Immigrants in Arizona : fiscal and economic impacts

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Immigrants in Arizona:
Fiscal and Economic Impacts
Judith Gans
Udall Center for Studies in Public Policy
The University of Arizona
Support for this publication comes
from the Thomas R. Brown Foundations.
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About the Author
Judith Gans is manager of the Immigration Policy Program at the Udall Center for Studies in Public
Policy at The University of Arizona. Her areas of expertise include U.S. immigration policy, economics,
and Latin American development policy. Gans has studied and written about various public policy
topics related to immigration including citizenship and globalization, U.S.-Mexico immigration reform,
immigration in a post-Sept. 11 environment, and historical perspectives on U.S. immigration policy. After
a career in business consulting and raising two children, Gans received her master’s degree in public
administration from Harvard University’s John F. Kennedy School of Government with a concentration
in immigration and economic development. She also received an MBA from the University of California
at Los Angeles, and a B.A. in economics from Stanford University. She was raised in Mexico and Brazil
and is fluent in Portuguese.
Acknowledgments
I am deeply grateful to the Thomas R. Brown Foundations for the opportunity to conduct this
study. Having comprehensive, credible data on the role of immigrants in Arizona that deepens our
understanding of its impacts can only enhance our capacity as a society to grapple with complex issues
of immigration policy. A number of people were central to the completion of this project, and I would
like to thank them for their patience, hard work, and dedication. My research assistant, Chung Choe, a
Ph.D. student in the Department of Economics at The University of Arizona, was unfailingly thoughtful
and diligent and acted as a helpful sounding board in thinking through possible approaches to this work.
In addition, Vera Pavlakovich-Kochi, senior regional scientist in the Economic and Business Research
Center at The University of Arizona’s Eller College of Management, was invaluable in helping me to
navigate the complexities of doing input-output analysis with the IMPLAN® model. Robert Merideth,
Renee La Roi, and Emily Dellinger McGovern of the Udall Center Publications team provided helpful
feedback on this document. As always, I am grateful to the Udall Center’s director and deputy director,
Drs. Stephen Cornell and Robert Varady, for their guidance and support. Finally, I want to thank my
husband, Joseph Kalt, for his unfailing support of and enthusiasm for my work. - JG
Immigrants in Arizona: Fiscal and Economic Impacts
by Judith Gans
Udall Center Publications
Robert Merideth, Editor in Chief
Emily McGovern, Editorial Associate
Renee La Roi, Senior Graphic Designer
Ariel Mack, Graphic Designer
ISBN-13: 978-1-931143-37-0
ISBN-10: 1-931143-37-4
LCCN 2008930594
Published by the Udall Center for Studies in Public Policy, The University of Arizona
Copyright © 2008 by the Arizona Board of Regents
All rights reserved
This version (June 2008) of the report is slightly revised from an online version posted July 2007.
Cover photos courtesy from back to front:
teacher reading with child from the U.S. Census Bureau; math class photo by Tungsten; worker by Rolf
Obermaier, palm trees and lab coat workers by Robert Walker from The University of Arizona Library;
police officer and child from the Flagstaff Police Department.
Design and layout by Renee La Roi
Udall Center for Studies in Public Policy
The University of Arizona
803 E. First St., Tucson, AZ 85719
(520) 626-4393
udallcenter.arizona.edu
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Table of Contents
page section
v Preface
3 Executive Summary
9 Demographic Characteristics
21 Framework for Analysis
27 Fiscal Costs
27 Education
30 Health Care
34 Law Enforcement and Other Costs
39 Economic Contributions
39 As Consumers
43 As Workers
43 Contributions to All Sectors
51 Contributions to Specific Industries
57 Net Fiscal and Economic Impacts
61 Conclusions
65 Appendix: Data Tables and Acronyms
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Preface
Arizona’s 362-mile border with Mexico is integral to its history. The border shapes
immigration’s impacts in the state and the ways Arizona grapples with the myriad
elements of immigration debates: numbers and types of immigrants, the extent of illegal
immigration, and the impacts of immigrants on the state’s fiscal and economic health. This
study is intended to provide data and analysis that deepens our understanding of the
economic consequences of immigrants (from all nations) in Arizona. To this end, we analyze
the role immigrants play as consumers and as workers, and examine their major incremental
fiscal impacts on the state’s budget. For reasons of data availability, this analysis was done
for calendar year 2004.
A few definitions of terms are in order. We use the terms immigrant and foreign born
interchangeably. These terms, in turn, divide into two sub-categories: naturalized citizens and
non-citizens. As in the U.S. Census, immigrants or foreign born are defined as the sum of
naturalized citizens plus non-citizens.
Arizona’s foreign-born population has grown dramatically since 1990 when there were about
268,700 foreign-born persons in the state. By 2004, that population had grown to 830,900.
This is more than a 200 percent increase. The vast majority of these new immigrants are in
the non-citizen category, which went from 163,300 to about 619,800, an increase of almost
280 percent. Most immigrants are of working age and have come to the United States
seeking employment. This fact is central to their impacts in Arizona.
The likelihood that many of Arizona’s non-citizens are undocumented immigrants has fueled
anger over lawlessness and made discussion of immigration in Arizona politically contentious.
But Arizona’s experience is a specific case of a national problem, one that exists because
large economic incentives in today’s global economy are overwhelming the U.S. immigration
system–a system that is widely understood to be in need of reform. Public discourse that
equates immigration and illegal immigration is narrowly focused and risks overlooking broader
dimensions of the role of immigrants in the economy.
It is not the purpose of this study to address the myriad issues surrounding illegal immigration
or to imply in any way that illegal immigration is not a problem. Rather, the objective of this
study is to suspend, for the moment, discussion of this narrow topic and focus instead on
a broader examination of all immigrants’ impacts on Arizona’s economic and fiscal health.
By so doing, we hope to create a more thorough understanding of the economic costs and
benefits of immigration and of the tradeoffs involved in setting and enforcing immigration
policy.
In Brief
Arizona’s proximity to Mexico, the growth of its immigrant population, and the
proportion of immigrants that are in the United States illegally have made immigration
a contentious issue. This study is intended to step back from debates over illegal
immigration and deepen our understanding of the costs and contributions of immigrants
to Arizona’s economy.
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executive Summary ___________________________________________
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Executive Summary
This report examines the costs and benefits of immigration in Arizona. It provides estimates
the major incremental fiscal cost associated with immigrants–for education, health care,
and law enforcement–and measures their contributions to Arizona’s economy both as
consumers and as workers. The two categories of immigrants (naturalized citizens and non-citizens)
are examined separately to disentangle the economic costs and benefits associated
with each.
The bottom line
Based on this study, the total state tax revenue attributable to immigrant workers was an
estimated $2.4 billion (about $860 million for naturalized citizens plus about $1.5 billion for
non-citizens). Balanced against incremental fiscal costs of $1.4 billion for education, health
care, and law enforcement, immigrants in Arizona generated a net 2004 fiscal contribution
of about $940 million toward services such as public safety, libraries, road maintenance,
and other areas. Because the incremental costs incurred by immigrants in these areas are
difficult to measure directly, they are not included in this report.
The 2004 total economic output attributable to immigrant workers was about $44 billion
($15 billion for naturalized citizens and $29 billion for non-citizens). This output included
$20 billion in labor and other income and resulted in approximately 400,000 full-time-equivalent
jobs.
Fiscal costs of immigration
Estimates of the incremental fiscal costs of immigration were derived from a variety of
sources. In summary:
o Education: For this analysis, English Language Learner (ELL) enrollment was used
as a proxy for the number of immigrant children in Arizona’s public schools. The
2004 cost of ELL education in Arizona was about $540 million of which about $350
million (65 percent) was incurred in Maricopa County.
o Health care: Total uncompensated care costs (reported as bad debt) for hospitals
in Arizona was about $420 million, of which an estimated $150 million (32 percent)
was incurred by immigrants. Of the $150 million in uncompensated care costs
associated with immigrants, nearly $140 million was incurred by non-citizens.
The total cost in 2004 of Arizona Health Care Cost Containment System (AHCCCS),
Arizona’s Medicaid program, was $4.3 billion, of which an estimated $640 million
was incurred by immigrants. Of the $640 million in AHCCCS costs associated with
immigrants, about $480 million was incurred by non-citizens.
o Law enforcement: In the area of law enforcement, the cost to the Arizona
Department of Corrections of incarcerating immigrants in 2004 was $91 million, of
which $89 million was for non-citizens.
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Immigrants as consumers
As consumers, immigrants bring considerable spending power to Arizona’s economy. This
spending contributes to Arizona’s overall economic performance, and, in turn, generates tax
revenues for the state.
o Jobs and income: Consumer spending in 2004 by naturalized citizen households
in Arizona was an estimated $6.1 billion. Approximately 39,000 full-time-equivalent
jobs can be attributed to this spending along with $5.9 billion of output in the state’s
economy. This output included labor income of $1.2 billion, and other income
(defined as rents, royalties, dividends, and corporate profits) of $900 million.
