State Financial Distress: Measuring The Impact of Immigration

Foreword:
Defining the costs of immigration is difficult because immigration is not binary (on/off), there appears to be a diminishing point of return where economic benefit from immigration is concerned.

Mass immigration has been used as a price-control on wages and a demand driver for housing inflation. According to the Census, the foreign born in the labor force was 15% as the beginning of the Great Depression and had also reached 15% in 2007.

In the Great Recession, Census data shows that homeownership rates (Excel) have declined  2.5%. The Great Depression was the only other time where homeownership rates (-4%) have had such declines since 1900. (Source U.S. Census) (Update: Great Recession homeownership rates have now fallen over 4%)

In their attempt to create yet another economic bubble, economists, researchers and business leaders are promoting immigration increases in the media. These decision makers, and their apologists, are coming to the realization that a more highly educated immigrant may be more productive than migrant laborers. However, many decision makers still refuse to acknowledge a displacement factor in employment and housing opportunities for established Americans.

The pro-immigration faction is contorting data and bending over backwards to deny that immigration has any detrimental effect on U.S. States, citizens and permanent residents. This paper will simply group available data that indicates a characteristic of the fiscal health of each State. The fiscal health ranking data (Appendix A) consists of "Housing Foreclosures", "High School Graduation Rates", "State Budget Overruns" and official "Unemployment Rates". The States are ranked and sorted from best performing to worst, this ranking score is directly compared with U.S. Census, “Foreign Born Employed in the Labor Force” data.

Table 1: Data is sorted by the state’s fiscal health ranking

	Data Used to Determine Fiscal Rank of Individual States (Data Sorted by Fiscal Ranking)				Not included in ranking - comparison only
Fifty States and District of Columbia	Foreclosure Rate: 1 Foreclosure per X units	High School Graduation Rate	State Overbudget: Total Gap as % of FY2010 Budget	Unemployment Rate: Average 2010-2011	Foreign Born Employed in the Labor Force
Avg. States Above 50th Percentile	2971	79.3%	1.8%	7.3%	8.1%
Mean (50th Percentile) Hawaii	513	75.4%	2.5%	6.4%	20.6%
Avg. States Below 50th Percentile	752	70.6%	2.9%	9.9%	13.0%

When we compare the Foreign Born Employed in the Labor force to the fiscal health rankings, we see a 4.9% lower average foreign born in states that are performing better than those below the Mean. 


Table 1: In the States where the fiscal health is the group above the median we see:

• the occurrence of housing foreclosures in demonstrably lower
• the average High School Graduation Rate is 8.7% higher
• the average of State budget overruns are 1.1% lower 
• the average Unemployment rate is 2.6% lower
• Foreign Born Employed in the Labor Force is 4.9% lower

Table 2: Data is sorted by the foreign born ranking

	Data Used to Determine Fiscal Rank of Individual States (Data Sorted by Foreign Born Ranking)				Not included in ranking - comparison only
Fifty States and District of Columbia	Foreclosure Rate: 1 Foreclosure per X units	High School Graduation Rate	State Overbudget: Total Gap as % of FY2010 Budget	Unemployment Rate: Average 2010-2011	Foreign Born Employed in the Labor Force
Avg. States Above 50th Percentile	2409	77.6%	1.8%	7.9%	4.7%
Mean (50th Percentile) Minnesota	817	86.5%	2.3%	7.1%	7.5%
Avg. States Below 50th Percentile	1302	71.9%	2.9%	9.3%	17.0%

(Sorted by Foreign Born, Minnesota becomes the Mean with a fiscal ranking of 11th)

Table 1: demonstrates that the States that are performing better than those in the lower Mean, also have consistently lower rates of Foreign Born Employed in the Labor Force. Table 1: and Table 2: demonstrate that States with lower averages of Foreign Born Employed in the Labor Force. On average, these States have better fiscal outcomes, lower foreclosure rates, lower unemployment rates and better high school graduation rates.

Table 2: When sorting the data by Foreign Born Employed in the Labor Force:

• the occurrence of housing foreclosures is demonstrably lower
• the average High School Graduation Rate is 5.5% higher
• the average of State budget overruns are again 1.1% lower 
• the average Unemployment rate is 1.4% lower 
• Foreign Born Employed in the Labor Force is 12.3% lower

Examining the Pro-immigration arguments for more immigration…

“Immigrants will buy homes and cure the foreclosure crisis.”

