PERSPECTIVE ON IMMIGRATION : Balancing the Ledger on Jobs, Taxes : Immigrants overall generate a net surplus of $25 billion a year; the undocumented alone generate a $2-billion deficit. The problem is illegal hiring.

Two principal misperceptions dominate the current bare-knuckle political debate over immigration. One is that immigrants take jobs and reduce the wages of natives. The other is that immigrants are a drain on the public coffers, using more in services than they pay in taxes. Both suggest that immigrants--legal or illegal--are changing our nation for the worse. And both are inaccurate.

Since such impacts are measurable, what explains the prevalence of these misconceptions? Part of the explanation lies in the sheer complexity of the issue. While the overall economic impacts of immigration are positive, they can vary by level of government, the strength of individual labor markets and the types of immigrant on which we focus. But this complex reality has been lost in a debate that all too often demands a simple good or bad bottom line. Labor-market effects. When viewed in terms of the nation as a whole, the studies that use the best data and methods find that immigration has little to no overall effect on the labor-market opportunities of natives. But when the lens is focused on individual labor markets in times of growth and decline, a different, richer picture emerges. In times of growth, immigration actually increases natives’ economic opportunities in labor markets where immigrants are concentrated, because their spending and investing has a ripple effect. (In 1989 immigrants earned and recycled through the economy $285 billion.) In times of economic decline or stagnation, immigration reduces the opportunities of low-skilled workers. Moreover, the one group that is consistently hard-hit by immigration is other recent immigrants.

Distinctions between regional labor markets and periods of the economic cycle are important because job production in the U.S. economy collapsed between 1989 and 1992. So it is not surprising that worries about competition surged and remain with us still, despite the recent upturn in new jobs.

Public-sector impact. This, too, depends on the lens through which the issue is viewed. When all immigrants who arrived since 1970 are examined, it appears that immigrants generate a net public-sector surplus of $25 billion to $30 billion annually. But when a distinction is made among immigrants by legal status, most of this surplus is found to come from legal immigrants. Illegal immigrants, who are poorer and less educated, generate a netpublic-sector deficit of roughly $2 billion.

These findings are sharply at odds with other recent studies that find that immigrants create a huge annual deficit. What accounts for the differing results between those studies and ours? The analyses that purport to find such high costs are flawed in several important ways: They underestimate immigrant incomes and, as a result, the taxes that immigrants pay; they omit or understate major types of taxes such as Social Security and unemployment insurance; they systematically inflate costs, for example, by overstating the rate at which immigrant children attend schools; they inflate the size of the undocumented population, exceeding the government’s own estimates by 50%; they ignore the job-creation effects of immigrants; they overstate the extent to which native workers are displaced, and they inflate the welfare costs associated with displacement, assuming, for example, that displaced natives never return to work.

But if immigrants generate a $25- to $30-billion net annual surplus, as our research indicates, why is the debate over immigration so furious in some sectors? In the first place, federal spending on programs that are targeted to immigrants or to the communities in which they settle has been dramatically reduced as immigration levels have risen. Federal refugee spending fell from $7,000 per refugee in the mid-1980s to $2,000 in the early 1990s. While federal spending on bilingual education fell by 50% through the 1980s, there was an 80% growth in the population of schoolchildren with limited English proficiency.

More important, while immigrants generate a net fiscal surplus, the bulk of the taxes they pay are federal, while the obligations for providing them services remains with local and state governments. Hence, in some communities, immigrants generate a net deficit at the local level.

The scale of recent immigration, its concentration in several states and in urban areas and its pace (half of the current immigrant population was not in the United States 10 years ago) raise serious questions about the fairness of federal fiscal policy. But before a new federal reimbursement policy for state and local governments is proposed, it is necessary to find a principled approach to the redistribution of federal tax dollars.

Such an approach requires an understanding of the differences between the costs imposed by immigrants and by natives. It also requires taking into account the fact that different immigrant groups--legal, refugee, illegal--have very different fiscal impacts.

What is the federal government’s responsibility in terms of policy? For instance, should the federal government be held fully accountable for the public costs that flow from the behavior of employers who profit by hiring the undocumented with impunity?

Sorting out these complex issues with factual information rather than misperceptions is a key first step toward lowering the decibel level in the angry debate over immigration.

Where Immigrants Come From Legal immigration by county or region 1961 to 1970 Mexico: 14% Other Latin American countries: 26% Asia: 13% Europe / Canada: 46% Other countries: (percentage not given) *1971 to 1980 Mexico: 14% Other Latin American countries: 26% Asia: 35% Europe / Canada: 22% Other countries: (percentage not given) *1981 to 1990 Mexico: 12% (Total: 6.0 million) Other Latin American countries: 26% Asia: 45% Europe / Canada: 15% Other countries: (percentage not given) Source: Immigration and Naturalization Service