Consumer spending in 2004 by non-citizen households in Arizona was an estimated
$4.4 billion. Approximately 28,000 full-time-equivalent jobs can be attributed to
this spending along with $4.3 billion of output in the state’s economy. This output
included labor income of about $930 million, and other income (defined as rents,
royalties, dividends, and corporate profits) of $560 million.
o Tax revenues: Consumer spending in 2004 by Arizona’s naturalized citizens
generated tax revenues of approximately $460 million, consisting of personal taxes
of about $49 million, sales taxes of about $210 million, and business taxes of $190
million.
Consumer spending in 2004 by Arizona’s non-citizens generated tax revenues of
approximately $320 million, consisting of personal taxes of nearly $36 million, sales
taxes of $150 million, and business taxes of about $130 million.
Immigrants as workers
Immigrants in 2004 were 14 percent of Arizona’s workforce, and were a larger proportion of
low-skilled labor in agriculture, construction, manufacturing, and certain service industries.
High-skilled immigrants were a large percent of the workers in specific areas of medicine
and science.
In low-skilled occupations in Arizona:
o Agriculture: Immigrants were 59 percent of the workforce in farming occupations
and 22 percent of the workforce in food-preparation-and-serving occupations.
o Construction: Immigrants were between 35 percent and 41 percent of the
workforce in certain construction trades such as brick masons, flooring installers,
and cement masons. They were 27 percent of the workforce in all construction
trades.
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o Manufacturing: Immigrants were 35 percent of the workforce in food-related
manufacturing, 46 percent of the workforce in textile-related manufacturing, and 22
percent of the workforce in metal-working manufacturing.
o Service industries: Immigrants were 34 percent of the workforce in occupations
providing services to buildings, 51 percent of the workforce in landscaping-services
occupations, and 38 percent of the workforce in building-and-grounds maintenance.
Immigrants were 26 percent of the workforce in traveler-accommodations
occupations, 23 percent of the workforce in restaurant-and-food-serving occupations,
and 33 percent of the workforce in private-household help.
In high-skilled occupations in Arizona:
o Medicine: Immigrants were 38 percent of medical scientists and 19 percent of
physicians and surgeons.
o Science: Immigrants were 36 percent of astronomers and physicists, 16 percent
of computer-hardware engineers, 18 percent of computer-software engineers, and
17 percent of electrical and electronics engineers. Immigrants were 15 percent of
economists.
Economic contributions of immigrant labor
Approximately $15 billion, or four percent, of the state’s output can be attributed to
naturalized citizen workers, resulting in about 120,000 full-time-equivalent jobs. This output
included $4.9 billion in labor income and $1.9 billion of other income in the state. State tax
revenues resulting from this economic activity were approximately $860 million.
Non-citizens, for their part, contributed about $29 billion, or eight percent of Arizona’s
economic output, resulting in about 280,000 full-time-equivalent jobs. Their output included
$10 billion in labor income, and $3.3 billion in other property income. The state tax revenues
resulting from this economic activity were approximately $1.5 billion.
The role of immigrants as workers can be further understood by analyzing the potential
consequences of this source of labor not being available. In other words, what would be the
impacts if immigrant labor were removed from the economy?
To this end, this study used a series of computer simulations to examine the impacts of
reduced immigrant labor on the industries that employ relatively large numbers of immigrants.
The study focused on industries employing low-skilled, non-citizen workers because this is
where recent growth in Arizona’s immigrant population has occurred and because we know
that significant numbers of these workers are in the country without authorization. Thus,
the simulations are designed to estimate the economic consequences of eliminating this
segment of the workforce.
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o Agriculture: A 15-percent, immigrant-workforce reduction in the agriculture
sector would result in direct losses of 3,300 full-time-equivalent jobs, and losses of
about $600 million in output including lost labor income of about $200 million, and
lost other income of about $110 million. The lost direct state tax revenue would be
approximately $25 million.
o Construction: A 15-percent, immigrant-workforce reduction in the construction
sector would result in direct losses of about 56,000 full-time-equivalent jobs, and
about $6.6 billion in output including lost labor income of about $2.6 billion and
some $450 million in lost other income. The direct lost state tax revenue would be
approximately $270 million.
o Manufacturing: A ten-percent reduction in immigrants in the manufacturing
workforce would result in direct losses of about 12,000 full-time-equivalent jobs,
and about $3.8 billion in output including lost labor income of about $740 million,
and lost other income of nearly $290 million. The lost direct state tax revenue
would be approximately $100 million.
o Service industries: In the service sectors analyzed, a 16-percent reduction in the
immigrant labor force would translate to direct losses of 54,000 full-time-equivalent
jobs, and lost output of $2.5 billion including reduced labor income of about $900
million, and reductions in other income of about $270 million. The lost direct state
tax revenue would be nearly $160 million.
Net fiscal impacts of immigrants
Total state tax revenue attributable to immigrant workers was estimated to be about $2.4
billion ($860 million for naturalized citizens plus $1.5 billion for non-citizens). Balanced
against estimated incremental fiscal costs of $1.4 billion, immigrants in Arizona generated a
net fiscal contribution of $940 million toward services such as public safety, libraries, road
maintenance, and other areas. Because the incremental costs incurred by immigrants in
these areas are difficult to measure directly, they are not included in this report.
As 14 percent of the workforce, immigrants make significant contributions to Arizona’s
economy. There are also specific fiscal costs associated with immigrants. But, by virtue of
their contributions as workers to Arizona’s economic output, their overall contribution
to the state’s fiscal health is positive. Certainly, these impacts are changing over time, but
looking at data for one year provides a snapshot of the extent and magnitude of the role of
immigrants in Arizona’s economy.
Note: We have estimated the incremental (marginal) costs of immigrants as individuals. If the
immigrants were not present in Arizona, these costs would disappear. Immigrants’ impacts
on costs of social services, such as fire and public safety protection, are not estimated
because it is extremely difficult to measure the incremental costs attributable specifically to
immigrants for these services.
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Demographic Characteristics
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Demographic Characteristics
How large is Arizona’s immigrant population? How rapidly is
it growing?
Arizona’s foreign-born population has grown significantly since 1990 when there were
268,700 immigrants in the state. By the year 2000, the number of immigrants had grown
by 143 percent to 652,200 and by 2004 it had grown to 830,900 persons, an increase of
over 200 percent from 1990. The largest increases occurred among non-citizens. During
the same periods, Arizona’s native-born population grew by 32 percent between 1990 and
2000 and another ten percent by 2004 to a total of 4,913,000. The result is that Arizona’s
total population in 2004 was 57 percent larger than it was in 1990. These data from the U.S.
Census Bureau are reported in Table 1.
Table 1. Growth in Arizona’s Population
(thousands of persons)
1990 2000
Change
1990–2000
(%) 2004
Native-born U.S. citizens 3,396.6 4,478.4 32 4,913.0
Foreign-born persons 268.7 652.2 143 830.9
Naturalized citizens 105.4 194.9 85 211.1
Non-citizens 163.3 457.3 180 619.8
Total 3,665.3 5,130.6 40 5,743.9
Note:
Native-born and foreign-born shares of total population for 2004 are assumed to be the same as for 2005 as reported in
the American Community Survey (see http://www.census.gov/acs).
Sources:
1990 snd 2000 U.S. Census and 2005 American Community Survey
How much of Arizona’s immigrant population is here illegally?
We do not know. The U.S. Census does not ascertain legal presence in the United States
when conducting its surveys and so the non-citizen category includes both legal and illegal
non-citizen immigrants. However, there are reasonable, statistically derived estimates.
Research by Jeffrey Passel at the Pew Hispanic Center indicates that, in 2002, there were
between 250,000 and 350,000 unauthorized immigrants in Arizona, most of whom came
from Mexico, and that by 2005 their numbers had increased to as many as 500,000.1
How does the age-profile of immigrants differ from that of
native-born Arizonans?
In contrast to the native-born population, Arizona’s immigrants are primarily of working
1. Passel, Jeffrey S., 2006, The Size and Characteristics of the Unauthorized Migrant Population in the U.S.: Estimates
Based on the March 2005 Current Population Survey, Washington, DC: Pew Hispanic Center
(see http://pewhispanic.org/files/reports/61.pdf).
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age. Figure 1 illustrates numbers of native-born and foreign-born persons in five-year age
groups and reveals large differences in the age structures of these populations in Arizona.
It should be noted that children born in the United States to immigrant parents are native-born
citizens and therefore counted as such. Of 1,365,000 native-born children ages18 and
under, 263,000 have at least one foreign-born parent. Tables A-1 and A-2 in the Appendix
of this document provide additional, more detailed, data on the age structures of Arizona’s
native-born and foreign-born populations.