The statement is patently false, employment displacement from immigration has compounded the foreclosure crisis.  Data in Table 1: and Table 2: indicate that states with high immigration rates have foreclosure rates at least twice as high as low immigration states.  Displacing more American workers with High Skill business related immigrants will further destroy home-equity through an inability to maintain the mortgage.  

“We need to fix the educational system, but until then we need immigrants to fill employment demands.”

First, there is no employment demand, in the last decade, employment levels only rose by 2 million, yet the Census shows that 6.9 million immigrants found employment. Second, Table 1: and Table 2: demonstrate that higher immigration levels are associated with lower High School Graduation Rates.

“Immigrants are a net benefit and do not use excessive government services.”

This statement may be true, but Americans displaced by legal and illegal immigrants are eligible for government safety-net services.  The services that immigrants consume are only a portion of the financial impact. Table 1: and Table 2: demonstrate that higher immigration levels are associated with State over-budget conditions.

“Immigrants create employment rather than displacing U.S. citizens and permanent residents.”

Table 1: and Table 2: demonstrate that higher levels of immigration are associated with Higher Unemployment rates during a recovery period. Civilian Population Survey data indicates that immigrants caused a net loss in the meager employment level growth of the last decade. (See Prior Post)

“If we don’t allow them to work here, they will go home and use their education to compete against us!”

If this statement isn’t "protectionism", I may not have a firm understanding of the meaning of the word. If sending educated foreign students home is a problem, maybe we should stop educating these competitors.

Methodology:

By taking the fiscal characteristics of each state, and ranking the results, we have a built-in laboratory to examine the outcome of our recent experiment in elevating the percentage of foreign born in the labor force. Referencing the Great Depression, the experiment of elevating the percentage of foreign born in the labor force has failed before, with similar results.

Financial health data is available for each of the state jurisdictions and the District of Columbia, this financial health data is “ranked” by state. The following categories are ranked and then compared separately to a ranking of foreign born in the labor force data.

The data is the most recent available and slight variations in the periods are inconsequential because we are measuring the outcome of U.S. Immigration policy and the effect on the State’s ability to provide employment, housing and services.

State Financial Health Data:

• Foreclosures – number of foreclosures per X number of housing units (December 2010)
• H.S. Graduation – State graduation rates for the 2006-07 school year (latest available)
• State Budget Shortfall – 2010 budget shortfall data.
• Unemployment – A State average of 2010 and 2011 unemployment statistics to Sept. 2011

The State Financial Health Data: represents responsibilities that we expect from our State Governments and comparing these data on a state by state data demonstrates where financial problems exist.

Scoring System: Each State Financial Health Data: category is aggregated into a State Fiscal Rank, where “ties” exist the data the numbering system contains identical rankings at that level and the total ranking for the category is reduced to account for the tie. The rankings are then totaled and divided by four, to reduce the weight of any categories that contain “ties”.

State Fiscal Rank: The four categories for State Financial Health Data are aggregated to find the Financial Rank. Due to ties, the Financial Rank aggregate category contains ranking from 1 to 47.

Foreign Born in the Labor Force Data: The foreign born in the labor force data was released in 2009 and contains data collected for 2007. (Foreign born data holds no weight in State Fiscal Rankings.)

Source Data:

State Budget Shortfalls:
Kaiser Family Foundation / statehealthfacts.org
http://www.statehealthfacts.org/comparemapreport.jsp?rep=49&cat=1

Unemployment Data by State:

Bureau of Labor Statistics

Local Area Unemployment Statistics (LAUS)
http://www.bls.gov/lau/

Data extracted on: December 20, 2011 (12:09:44 AM)

Unadjusted data Jan. 2010 through Sept. 2011 (excludes preliminary data)

Foreign Born Employed in the Labor Force:
Appendix Table A.
Employed Civilian Foreign-Born Labor Force by State: 2007
www.census.gov/prod/2008pubs/acs-09.pdf

Foreclosure Rate:
Kaiser Family Foundation / statehealthfacts.org

Represents the number of foreclosures filed for every X housing units during the month of December 2010. A foreclosure is a legal procedure by which mortgaged property is sold, upon default, in order to satisfy a debt. Foreclosures generally are governed by state law, and rules may vary between states.
http://www.statehealthfacts.org/comparetable.jsp?ind=649&cat=1

High School Graduation Rates:

SOURCE: U.S. Department of Education, National Center for Education Statistics, Common Core of Data (CCD), "State Nonfiscal Survey of Public Elementary/Secondary Education," 1986-87 through 2007-08; The Averaged Freshman Graduation Rate for Public High Schools From the Common Core of Data: School Years 2002-03 and 2003-04; and Projections of Education Statistics to 2017. (This table was prepared September 2009.)

