National Data | U.S. Importing Poverty — Despite The Great Recession

By Edwin S. Rubenstein

10/07/2010

In the worst economic crisis since the Great Depression, four million more Americans fell into poverty in 2009, with the total reaching 44 million, or one in seven residents.

Economists say it could have been worse. Unemployment insurance helped millions escape poverty. Others dodged the poverty designation, at least technically, by crashing with their siblings, parents or even non-relatives. The poverty line for a person living alone is $11,161; for a four person household it jumps to $22,128.

Immigration’s role? When the annual poverty data was released last year, I noted that immigration’s impact is two-fold: direct — many immigrants are themselves poor, adding to the poverty population.; and indirect — immigrants compete with and displace native-born Americans, driving them into poverty by bidding down their wages and taking their jobs.

This year, I focus on immigration’s direct impact.

The absolute number of immigrant poor rose by 9.6% in 2009, edging out the 9.4% expansion of native-born poor. But because the immigrant population is growing faster, their poverty rate did not rise as rapidly as the native rate.

Nevertheless, in 2009 foreign-born residents were about 50% more likely to be poor than natives:

More than three-quarters of foreign-born poor are non-citizens, a group that includes temporary workers, recently-arrived legals, and illegal aliens. Fully one-quarter of non-citizens lived in poverty last year.

As catastrophic as this seems, it masks the full impact of the recession. Many aliens, but especially illegals, have left the country after losing their jobs. By emigrating south they kept the U.S. poverty count from moving further north.

Fact is, naturalized citizens are the most rapidly growing slice of the immigrant poor. Their poverty population rose 10.1% in 2009. These immigrants are generally are older, have been in the country longer, speak English fairly well, and have marketable skills. They supposedly represent the "best and the brightest" of immigrant groups.

To be sure, as my table above shows, their poverty rates are low — lower than the native-born — 10.2% vs.12.6%. (But remember, the native-born category includes troubled minorities. The white poverty rate is just 9.4%. Only about 4% of whites are immigrants.)

Rarely mentioned, however, is the role that welfare plays in making it look like this select group has climbed out of poverty. An analysis of Census Bureau survey data found that 33.9 percent of households headed by naturalized Mexican immigrants receive at least one major welfare program.

By contrast, only 14.9 percent of native households receive any welfare.

It is one of the unspoken truths of current immigration policy that immigrants generally, and naturalized immigrants in particular, use a lot of government benefits, i.e. are being paid by the American taxpayer to be here.

This was the case even before the Great Recession: About 80 percent of all immigrant households receiving welfare had at least one person working in 2001. But they are the working poor — with incomes low enough to qualify for welfare.

A broader view of the immigration/poverty nexus is captured by the trend in Hispanic poverty. While Hispanics account for 16 percent of U.S. population, more than one-third of the total increase in the poverty population last year occurred among Hispanics — mostly immigrants, their children and grandchildren.

The Hispanicization of U.S. poverty is still more apparent in the long-run view:

From 1989 to 2009 nearly 60 percent of the increase in the poverty population occurred among Hispanics — mostly immigrants, their children and grandchildren.

Twenty years ago, the Hispanic poverty rate was comfortably below that of blacks. Today the Hispanic poverty rate (25.3 percent) is on a par with the black rate (25.8 percent.)

Establishment poverty "experts" don’t dwell on the role of immigration — because it implies that more restrictive policies might reduce U.S. poverty.

Edwin S. Rubenstein is President of ESR Research Economic Consultants in Indianapolis.

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