Figure 1. Age Distributi on of Arizona ’s 2000 Populati on:
Number of Persons per Age Group
Source: U.S. Census, 2004
0
50000
100000
150000
200000
250000
300000
350000
400000
0-4 5-9 10-
14
15-
19
20-
24
25-
29
30-
34
35-
39
40-
44
45-
49
50-
54
55-
59
60-
64
65-
69
70-
74
75-
79
80-
84
85
+
Native Born Foreign Born
Figure 2 details the changes between 1990 and 2000 in these age groups by gender. The
growth in Arizona’s immigrant population has been concentrated among people of working
age while the native-born population has seen greater growth among people less than
25 and more than 35 years old. The number of native-born women in Arizona between
the ages of 25 and 34 actually declined during the period and the number of native-born
men increased only slightly. This means that immigrants have been critical to the growth in
Arizona’s labor force, especially of workers between the ages of 20 and 35.
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Figure 2. Changes (1990 to 2000) in the Number of Arizona
Residents by Age Group, Gender, and Nati vity
Source: 1990 and 2000 U.S. Census
How does the educational attainment of immigrants compare
to that of native-born Arizonans? Why does this matter?
Educational attainment is a commonly-used proxy for skill and is a demographic characteristic
with significant implications in a number of areas. For our purposes, it provides an indication
of the extent to which immigrants compete for employment with native-born workers, and
is important in estimating the net fiscal impacts of immigrants. The extent of workforce
competition between immigrants and native-born persons depends directly on how similar
or different the skills of these two groups are.
When immigrants’ skills are very similar to native-born workers, the two groups are more
likely to compete with each other in the workplace. This competition leads to lower wages
and higher profits, causing a tendency toward increased investment in existing industries.
When immigrants’ skills are very different from those of native-born workers, the two
groups are more likely to play complementary roles in the workplace. In this case, the
types of production possibilities expand and wages of complementary workers tend to rise.
Expanded production possibilities mean that investment in new industries tends to increase
or existing industries that rely on immigrants’ skills tend to expand.
It should be noted that using education as a proxy for skill and as a measure of workplace
competition is most valid in those occupations where knowing English is not important.
New immigrants compete most directly in the workforce with other recent immigrants.
0
10
20
30
40
50
60
70
0-4 5-9 10-
14
15-
19
20-
24
25-
29
30-
34
35-
39
40-
44
45-
49
50-
54
55-
59
60-
64
65-
69
70-
74
75-
79
80-
84
85 +
Change in native-born males
number of persons (thousands)
Change in foreign-born males Change in foreign-born females
Change in native-born females
age groups
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Immigrants differ, on average, from native-born Arizonans in their levels of education. Within
the immigrant population, naturalized citizens also differ from non-citizens.
Table 2 shows educational attainment for Arizona adults 25 and older as of the 2000 Census.
We see that relatively few native-born Arizonans are low-skilled–over 86 percent of native-born
citizens have at least a high-school education. Among naturalized citizens, 63 percent
are high-school graduates while only 41 percent of non-citizens have graduated high school.
The percentages given in this table tell us how likely individuals within each citizenship
category are to have a given level of education.
Table 2. Educational Attainment of Arizona Residents by
Citizenship Status
(thousands of persons)(1)
Educational
attainment
Native-born Foreign-born
=
Naturalized
citizens
+
Non-citizens
Number % Number % Number % Number %
9th grade or less 124.0 4 150.1 32 38.0 22 112.1 38
Some high school 288.7 10 87.3 19 26.4 15 60.9 21
High-school
graduate 715.7 26 85.4 18 36.0 21 49.4 17
Some college 981.1 35 78.0 17 41.3 24 36.7 12
College graduate 436.8 16 38.8 8 19.3 11 19.5 7
Master’s degree 163.1 6 16.8 4 8.0 5 8.8 3
Professional
degree 47.6 2 8.1 2 3.9 2 4.2 1
Ph.D. 24.5 1 4.9 1 2.1 1 2.8 1
Total: 2,781.5 100 469.4 100 175.0 100 294.4 100
Note:
(1) includes only number of persons 25 years of age and older in each category
Source:
2000 U.S. Census
What proportion of those in each educational attainment
category are immigrants?
Examining immigrants’ share of a given educational attainment category sheds further light
on the role of immigrant and native-born workers in various skill segments of Arizona’s
labor force. Figure 3 illustrates that over half (55 percent) of all Arizonans with less than
a 9th grade education are foreign born. This is particularly striking in light of the fact
that immigrants are only 12 percent of the overall population. Native-born citizens are the
majority of all other education categories with the largest concentrations occurring among
those with a master’s degree or less. Immigrant shares of those with professional degrees
and Ph.D.s are higher than other categories beyond high school. These data indicate that
low-skilled immigrants are likely to be working in jobs that most native-born workers, with
their higher levels of education, are less well-suited for and that high-skilled immigrants are
also filling specific niches in Arizona’s labor markets.
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According to the U.S. Census, 38 percent of all medical scientists in Arizona are foreign
born, as are 35 percent of astronomers and physicists, 17 percent of chemists and materials
scientists, 17 percent of electrical and electronics engineers, and 16 percent of computer-hardware
engineers. We see that immigrants are concentrated in the two ends of the skill-spectrum:
those with less than a high-school education and (to a lesser extent) those with
graduate degrees. This illustrates the economic incentives that fill gaps in the native-born
labor force with immigrants.
Figure 3. Immigrants as a percent of arizonans in each
Educati onal Attainment Categ orY
Source: U.S. Census, 2004
17%
15%
7% 8% 9%
11%
23%
55%
Up to 9th
Grade
Some HS HS
Graduate
Some
College
College
Graduate
Masters
Degree
Professional
Degree
PhD
Non Citizen
Naturalized Citizen
Where do Arizona’s immigrants work?
Immigrants as workers are 14 percent of Arizona’s labor force overall and are found in
higher percentages in such sectors as agriculture, construction, and manufacturing (Figure
4). Some service industries, such as leisure and hospitality, are also particularly reliant on
non-citizen labor.
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Figure 4. Immigrants as a Percent of total Workforce
by Industry Group in Arizona
Source: U.S. Census, 2004
16.6
18.8
19.4
20.3
23.0
43.9
16.5
14.2
11.5
10.4
10.2
8.3
4.6
5.0
6.5
7.1
7.9
Active duty military
Utilities
Public administration
Mining
Communications
Finance and real estate
Health and education services
Transportation and warehousing
Retail Trade
Arizona total
Services to businesses and professions
Wholesale trade
Other services
Leisure and hospitality
Manufacturing
Construction
Agriculture and forestry
Naturalized citizens
Non-citizens
Why look at detailed information about immigrant
employment and occupations?
Immigrants are important to specific sectors of the economy. Table 3 details their importance
to manufacturing, services to buildings, landscaping services, and so forth. They are also vital
to specific occupations within industries. This is important because any industry require a
range of skills in its workforce. In construction, for example, completing a building requires
filling an array of occupations including construction managers, framers, electricians, brick
masons, stone masons, dry-wallers, roofers, and so forth. If one or more of those occupations
is heavily reliant on immigrant labor, then the entire enterprise, in a very real sense, also
depends on immigrant labor. This is the essence of what is meant by “complementary
skills.”
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Table 3. Economic Sectors in Arizona with
High Immigrant Employment
(immigrants as a percent of workers per sector)
Industries
Foreign-born
= Naturalized
citizens + Non-citizens
Manufacturing (by category):
Food-related
Textile-related
Metal working
35
46
22
10
15
7
25
31
15
Services to buildings 34 6 28
Landscaping services 51 7 44
Traveler accommodations 26 7 19
Restaurant/food serving 23 5 18
Private household help 33 8 25
Occupations
Foreign-born
=
Naturalized
citizens
+
Non-citizens
Construction trades (by category):
Brick masons
Flooring installers
Cement masons
All construction trades
35
36
41
27
5
6
11
5
30
30
30
22
Farm occupations 59 11 48
Production occupations 28 8 20
Building and grounds maintenance 38 8 30
Food preparation and serving 22 5 17
High-skilled occupations (by category):
Medical scientists
Physicians and surgeons
Astronomers and physicists
Computer hardware engineers
Electrical, electronic engineers
Computer software engineers
Economists
38
19
36
16
17
18
15
14
12
12
9
9
6
5
24
7
24
7
8
12
10
Source:
2000 U.S. Census
Where are Arizona’s immigrants from?
As of 2000, 68 percent of Arizona’s 652,200 immigrants were from Mexico, and most were
non-citizens (see Table 4). The other 32 percent were from a combination of Asia, Europe,
and Central and South America. Europe and Asia are the next largest regions of origin
for Arizona’s foreign born with 11 percent of immigrants in Arizona from each of these
regions. A much higher proportion of non-Mexican immigrants are naturalized citizens. Low
naturalization rates among immigrants from Mexico result from a combination of factors
including their relatively recent arrival to the United States (it takes time to become a
naturalized citizen) and the likelihood that a significant number are unauthorized.
