscal year 2025 and employed around 15.3 million people worldwide.
The distinction between immigrants and their children is essential. Of the 229 companies, 108 were founded by immigrants and 121 by children of immigrants.
It would therefore be misleading to attribute every one of these businesses solely to first-generation immigrant founders. The findings instead demonstrate the economic significance of both immigration and the opportunities available to subsequent generations.
Company revenue also must not be confused with additional national GDP created by immigration. Revenue measures a company’s sales, not the net value added to the economy. Nor can all employees at these firms be counted as jobs that would never have existed in a different immigration scenario.
Even with those qualifications, the scale of immigrant-linked entrepreneurship is difficult to dismiss.
America’s success in this area reflects more than the arrival of talented people. Universities, investment markets, business networks, intellectual-property protections, research institutions and access to customers help determine whether an idea becomes commercially successful.
The United States has often combined talent educated abroad with domestic capital, technology and institutions capable of turning that talent into productive enterprises.
That advantage also creates a difficult issue for countries losing skilled workers. When doctors, scientists and entrepreneurs leave poorer economies, their departure can reduce the human capital available to their countries of origin.
For the United States, the benefits of attracting such workers can be considerable. For the global economy, the consequences are more complicated.
High-skilled immigration is not automatically beneficial to every American professional either. Additional programmers, researchers, doctors or engineers can increase competition within particular occupations. Employers may gain bargaining power when sponsored employees face restrictions on changing jobs.
This matters because American immigration policy does not simply determine who may enter the country. It can shape the balance of power between workers and their employers.
The United States also operates an immigration system that serves several different purposes rather than a single selection process based exclusively on economic potential.
Lawful permanent residence can be obtained through family relationships, employment, humanitarian channels and other categories. Refugees and asylum seekers follow separate procedures, while students and temporary workers may reside in the United States without initially having permanent residence.
Family-based immigration represents a substantial share of lawful permanent admissions, while employment-based categories account for a smaller share. But those legal categories should not be confused with the actual education or productivity of the individuals involved.
Someone receiving residence through a family relationship may be a physician, entrepreneur, engineer or researcher. Conversely, employment-based immigration categories can include spouses and children of the principal worker, so the total does not exclusively represent skilled employees.
Family reunification also has economic consequences that conventional skill-based assessments can overlook.
Relatives can provide childcare, support older family members, pool household savings, help manage small businesses and enable other family members to increase their working hours. These activities can improve household productivity even when the arriving relative does not possess advanced qualifications.
Immigration law therefore has objectives beyond maximizing immediate earnings. Family unity, humanitarian protection and refuge are legitimate policy purposes, although they inevitably involve economic trade-offs.
At the same time, the employment-based immigration system creates considerable obstacles for many workers whose skills appear valuable to the American economy.
For a typical employer-sponsored green-card application, an employer may need to complete the Program Electronic Review Management labour-certification process, commonly known as PERM. This usually involves establishing that the relevant legal requirements have been met before pursuing permanent residence for the worker.
The employer may then file Form I-140, the immigrant petition associated with employment-based categories. Approval of this petition does not necessarily mean that permanent residence can be granted immediately.
Applicants may also need to wait for an immigrant visa number to become available. Their priority date and the availability of visas within their category and country of chargeability determine when the process can advance.
The October 2026 U.S. Department of State Visa Bulletin illustrates the severity of some backlogs. Its employment-based second-preference final action date for India was November 1, 2013, while several other countries had substantially more recent cutoff dates.
These dates are not precise predictions of how long a new applicant will wait, but they demonstrate the extent of oversubscription in particular categories. Workers can obtain qualifications, secure employment and contribute to American businesses while remaining uncertain about their long-term immigration status.
Not every highly skilled applicant follows the same procedure. Some employment-based categories do not require conventional labour certification, and certain individuals may qualify through extraordinary-ability provisions, national-interest waivers or other specialized pathways.