Appendix A:

Ranking table sorted by rank (Immigration is not a component of "Financial Rank" -- comparison only.)

State	Foreclosure rate 1 per x housing units	High School	State Overbudget	Unemployment Rate	Immigration	Financial Rank	FR Ties
North Dakota	10805	83.1%	0.00%	3.7%	2.4%	1
Nebraska	2839	86.3%	0.92%	4.5%	6.4%	2
South Dakota	1943	82.5%	0.43%	4.8%	1.9%	3
Montana	1692	81.5%	0.00%	7.4%	1.7%	4
Vermont	20841	88.5%	2.83%	5.9%	3.5%	5
Wyoming	3080	75.8%	0.18%	6.5%	3.4%	6
Iowa	842	86.5%	2.26%	6.1%	4.5%	7	Tie
Maryland	1427	80.0%	2.03%	7.3%	15.7%	7	Tie
Massachusetts	1669	80.8%	2.04%	8.2%	17.0%	8
West Virginia	7642	74.8%	0.82%	8.9%	14.3%	9
New Hampshire	1324	81.7%	2.86%	5.7%	5.6%	10
Minnesota	817	86.5%	2.27%	7.1%	7.5%	11
Pennsylvania	1153	83.0%	2.36%	8.3%	6.3%	12
Maine	2351	78.5%	2.80%	7.8%	3.5%	13
Wisconsin	692	88.5%	2.37%	8.0%	5.1%	14
Oklahoma	1086	77.8%	2.84%	6.5%	6.7%	15	Tie
Connecticut	1288	81.8%	2.70%	9.1%	15.9%	15	Tie
Kansas	1148	78.8%	3.39%	6.9%	7.4%	16
Kentucky	1934	76.4%	1.45%	10.2%	3.4%	17	Tie
Virginia	968	75.5%	2.41%	6.6%	13.6%	17	Tie
Missouri	840	81.9%	2.27%	9.3%	4.3%	18
Arkansas	658	74.4%	0.91%	7.9%	5.4%	19
Texas	860	71.9%	1.07%	8.2%	20.6%	20
Delaware	891	71.9%	1.82%	8.3%	9.5%	21
District of Columbia	5488	54.8%	1.30%	10.0%	16.9%	22
Tennessee	1060	72.6%	1.21%	9.7%	5.3%	23	Tie
Hawaii	513	75.4%	2.52%	6.4%	20.6%	23	Tie
Indiana	779	73.9%	1.06%	9.5%	4.9%	24
Ohio	483	78.7%	1.39%	9.6%	4.2%	25
Utah	284	76.6%	2.21%	7.6%	10.3%	26
Alaska	1448	69.0%	2.89%	7.8%	9.5%	27
Idaho	309	80.4%	2.24%	9.4%	7.2%	28
New York	3042	68.9%	3.88%	8.3%	27.0%	29
New Mexico	765	59.1%	1.82%	8.0%	11.7%	30	Tie
New Jersey	718	84.4%	4.00%	9.4%	25.6%	30	Tie
Louisiana	1059	61.3%	2.78%	7.6%	4.2%	31
Colorado	420	76.6%	2.38%	8.8%	11.6%	32
Washington	693	74.8%	2.32%	9.4%	14.3%	33
Mississippi	1238	63.5%	1.93%	10.4%	2.6%	34	Tie
Alabama	1105	67.1%	2.37%	9.5%	3.9%	34	Tie
North Carolina	1398	68.6%	2.62%	10.3%	9.1%	35
Michigan	282	77.0%	1.58%	11.7%	7.1%	36
Rhode Island	870	78.4%	3.48%	11.3%	15.5%	37
Illinois	376	79.5%	4.37%	9.8%	17.8%	38
South Carolina	682	58.9%	2.15%	10.8%	5.5%	39
Oregon	583	73.8%	3.24%	10.3%	12.3%	40
Georgia	365	64.1%	2.88%	10.2%	12.1%	41
Florida	343	65.0%	2.85%	11.3%	23.8%	42
Arizona	201	69.6%	6.50%	9.7%	19.5%	43
California	203	70.7%	5.28%	12.2%	34.9%	44
Nevada	84	52.0%	4.68%	14.1%	25.2%	45