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Table 4. Arizona’s Immigrants by Regions of Origin
(thousands of persons)
Naturalized
citizens Non-citizens
Total
foreign-born
Region of origin Number % Number % Number %
Mexico 93.3 14. 349.1 54. 442.4 68.
Asia 35.2 5. 36.3 6. 71.5 11
Europe 40.9 6. 29.9 5. 70.8 11
Central and South America 12.0 2. 20.9 3. 32.9 5.
Canada 9.7 2. 14.3 2 24.0 4.
Africa 2.9 <1 5.2 <1 8.1 1.
Oceania and other 0.9 <1 1.6 <1 2.5 <1
Total foreign-born 194.9 30. 457.3 70 652.2 100.
Source:
2000 U.S. Census
Where do immigrants in Arizona live?
More than two out of three immigrants in Arizona live in Maricopa County, with the second
largest concentration, at 14 percent, in Pima County followed by Yuma County at 7 percent.
This concentration reflects the high proportion of working-age immigrants in Arizona and
the reality that a large share of Arizona’s economic activity, especially in manufacturing,
is centered in Maricopa County. This means that the economic benefits and costs of
immigration–in fact all of the ramifications of integrating large numbers of newcomers to
the fabric of society–occur disproportionately in Maricopa County.
Figure 5 illustrates the geographic distribution of immigrants in Arizona. These data are
provided in more detail in Table A-3 of the Appendix.
17
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Figure 5. Arizona ’s Immigrant Populati on by
County of Residence, 2000
percent
Source: U.S. Census, 2004
0.5
0.8
1.5
2.2
3.1
4.2
7.3
11.8
68.7
Apache and Navajo
Coconino
Yavapai
La Paz and Mohave
Gila and Pinal
CGGS
Yuma
Pima
Maricopa
Naturalized citizens
Non-citizens
Note: “CGGS” refers to Cochise, Graham, Greenlee, and Santa Cruz Counties as grouped by the U.S. Census Bureau.
In Brief
Arizona’s foreign-born population grew by over 200 percent between 1990 and 2004
to a total of 830,900 persons, with an estimated 450,000 to 500,000 of them
unauthorized. Arizona’s foreign-born are primarily of working age. Between 1990 and
2000, 52 percent of the increases in 20-to-45-year-olds were immigrants. Immigrants
fill specific gaps in the labor force. They comprise 55 percent of those lacking a high
school education, making them an important source of low-skilled workers. These
workers are concentrated in construction, agriculture, manufacturing, leisure, and
service industries. Immigrants are 15 percent of those with professional degrees and
17 percent of those with Ph.D.s in Arizona, and vital workers in some high-skill sectors.
Sixty-nine percent of Arizona’s foreign born are from Mexico and most live in Maricopa
County.
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page IMMIGRANTS IN ARIZONA
19
page
Framework for Analysis _____________________________________
20
page IMMIGRANTS IN ARIZONA
21
page
Framework for Analysis
This report examines the fiscal costs resulting from immigration along with immigrants’
contributions to Arizona’s economy. Fiscal costs result from providing public services such
as education and health care to immigrants. Immigrants’ contributions to Arizona’s economy
result from their roles as consumers and as workers. Examining the role of immigrants in
Arizona’s economy requires analyzing four areas:
o What are the fiscal costs of immigrants in the areas of education, health care, and
law enforcement? (see p. 27)
o What are the consequences of immigrants’ consumer spending on the economic
output, job growth, and incomes of all Arizonans? (see p. 39)
o What role do immigrant workers play as producers in Arizona’s economy?
(see p. 43)
o What are the fiscal gains from immigrant spending and productive contributions
to the economy? (see p. 57)
Figure 6 illustrates the approach we used to assess the economic and fiscal impacts of
immigrants in Arizona.
Figure 6. Framework for Anal ysis of THE role of Immigrants
in Arizona ’s Economy
Source:
American Community Survey of the U.S. Census Bureau and the Arizona Department of Health Service
22
page IMMIGRANTS IN ARIZONA
How do we measure economic impact?
Input-output models, such as IMPLAN® (see p. 40), are designed to analyze the economic
and fiscal consequences of specific events for a region’s economy. We examined two ‘events’
with regard to immigrants in Arizona: (1) the economic stimulus resulting from immigrant
spending in the economy (immigrants as consumers); and (2) the productive capacity and
consequent output of immigrants in the workforce (immigrants as workers). By looking
structurally at these two aspects of immigrants’ roles in the economy we can disentangle
the various economic benefits and costs of immigrants in Arizona.
Are naturalized citizens different from non-citizens? How and
why is this important?
For a number of reasons, we distinguish between naturalized citizens and non-citizens in
our analysis. Naturalized citizens, by and large, came to the United States through legal
channels that favor people with high skills. Naturalized citizens, on average, have been in
the country long enough to learn English and achieve the degree of social and economic
integration required for naturalization. This means that naturalized citizens are generally
older and better educated than non-citizens and their demographic and education profiles
more closely resemble those of native-born citizens than non-citizens. Average incomes of
naturalized citizens are higher than those of non-citizens and, because household spending
patterns differ by income level, their spending has a different type of impact than does
that of non-citizens. (For example, lower-income households spend a higher proportion of
their earnings on basic needs, such as food and shelter, than do high-income households.)
Looking separately at naturalized citizens and non-citizens thus allows us to isolate significant
differences between the two groups and their impacts on Arizona’s economic and fiscal
health.
How do immigrants’ demographic characteristics shape their
role in Arizona’s economy?
Immigrants’ numbers affect their share of the overall workforce which, in 2004, was 14
percent. A person’s age, skill, and level of education have direct bearing on job qualifications,
years of work experience, and, therefore, on incomes earned and taxes paid.
Where do unauthorized immigrants fit into this analysis?
Among non-citizens, the U.S. Census does not distinguish unauthorized immigrants. Arizona’s
non-citizen population grew dramatically between 1990 and 2000, and that growth has
continued through mid-decade. The 2000 Census counted Arizona’s non-citizen population
at 457,300. According to the Census Bureau, by 2005, Arizona’s foreign-born population
had reached 843,300, and estimates by Jeffrey Passel indicate that as much as 58 percent
(500,000) of this population was unauthorized. (See the demographics section earlier in this
report.) This means that our analysis rests on a key assumption: the characteristics of non-citizens
are not substantially different from those of unauthorized immigrants. The validity
of this assumption is supported by the estimate that, as of the 2000 Census, between 45
23
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and 50 percent of Arizona’s non-citizen population was unauthorized and that, by 2005, as
much as 66 percent of Arizona’s non-citizen population was unauthorized. 2 Thus, in a real
sense, the non-citizen data on incomes, educational attainment, and so forth mirrors the
characteristics of people in the country illegally.
In Brief
To understand the role of immigrants in Arizona’s economy, we (1) analyzed fiscal
costs of immigrants in the areas of education, health care, and law enforcement;
(2) examined the consequences of immigrant consumer spending on economic output,
job growth, and incomes; (3) measured immigrant contributions as workers to economic
output; and (4) estimated the fiscal gains resulting from that economic activity. This was
accomplished using the IMPLAN® input-output model (see p. 40), which is a regional
accounting system that quantifies the structural relationships among sectors of the
economy. Foreign-born naturalized citizens and non-citizens were analyzed separately
because of their differing demographic characteristics.
We turn now to a discussion of each of the four areas in our framework.
2. See Passell, 2006, op cit.
24
page IMMIGRANTS IN ARIZONA
25
page
Fiscal Costs ___________________________________________
26
page IMMIGRANTS IN ARIZONA
27
page
Fiscal Costs
We first examined the major categories of fiscal costs associated with immigrants in Arizona.
We estimated the costs incurred by immigrant use of the education system, health care, and
some aspects of law enforcement. In each of these areas, data availability determined the
approach used to estimate these costs and some estimates are more precise than others.
In each area examined, however, we are able to provide reasonable measures of the fiscal
costs associated with immigrants.
We do not claim to have captured all fiscal costs associated with immigrants. The fiscal
categories included are those attributable directly to immigrants as individuals. As such,
an increase or decrease in the numbers of immigrants is directly correlated with increases
or decreases in these costs. Public expenditures for items such as road maintenance, local
law enforcement, and fire protection are fiscal costs of community infrastructure. While
we know that immigrants do contribute to these costs, data do not exist to allow us to
disentangle the extent to which they do. Further, it is unlikely that there is a one-to-one
relationship between decreases in the number of immigrants and decreases in these costs.
Educati on
Data obtained from the Arizona Department of Education (ADE) provide an accurate
accounting of 2004 funds, by district and by county, spent to educate immigrant children.
These data were calculated by ADE staff using the funding formulas followed in actual
allocations of funds to schools. English Language Learner (ELL) enrollment was used as a
measure of the number of immigrant children in Arizona schools.