Nevertheless, employer sponsorship and visa backlogs can create a serious problem even for workers who have already demonstrated their economic value.
When legal status depends heavily on one employer, employees may be reluctant to change jobs, challenge management or report mistreatment. The employer gains leverage that extends beyond ordinary workplace relationships.
That dependency can reduce labour-market efficiency. A highly skilled employee may remain in a less productive position rather than accept an opportunity at a company offering better wages or more valuable work, simply because changing employers creates immigration complications.
A policy intended to attract global talent should encourage that talent to move toward the activities where it creates the most value.
The challenge is not to eliminate family immigration and admit only university graduates. It is to recognize that different immigration channels serve different purposes and to design an employment system that does not unnecessarily obstruct valuable workers or compromise their bargaining power.
High-skilled immigration provides unusually strong opportunities for innovation and long-term growth. But recognizing those benefits should not require pretending that lower-skilled workers contribute nothing to the economy.
The Policy Choice: Who Should Bear Immigration’s Costs?
The economic case for immigration ultimately depends on more than the number of immigrants admitted or the total amount of production they generate. A policy can increase national income and still fail the people who experience its most serious costs.
That creates a difficult but unavoidable responsibility for government.
If immigration benefits employers, consumers and owners of capital while imposing concentrated losses on particular workers, policymakers cannot treat the national average as a complete measure of success. They must consider whether those gains are shared, whether workers can protect their interests and whether communities have sufficient resources to adapt.
The first priority is to distinguish the different objectives of immigration policy.
Employment-based admissions can be designed to attract people whose qualifications produce substantial productivity gains, support important industries or address persistent labour shortages. Researchers, scientists, engineers, medical professionals and entrepreneurs can create benefits that extend well beyond their own employment.
But economic value is not confined to workers with university degrees.
Agricultural workers, construction labourers, technicians, caregivers and service employees perform essential functions. Their contribution may involve sustaining production, supporting families or making other workers more productive rather than producing patents or founding large companies.
A sensible system should evaluate the conditions under which these workers are admitted and employed instead of treating formal educational attainment as the sole measure of economic worth.
Employers who argue that American workers refuse particular jobs should face scrutiny over the wages and conditions attached to those positions.
A claim that local workers cannot be found at the current wage does not demonstrate that no local workers are available at any wage. Better compensation, safer workplaces, predictable schedules and improved recruitment can change the number of applicants.
The Crider experience shows both the potential and the limits of this adjustment. Higher wages attracted local workers, but unresolved workplace problems undermined the durability of the recruitment effort.
Strong labour protections are therefore central to economically responsible immigration policy.
Governments should enforce laws against wage theft, unsafe working conditions and illegal retaliation. Workers must be able to report violations without facing disproportionate personal risks, and employers should not be permitted to build business models around immigration-related vulnerability.
Protecting immigrant workers can also protect native-born workers. If employers cannot use fear or legal dependency to suppress complaints, the incentives to maintain low standards across an occupation become weaker.
Employment-based visa rules deserve similar attention.
Allowing sponsored workers greater mobility between employers would reduce dependence on individual firms and enable employees to pursue opportunities where their skills are more valuable. More efficient routes to permanent residence could also reduce years of uncertainty for workers already established in the country.
Annual visa limits and country-based restrictions should be assessed against their consequences for employers, employees and the broader economy. Long backlogs may prevent valuable workers from moving freely even when American businesses want to retain their skills.
At the same time, increasing employment-based admissions should not require dismissing family reunification as economically irrelevant. Family support can influence childcare, work participation, entrepreneurship and long-term integration.
Humanitarian immigration requires a separate approach because its purposes are not limited to economic returns.
A country may decide to protect refugees or asylum seekers because people face persecution, danger or other circumstances covered by its legal and humanitarian commitments. The initial cost of providing that protection does not disappear simply because the decision is morally or legally justified.
The question is how those costs should be financed and managed.