How was the number of immigrants in the public schools
determined?
The total number of students classified as ELL in 2004 was about 160,700 (see Table 5).
These children were either foreign-born or native-born children of immigrant parents living
in non-English-speaking households. In light of fact that the total number of foreign-born
persons between the ages of five and 19 in Arizona as of the 2000 Census was about
103,100, we consider English Language Learner (ELL) enrollment to be a reasonable proxy
for the impacts immigrants in Arizona’s public schools. It should be noted, however, that
one adjustment was made to ELL numbers. Apache and Navajo Counties had a combined
enrollment of almost nine percent of the ELL students in Arizona in 2004, yet as of the
2000 Census just 0.6 percent of the foreign-born population lived in these two counties.
We assumed that 90 percent of the ELL students in these counties were Native American
children, not immigrants. Similarly, 2004 ELL enrollment in Coconino County was three
percent of ELL students in Arizona yet as of the 2000 Census just 0.9 percent of foreign born
lived in Coconino County. We assumed that 85 percent of the ELL students in Coconino
County in 2004 were Native American rather than immigrants (Map A.)
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page IMMIGRANTS IN ARIZONA
MAP A
Arizona Immigrant student enrollment in
english language Learner (ELL) Program, 2004
number of students
Coconino
Pima
Mohave
Apache
Navajo
Gila
Pinal
Ya vapai
Maricopa
Yuma
Cochise
La Paz
Graham
Greenlee
Santa
Cruz
County groups
County boundaries
605
1,690
9,552
3,344
1,689
1,341
13,499
95,248
20,271
ELL enrollment
ELL Enrollment
Source:
Arizona Department of Education. Enrollment numbers for Apache-Navajo and Coconino counties have been adjusted to
factor out Native American student enrollment (See Note 4 in Table 5)
What were the costs of educating immigrant ELL students in
2004?
The cost of educating immigrant ELL students in 2004 was about $544.1 million. The majority
(65 percent) of these costs were incurred in Maricopa County. Pima County had the next
highest ELL costs at 14 percent of the total. These costs are detailed in Table 5 and Figure 7.
29
page
Table 5. Public Education Costs of ELL Students in Arizona
County:
Base
support(1)
ELL
enrollment
Weighted
ELL count(2)
Total ELL
costs(3)
(million dollars)
Apache and Navajo (4) 2,858 11,341 18,026 51.5
Mohave and La Paz 2,858 1,689 2,332 6.7
Gila & Pinal 2,858 3,344 4,487 12.8
CGGS(5) 2,858 9,552 12,638 36.1
Pima 2,858 20,271 26,187 74.8
Maricopa 2,858 95,248 123,217 352.2
Coconino (4) 2,858 4,032 5,540 15.8
Yavapai 2,858 1,690 2,369 6.8
Yuma 2,858 13,499 16,516 47.2
Totals 160,666 211,312 603.9
Native American adjustment -59.8
Foreign-born ELL costs (5) 544.1
Notes:
(1) This is the Arizona Department of Education’s per-pupil cost before adjusting for a district’s Teacher Experience
Index (TEI). The TEI is a factor by which a district’s funding is further increased to reflect the seniority of its teachers.
Because the presence of immigrant children does not influence this index, it was not included in the per-pupil cost of
immigrant children. Actual amount is $2,858.02.
(2) In calculating funding levels, the number of ELL children in a district is further weighted (increased) by other
support-level weights such as the child’s grade level.
(3) Total cost equals the Base support level times the Weighted ELL count.
(4) ELL enrollment in these counties is greater than the foreign-born share of the population would indicate. Of
Arizona’s immigrant population, 0.6 percent lives in Apache and Navajo Counties and 0.9 percent lives in Coconino
County. Because of the large numbers of Native American children in these counties, we presume that the majority
of ELL kids in these counties are Native American. We assume that 10 percent of the ELL children in Apache &
Navajo Counties and 15 percent of the children in Coconino County are immigrants and calculated the adjustment
for Native American students as follows:
(-0.9 x $51,519,036) + (-0.85 x $15,834,157 ) = - $59,826,166
(5) “CGGS” refers to Cochise, Graham, Greenlee, and Santa Cruz Counties as aggregated by the U.S. Census Bureau
in its data collection.
Source:
Arizona Department of Education
Figure 7, below, illustrates the extent to which ELL costs concentrate in Maricopa County,
reflecting the fact that nearly 70 percent of Arizona’s immigrants live in Maricopa County.
30
page IMMIGRANTS IN ARIZONA
Figure 7. 2004 ELL Costs by County
million dollars
Source: Arizona Department of Education
2.4
6.7
6.8
12.8
36.1
47.2
74.8
352.2
Coconino
Apache and Navajo
Mohave and La Paz
Yavapai
Gila and Pinal
CGGS*
Yuma
Pima
Maricopa
51.5
Note: “CGGS” refers to Cochise, Graham, Greenlee, and Santa Cruz Counties as grouped by the U.S. Census Bureau.
Health Care
Measuring immigrants’ impacts on health care costs requires examining two areas:
uncompensated care costs incurred by hospitals and immigrant reliance on the public health
care system through the Arizona Health Care Cost Containment System (AHCCCS).
How did we approach measuring these costs?
Because hospitals and community health clinics do not consistently collect information on
patients’ nativity and citizenship status, we have relied on a combination of information
sources to estimate these costs. Reliable data on insurance rates for native born, naturalized
citizens, and non-citizens in Arizona does exist through the U.S. Census Bureau’s American
Community Survey (ACS). We can readily calculate the percentages and numbers of people
in each nativity category (i.e., native born or foreign born) who have private insurance, rely
on public insurance, or are uninsured. We then used these data can to estimate immigrant
impacts on health care costs.
How accurate are the estimates generated in this way?
This approach relies on one central assumption: that immigrants use the health care system
at the same rates as do native-born people. To the extent that immigrants might use health
care more than native born people, this approach underestimates their impacts on heath
care costs. To the extent that immigrants might use health care services less than native-born
people, our approach overstates their impacts on heath care costs.
31
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Numerous national studies have indicated that, across the board, immigrants use health
care at lower rates than do native-born people.3 This suggests that the estimated health
care costs in this report may be overstated. However, in light of the sensitivities that exist
about the fiscal costs of immigrants, we have taken a conservative approach by basing our
calculations by assuming similar use of health care by immigrants and native-born persons.
With this approach, we are confident that these costs are not likely to be underestimated.
How were uncompensated care costs of hospitals estimated?
The ACS provides data on access to insurance by nativity and by type of insurance.
The Arizona Department of Health Services (ADHS) publishes annual reports for all
hospitals in the state. These reports include data on bad debt, which we use as a proxy for
uncompensated care costs. Working with the ACS data and the ADHS data, we were able to
arrive at estimates of immigrants’ impacts on uncompensated care costs in Arizona.
The analysis included the following steps:
o With 2004 ACS insurance data for Arizona, we calculated the number of native-born
persons, naturalized citizens, and non-citizens who were uninsured in 2004.
o These numbers were then used to calculate the percentages of uninsured Arizonans
who were native born, naturalized citizens, and non-citizens.
o These percentages were then applied to 2004 hospital bad debt data as reported by
the ADHS. These data are reported by hospital, allowing for aggregation to county
and state levels.
The results of this analysis, depicted in Figure 8 and Table 6, are presented by nativity to
illustrate naturalized citizens’ and non-citizens’ impacts on uncompensated care costs
relative to those of native-born persons.
3. See Udall Center Immigration Policy Fact Sheet No. 2, “Immigrants and Health Care” (http://udallcenter.arizona.
edu/immigrationpolicy).
32
page IMMIGRANTS IN ARIZONA
Figure 8. Estimated 2004 Hospital Uncompensated Care Costs
Sources: American Community Survey of the U.S. Census Bureau and the Arizona
Department of Health Services
194.1
29.6
9.5
37.2
125.6
4.9 1.8
17.0
Phoenix metro Tucson metro Yuma All other
Arizona
costs (million dollars)
Native-born
Foreign-born
Table 6. 2004 Hospital Uncompensated Care Costs(1)
(million dollars)
Arizona
total
Phoenix
metro area
Tucson
metro
area Yuma
Other
Arizona
Naturalized citizens 13.9 9.3 1.4 0.01 3.2
Non-citizens 135.4 116.4 3.4 1.7 13.8
Total foreign-born 149.3 125.6 4.9 1.8 17.0
Native-born 270.3 194.1 29.6 9.5 37.2
Totals 419.6 319.7 34.4 11.3 54.2
Note:
(1) Hospital bad debt as reported by the Arizona Department of Health Services
Sources:
American Community Survey of the U.S. Census Bureau and the Arizona Department of Health Services
Several observations can be made from this information. First, the majority of uncompensated
care costs are incurred in the Phoenix metropolitan area (Maricopa County). Second, native-born
people have a larger impact on uncompensated care costs ($270.3 million) than do
immigrants ($149.3 million). Third, non-citizens have a much larger impact ($135.4 million)
than do naturalized citizens ($13.9 million), reflecting the fact that a greater proportion
of non-citizens than naturalized citizens lack health insurance. Tables A-6 and A-7 in the
Appendix detail the numbers and percentages of people in the various nativity and insurance
categories used to perform these analyses.
What about immigrant use of Arizona’s AHCCCS system?
Again, using the ACS data, the number and percent of native born, naturalized citizens, and
non-citizens who rely on public insurance was calculated. These percentages were then used
33
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to allocate total 2004 AHCCCS expenditures to native born, naturalized citizens and non-citizens
as a way of estimating each cohort’s share of these costs. The results of this analysis
are depicted in Figure 9 and Table 7.
Figure 9. 2004 AHCCCS Estimated Costs by Nati vity
Source: American Community Survey of the U.S. Census Bureau and
AHCCCS Appropriations Status Reports to the Arizona State Legislature
1,846.4
1,077.1
128.2
352.2
100.8 62.9
564.2
126.0
Phoenix metro Tucson metro Yuma All other
Arizona
Native-born
Foreign-born
costs (million dollars)
As with uncompensated care costs, the majority of AHCCCS costs are attributable to native-born
persons living in Maricopa County. The next largest share is incurred by native-born
persons living in Pima County. Immigrant use of AHCCCS is approximately $640 million out
of $4.26 billion in total expenditures. Again, the majority (about $480 million) of immigrant
AHCCCS costs are attributable to non-citizens.
Table 7. 2004 AHCCCS Costs: Allocations by Nativity(1)
(million dollars)
Total
Arizona
Phoenix
metro area
Tucson
metro area Yuma
Other
Arizona
Naturalized citizens 164.6 63.3 38.0 12.7 50.6
Non-citizens 477.4 288.9 62.8 50.2 75.4
Total foreign-born 642.0 352.2 100.8 62.9 126.0
Native-born 3,615.9 1,846.4 1,077.1 128.2 564.2
Arizona totals 4,257.9 2,198.7 1,177.9 191.1 690.2
Note:
(1) Calendar year expenditures calculated from fiscal year data reported in AHCCCS Appropriations Status Reports to the
Arizona State Legislature.
Source:
American Community Survey of the U.S. Census Bureau and AHCCCS Appropriations Status Reports to the Arizona State
Legislature
34
page IMMIGRANTS IN ARIZONA
Law Enforcement and Othe r Costs
There are two elements to law-enforcement costs: those incurred by local police and sheriff’s
departments in the normal course of providing for public safety and those incurred through
the department of corrections to incarcerate immigrants convicted of crimes. Conversations
with local law enforcement officials revealed that the records kept by local and county
public safety departments do not allow systematic identification of costs that result from
the presence of immigrants in Arizona. While anecdotal reports are made regarding specific
costs, there is no systematic, comprehensive way to allocate these costs by nativity.
What about immigrants convicted of crimes?
Incarceration costs of immigrants provided by the Arizona Department of Corrections are
shown in Table 8. The vast majority of incarceration costs are for non-citizens. The total cost
to Arizona of immigrant inmates for calendar year 2004 was $91.0 million, of which $89.1
million was for non-citizens. And, again, the vast majority of these cases were in Maricopa
County.
Table 8. 2004 Costs of Immigrant Inmates
(state total and by county of residence)
Arizona total
Phoenix
metro area
Tucson
metro area Yuma
Other
Arizona
Naturalized citizens
Number of inmates 129 55 29 8 37
Average length of
incarceration (days) 260 277 269 271 229
Average cost per day(1) $56 $56 $56 $56 $56
2004 total cost $1,890,000 $855,000 $438,000 $122,000 $476,000
Non-citizens
Number of inmates 6,367 4,469 768 235 895
Average length of
incarceration (days) 249 253 265 219 204
Average cost per day $56 $56 $56 $56 $56
2004 total cost $89,100,000 $63,600,000 $11,400,000 $2,890,000 $10,200,000
Total cost of
immigrant inmates
$91,000,000 $64,400,000 $11,900,000 $3,010,000 $10,700,000
Note:
(1) Actual average amount is $56.19.
Source:
Arizona Department of Corrections; fully allocated costs; department FY2004 actual operating budget was $644,000,000.
The data on incarceration costs are depicted graphically in Figure 10.
35
page
Figure 10. 2004 Costs of Incarcerating Foreign-Born
Persons in Arizona
Source: Arizona Department of Corrections
Does Arizona receive federal monies to compensate for law-enforcement
costs associated with immigrants?
Yes, as appropriated by Congress. In 2004, Arizona received $12.1 million as a State Criminal
Alien Assistance Program (SCAAP) grant. These monies can vary widely from year to year.
Are there other costs associated with immigration?
While we are confident that we have provided accurate estimates of the incremental fiscal
costs associated with immigrants, we recognize that not all of the costs associated with
immigration (especially unauthorized immigration) have been captured in this report. Our
attempt has been to measure, when reliable data are available, the most significant costs
to Arizona’s taxpayers of immigrants (whether authorized or unauthorized) residing in
Arizona.
Certainly communities along the U.S.-Mexico border bear additional costs associated with
unauthorized entry to the United States from Mexico. One such cost is for cleaning up the
trash left behind by unauthorized migrants. Authorities estimate that each unauthorized
crosser leaves behind about eight pounds of trash. In 2002, the United States estimated
that the cost of removing all of the trash left by unauthorized immigrants in just a portion
of southeastern Arizona would be about $4.5 million. Not all of these costs are incurred
by Arizona’s border communities because Congress has appropriated, since 2002, some
$3.4 million for environmental remediation in southern Arizona. Over a five-year period,
Congress is expected to spend on the order of $62.9 million for environmental remediation
in southern Arizona.4 As with local law enforcement costs, consistently gathered, accurate
estimates of the costs of illegal entry incurred by communities along the border are not
available.
4. Davis, Tony, “Crossers Burying Border in Garbage,” Arizona Daily Star, July 30, 2006 (see http://www.azstarnet.
com/sn/environment/140004).
0.4 0.5
89.1
63.6
11.4 10.2
0.1
1.9 0.9 2.9
Arizona
total
Phoenix
metro
Tucson
metro
Yuma All other
costs (million dollars)
Naturalized-citizen costs
Non-citizen costs
36
page IMMIGRANTS IN ARIZONA
In Brief
The majority of fiscal costs of immigrants fall into three broad categories: education,
health care, and law enforcement. In education, 2004 immigrant ELL (English Language
Learner) costs were $544.1 million. Arizona’s hospital uncompensated care costs in
2004 totaled $419.6 million of which approximately $149.3 million was incurred by
immigrants ($13.9 million for naturalized citizens and $135.4 million for non-citizens).
Total AHCCCS costs in 2004 were $4.3 billion, of which approximately $642 million
was incurred by immigrants ($164.6 million for naturalized citizens and $477.4 million
for non-citizens). Arizona’s cost of incarcerating immigrants in 2004 was $91 million
out of a total Arizona Department of Corrections’ budget of $644 million. Arizona
received $12.1 million from the federal government through the State Criminal Alien
Assistance Program in 2004.
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Economic COntributions __________________________ _______
38
page IMMIGRANTS IN ARIZONA
39
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Economic Contributions
Having examined the fiscal costs associated with immigrants, we now turn our attention to
immigrants’ contributions to Arizona’s economy as consumers and as workers. These are
examined separately for naturalized citizens and non-citizens.
As Consumers
How did we assess immigrants as consumers?
Understanding the impacts of immigrant consumer spending requires estimating the after-tax
disposable income available to immigrant households–referred to as buying power–for
spending on goods and services. This spending has direct as well as indirect consequences
for output, employment, incomes, and tax revenues. Input-output models allow us to trace
the way that consumer spending drives economic activity and generates tax revenues.
How did we measure the buying power of immigrant
households?
The Census Bureau’s American Community Survey (ACS) estimates that there were
2,156,000 households in Arizona in 2004. An estimated 5.6 percent, or 120,720, were
naturalized citizen households and 6.9 percent, or 148,700, were non-citizen households.
ACS estimates that average 2004 income was $71,700 for naturalized citizen households and
$42,300 for non-citizen households. (Note that the income for non-citizen households may
seem high, but household incomes are higher than individual incomes because households
often have multiple earners.) This income was then adjusted to account for savings, tax
payments, and remittances sent to countries of origin to arrive at estimates of disposable
income for each category of household. Total buying power was calculated for each group
by multiplying the number of households by average disposable income.
What was the buying power of immigrants in Arizona in 2004?
Buying power in 2004 was estimated to be $6.1 billion for Arizona naturalized-citizen
households and $4.4 billion for non-citizen households. Please refer to Table A-4 in the
Appendix for the step-by-step calculations of these numbers and for assumptions on savings,
taxes, and remittances.