Cities experiencing sudden arrival surges should not be expected to absorb the entire financial burden of a federal immigration challenge through emergency local budgets. More predictable federal support, funding tied to actual arrivals and better coordination over shelter, schooling and healthcare could reduce the gap between national decisions and local responsibilities.
Work authorization is another important part of the solution where the law permits it.
Preventing people from supporting themselves while simultaneously criticizing the cost of their public assistance creates an avoidable economic problem. Faster and more efficient processing can allow eligible people to enter employment, earn income and reduce reliance on emergency services.
Housing policy must also respond to population changes.
Immigration increases demand for housing in the places where people settle, but the affordability consequences are shaped by construction capacity and regulation. Cities that restrict development are more likely to experience rent pressure when population increases, regardless of whether growth comes from immigration or domestic migration.
Expanding housing supply, transport capacity and public infrastructure can reduce the conflict between existing residents and newcomers competing for limited services.
The same principle applies to labour markets. Expanding productive capacity matters as much as deciding who enters the workforce.
The CBO’s revised 2026 economic projections illustrate why reducing immigration does not create a simple economic gain for existing workers.
CBO projected that lower net immigration would slow labour-force growth and reduce potential economic output relative to a scenario with more immigration. A smaller supply of workers could place upward pressure on wages in some sectors, particularly where recruitment was already difficult.
But fewer immigrants also mean fewer consumers, less demand for goods and services, and potentially lower business investment. Some firms may respond to worker shortages by improving productivity, adopting automation or offering higher wages. Others may reduce output, raise prices or move production to places where labour is more readily available.
Reduced population growth can also ease housing demand while reducing incentives to build new homes. The total effect depends on how businesses, consumers and investors respond.
This is why policies designed solely to raise wages by restricting labour supply can produce unexpected results. Higher wages in a particular industry may be accompanied by higher prices, reduced employment elsewhere or slower long-term growth.
The opposite mistake is equally serious. Policymakers cannot assume that increasing labour supply is beneficial simply because employers report shortages or economic output rises.
A better approach would evaluate immigration by occupation, geography, education, income and legal status while accounting for changes over time. Research should examine not only national employment and GDP, but also wage distribution, housing costs, employer bargaining power and pressure on public services.
When particular communities experience concentrated losses, those costs should influence policy.
Wage supports, training, stronger labour standards, effective employment services and investment in affected regions may help workers adjust to economic change. State and local governments facing unusually heavy arrival-related expenses may require additional fiscal support.
Compensation is not a peripheral concern. If the economic gains from immigration accrue broadly while the costs fall heavily on people with limited resources, failing to address those losses can undermine both prosperity and public confidence.
There is also a responsibility to recognize the motives of the people moving.
Immigrants are generally seeking safety, opportunity, financial stability and better futures for their families. Their decisions are shaped by the same aspirations that have influenced generations of Americans. Treating migrants as the cause of every economic hardship ignores the employers, institutions and policy choices that determine how immigration affects wages and living conditions.
But sympathy for immigrants does not require indifference toward the American workers who may experience greater competition or the communities struggling to provide adequate public services.
The economic impact of immigration in the United States is neither uniformly positive nor inherently destructive. Immigration can increase production, strengthen innovation, expand the tax base and create opportunities for businesses and workers. It can also contribute to housing pressure, strain local budgets, weaken the bargaining position of particular workers and redistribute income toward employers, consumers and owners of capital.
Those outcomes are not independent of policy. The rules governing work authorization, employment conditions, visa sponsorship, housing construction and fiscal support help determine which benefits emerge and who absorbs the costs.
The central economic question is therefore not whether America should choose immigrants over existing citizens, or existing citizens over immigrants. It is whether the country can design an immigration system that creates genuine opportunity without depending on exploitation or leaving its most vulnerable communities to absorb the consequences.
A larger economy is valuable, but its size is not the final measure of prosperity. The real achievement would be an immigration system in which the gains from growth, productivity and innovation translate into better lives for the people who make that economy work.
Last Updated on October 30, 2026 by Aseem Gupta