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page IMMIGRANTS IN ARIZONA
IMPLAN® Model
IMPLAN® is an economic impact assessment modelling system (see www.implan.com)
that quantifies the structural relationships among sectors of the economy, tracing flows
between producers, intermediate users and final consumers. It calculates the consequences
of these flows for incomes, output, employment, and taxes. It is widely used to estimate the
impacts of specific “events” on a region’s economy.
Final demand (purchases by consumers) drives the IMPLAN® model. To meet final demand,
industries produce goods and services for use by consumers, which, in turn, requires the
purchase of goods and services from other producers. Other producers, in turn, purchase
goods and services, and so on. These subsequent purchases create multiplier effects beyond
the initial purchases by consumers.
The IMPLAN® model mathematically describes this buying and selling of goods and services
throughout a region’s economy and estimates a set of multipliers that quantify the change
in output for all industries caused by a one-dollar change in final demand for any given
industry. These multipliers measure the consequences for a region’s economy of specific
‘events’ such as an increase in final demand or an increase in the labor supply, and calculates
the tax consequences of the event under consideration. When these multipliers result in
economic activity that otherwise would not have happened, they represent net additions
to a region’s economy.
A word about multipliers: It can be difficult to determine how much of the spin-off, or
multiplier, effects result in net additions to the economy and how much are a reallocation
of activity that would have occurred anyway. While direct impacts are accurate measures of
the economic costs and benefits of an event, indirect, or spin-off, effects can be understood
as additional possible impacts. Some portion of these indirect impacts are net additions
to the economy but to count 100 percent of them is to risk over stating the benefits (or
costs) of an event. For this reason, the direct and spin-off impacts are listed separately in
this report.
41
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What did this buying power contribute to Arizona’s economy?
Immigrant buying power made significant contributions to Arizona’s economy in 2004. Table
9 describes direct impacts that include private-sector output of approximately $10.2 billion
dollars, an increase in employment of an estimated 66,500 full-time-equivalent jobs. The output
attributed to immigrants included increased labor income of about $2.2 billion and increased
other income of about $1.5 billion. The share of these impacts attributable to naturalized and
non-citizens is also shown.
Table 9. 2004 Immigrant Consumer Spending
Estimated Contribution to Economic Activity
thousands million dollars
Employment(1) Output(2) Labor income
Other
income(3)
Naturalized citizens 38.5 5,937 1,230 903
Non-citizens 28.0 4,310 926 563
Total impacts 66.5 10,247 2,156 1,466
Estimated Contribution to Taxes(4)
million dollars
Personal
taxes(5)
Business
taxes(6) Sales taxes Total
Naturalized citizens 49 194 214 457
Non-citizens 36 134 148 319
Total Fiscal
impacts
85 328 362 776
Notes:
(1) Employment in IMPLAN® is measured in full-time-equivalent jobs and thus appears lower than estimates from other
sources.
(2) Labor income and Other income are subcategories of Output.
(3) Other income includes payments to individuals for rents, royalties, dividends, and corporate profits.
(4) The IMPLAN® model calculates total tax impacts by category of taxes. The direct share of business tax impacts was
estimated to be in proportion to direct-to-total output impacts. The direct share of sales and personal taxes were estimated
to be in proportion to direct-to-total labor income impacts.
(5) Personal taxes includes income taxes, personal motor vehicle taxes, property taxes, fines and fees.
(6) Business taxes includes taxes on corporate profits and dividends, business motor vehicle taxes, business property taxes,
severance taxes, and other state/local business non-tax fees.
Source:
Based on IMPLAN® simulations
How did immigrants’ consumer spending impact Arizona’s tax
revenues?
Because of the economic activity it generated, immigrant consumer spending also had
significant direct impacts on tax revenues in Arizona. The tax consequences of immigrant
consumer spending include incremental personal taxes estimated at $85 million, business
taxes by $328 million, and sales taxes by $362 million, for a total of $776 million (see Table 9).
42
page IMMIGRANTS IN ARIZONA
What about non-citizens who are unauthorized immigrants?
Do they pay taxes?
Questions are often raised about the extent to which unauthorized immigrants pay income
taxes. This depends on two factors:
o the proportion of unauthorized immigrants working with forged documents, and
o the number of exemptions claimed for withholding purposes by those using such
forged documents.
Those using forged documents do have taxes withheld from their paychecks, but anecdotal
evidence suggests that unauthorized immigrants often minimize the amounts withheld by
claiming large numbers of exemptions on W-2 Forms. Because we know that the non-citizen
category includes a significant number of unauthorized immigrants, the estimated personal
tax impacts of $36.5 million may be overstated. However, personal taxes of non-citizens are
just 11 percent of the estimated direct tax impacts of non-citizens and only five percent of
the total estimated direct tax increases resulting from consumer spending by immigrants.
What were the spin-off impacts of immigrant consumer
spending?
These were also significant. While we cannot claim that all of these impacts represent net
additions to the Arizona economy (see the side-box on the IMPLAN® model, p. 40), we do
know that some of them represent net growth in the economy. The estimated spin-off
impacts presented in Tables 10 and 11 should be viewed as a measure of possible additional
impacts.
Table 10. Immigrant Consumer Spending
(2004 spin-off contributions)
Maximum Possible Additional Economic Activity
thousands million dollars
Employment Output(1) Labor income
Other
income
Naturalized
citizens 22.8 2,436 811 458
Non-citizens 16.8 1,796 597 349
Total impacts 39.6 4,232 1,408 799
Maximum Possible Additional Taxes(2)
million dollars
Personal Taxes Business taxes Sales taxes Total
Naturalized citizens 80 85 20 185
Non-citizens 54 58 14 127
Total fiscal impacts 134 143 34 312
Notes:(1) Labor income and Other income are subcategories of Output; (2) The spin-off share of taxes was estimated to be the
total tax impacts minus the direct tax impacts calculated above.
Source: Based on IMPLAN® simulations
43
page
In Brief
The 2004 spending power of naturalized citizens was approximately $6.1 billion
and of non-citizens was approximately $4.4 billion. The economic activity that can be
attributed to this spending power includes 66,500 full-time-equivalent jobs and $10.2
billion in output. The state tax revenues attributable to this spending power were
approximately $780 million.
As Workers
As was detailed earlier in this report, immigrants are 14 percent of the workforce in Arizona
and a much larger share of the workforce in specific sectors of the economy such as
agriculture, manufacturing, construction, hotels, restaurants, and certain service sectors. But
naturalized-citizen and non-citizen immigrants also work in, and, therefore, contribute to,
virtually every sector of Arizona’s economy. Measuring immigrants’ contributions as workers
in Arizona’s economy requires examining their participation across the economy as a whole,
not just in those sectors that employ large numbers of immigrants.
Our purpose in this section on immigrants as workers is to examine two broad areas. First
we look at immigrants as workers across all sectors of Arizona’s economy to measure the
portion of output, employment, labor and other income, and state tax revenues (personal,
business, and sales taxes) that can be attributed to immigrants. Naturalized citizens and non-citizens
are analyzed separately because they tend to work in different areas of the economy.
Second, we analyze what would occur if specific industries–agriculture, construction,
manufacturing, and certain service sectors–were to lose a large share of their non-citizen
workers. This analysis quantifies the consequences of such a hypothetical workforce
reduction for employment, output, labor and other incomes, and state tax revenues.
Contributions to All Sectors
How did we measure the role of immigrants across all sectors
of Arizona’s economy?
Immigrants work in virtually every sector of Arizona’s economy. The share of foreign-born
persons in each sector’s workforce was calculated using data from the U.S. Census,
which indicate the number and share of native-born, naturalized-citizen, and non-citizen
workers in each industry sector in Arizona.5 These share-of-workforce calculations provide
estimates of the number of naturalized citizen and non-citizen workers in each of the 495
different IMPLAN® industry sectors for Arizona. The IMPLAN® model, in turn, calculates the
proportion of employment, output, labor and other income, and tax revenues that can be
attributed to these workers.
5. See data table, “Employment by Industry and Occupation,” for data on the share of foreign-born workers by
industry sector and occupation. Available at http://udallcenter.arizona.edu/immigrationpolicy.
44
page IMMIGRANTS IN ARIZONA
What were the impacts of immigrants in the workforce in
Arizona?
Approximately 121,400 full-time-equivalent jobs in 2004 can be attributed to naturalized-citizen
workers along with output of $14.8 billion, including $4.9 billion in labor income
and $1.9 billion in other income. Approximately 278,000 full-time-equivalent jobs can be
attributed to non-citizen workers along with an estimated $29 billion in output that includes
$10 billion in labor income and $3.3 billion in other income. These estimates are described
in Table 11 and Maps B through E.
MAP B
Employment Generated by Immigrants in Arizona , 2004
number of jobs
Non-citizen employment
Naturalized-citizen employment
Employment
Coconino
Pima
Mohave
Apache
Navajo
Gila
Pinal
Ya vapai
Maricopa
Yuma
Cochise
La Paz
Graham
Greenlee
Santa
Cruz
County groups
County boundaries
661
385
748
908
217
1,639
7,281
2,083
24,577
74
503
257
932
414
542
1,562
3,521
20,158
Source:
Based on IMPLAN® simulations
45
page
MAP C
Economic output generated BY Immigrants in Arizona , 2004
M = million dollars
Coconino
Pima
Mohave
Apache
Navajo
Gila
Pinal
Yavapai
Maricopa
Yuma
Cochise
La Paz
Graham
Greenlee
Santa
Cruz
$59 M
$45 M
$264 M
$103 M
$331 M
$166 M
$140 M
$3748 M
$1081 M
$77 M
$37 M
$84 M
$83 M $14 M
$244 M
$502 M
$147 M
$3121 M
Non-citizen output
Naturalized-citizen output
Output
(million dollars)
County groups
County boundaries
Source:
Based on IMPLAN® simulations
46
page IMMIGRANTS IN ARIZONA
MAP D
Labor income Generated by Immigrants in Arizona , 2004
M = million dollars
Non-citizen labor income
Naturalized-citizen labor income
Labor Income
(million dollars)
Coconino
Pima
Mohave
Apache
Navajo
Gila
Pinal
Ya vapai
Maricopa
Yuma
Cochise
La Paz
Graham
Greenlee
Santa
Cruz
$6 M
$47 M
$19 M
$11 M
$54 M
$21 M
$25 M
$833 M
$215 M
$7 M
$2 M
$45 M
$14 M
$23 M
$12 M
$15 M
$701 M
$107 M
County groups
County boundaries
Source: Based on IMPLAN® simulations
47
page
MAP E
Othe r income generated by Immigrants in Arizona , 2004
M = million dollars
Source:
Based on IMPLAN® simulations
What were the tax consequences of this economic activity?
As we see in Table 11, the IMPLAN® model estimates that the economic activity generated
by naturalized citizens resulted in approximately $862 million in taxes, of which 44 percent
were business-related taxes and 41 percent were sales taxes. Economic activity generated
by non-citizens resulted in tax revenues to the state of approximately $1.5 billion, of which
39 percent were business-related taxes and 45 percent were sales taxes. Total tax revenues
were $2.4 billion of which 41 percent were business-related taxes and 43 percent were
sales taxes.
Coconino
Pima
Mohave
Apache
Navajo
Gila
Pinal
Yavapai
Maricopa
Yuma
Cochise
La Paz
Graham
Greenlee
Santa
Cruz
County groups
County boundaries
$5 M
$8 M
$9 M
$1 M
$25 M
$10 M
$57 M
$15 M
$433 M
$8 M
$5 M
$36 M
$14 M
$44 M
$20 M
$20 M
$600 M
$156 M
Non-citizen other income
Naturalized-citizen other income
Other Income
(million dollars)
48
page IMMIGRANTS IN ARIZONA
Table 11. Immigrants in the Workforce—2004 Direct Impacts
thousands million dollars
Employment(1) Output Labor income Other income(2)
AZ baseline
totals in
IMPLAN® 3,058 351,625 127,196 57,084
Direct Contribution by Immigrants
Employment(1) Output Labor income Other income(2)
thousands
percent
of AZ
baseline million $
percent
of AZ
baseline million $
percent
of AZ
baseline million $
percent
of AZ
baseline
Naturalized
citizens 121.4 4.0 14,804 4.2 4,941 3.9 1,876 3.3
Non citizens 278.1 9.1 28,965 8.2 10,034 7.9 3,314 5.8
Total
economic
impacts 399.0 13.1 43,768 12.4 14,975 11.8 5,192 9.1
Estimated Direct Contributions to Taxes(4)
million dollars
Personal
taxes(5)
Business
taxes(6) Sales taxes Total
Naturalized citizens 133 377 353 862
Non citizens 234 590 669 1,490
Total tax revenue 367 967 1,020 2,360
Notes:
(1) Labor income and Other income are subcategories of Output.
(2) Employment is measured in full-time-equivalent jobs.
(3) Other income includes payments to individuals for rents, royalties, dividends, and corporate profits.
(4) The IMPLAN® model calculates total tax impacts by category of taxes. The direct share of business tax impacts was estimated to
be in proportion to direct-to-total output impacts. The direct share of sales and personal taxes were estimated to be in proportion
to direct-to-total labor income impacts.
(5) Personal taxes includes income taxes, personal motor vehicle taxes, property taxes, fines and fees.
(6) Business taxes includes taxes on corporate profits and dividends, business motor vehicle taxes, business property taxes, severance
taxes, and other state/local business non-tax fees.
Source:
Based on IMPLAN® simulations
Where do naturalized citizens generate the largest dollar
impacts on output in Arizona?
In addition to examining sectors where immigrants are a large share of the workforce, we
look at sectors where immigrants, in this case naturalized citizens, generate large dollar
impacts as a small share of the workforce because the sectors themselves are large. Table
12 lists in rank order those sectors where the size of the output contributed by naturalized
citizens is large and the share of each sector’s workforce that is a naturalized citizen. The
cumulative contributions indicate that almost 50 percent of the output contributed by
naturalized citizens in Arizona occurs in these 20 sectors. The remaining 50 percent of
output generated by naturalized citizens in Arizona is spread across the other 475 sectors
of the economy.
49
page
Table 12. Direct Output Generated by Naturalized Citizens
(dollar amount and rank by industry sector)
Rank Sector
Share of
workforce
(%)
Direct
contribution
(million $)
Cumulative
contribution
(million $) (% )
1 Real estate 4 1,131 1,131 7.6
2 New residential unit structures
(non-farm) 5 909 2,041 13.8
3 Wholesale trade 5 884 2,925 19.8
4 Semiconductors and related
device manufacturing 8 783 3,707 25.0
5 Offices of physicians, dentists, and
other health 5 344 4,051 27.4
6 Hospitals 5 321 4,372 29.5
7 Food services and drinking places 3 307 4,679 31.6
8 Management of companies and
enterprises 7 287 4,966 33.5
9 Non-depository credit
intermediation and related 4 279 5,245 35.4
10 Commercial and institutional
buildings 5 274 5,518 37.3
11 Search, detection, and navigation
instruments 9 237 5,755 38.9
12 Telecommunications 3 215 5,970 40.3
13 Guided missile and space vehicle
manufacturing 2 204 6,174 41.7
14 Other ambulatory health care
services 5 179 6,353 42.9
15 Automotive repair and
maintenance (except car washes) 5 178 6,531 44.1
16 Motor vehicle and parts dealers 4 173 6,704 45.3
17 Insurance carriers 3 165, 6,869 46.4
18 Architectural and engineering
services 4 156 7,025 47.5
19 Miscellaneous store retailers 11 151 7,176 48.5
20 Hotels and motels, including
casino hotels 7 149 7,324 49.5
Source:
Based on IMPLAN® simulations
50
page IMMIGRANTS IN ARIZONA
Where do non-citizens generate the largest dollar impacts on
output?
Table 13 details those sectors, in rank order where non-citizens made the largest dollar
contributions to Arizona’s economy. The specific sectors and rankings are different than
those for naturalized citizens, reflecting the fact that these two categories of immigrants
tend to have different levels of education and skills. The cumulative contributions indicate
that about 13 percent of the output generated by non-citizens occurs in one sector–new
residential construction–and that about 56 percent of the total output generated by non-citizens
occurs in these 20 sectors. The remaining 44 percent of output generated by non-citizens
is spread across the other 475 sectors of the economy.
Table 13. Direct Output Generated by Non-Citizens
(dollar amount and rank by industry sector)
Rank Sector
Share of
workforce
(%)
Direct
contribution
(million $)
Cumulative
contribution
(million $) (% )
1 New residential unit structures
(non-farm) 20 3,637 3,637 12.6
2 Wholesale trade 11 1,938 5,575 19.2
3 Food services and drinking places 18 1,715 7,290 25.2
4 Real estate 5 1,337 8,627 29.8
5 Commercial and institutional
buildings 20 1,095 9,722 33.6
6 Semiconductors and related device
manufacturing 9 862 10,584 36.5
7 Services to buildings and dwellings 28 633 11,217 38.7
8 Vegetable and melon farming 45 547 11,764 40.6
9 Automotive repair and
maintenance (except car washes) 15 524 12,288 42.4
10 New residential additions and
alterations 20 481 12,769 44.1
11 Hotels and motels, including casino
hotels 19 419 13,187 45.5
12 Motor vehicle and parts dealers 8 410 13,597 46.9
13 Employment services 10 384 13,981 48.3
14 Cattle ranching and farming 25 351 14,332 49.5
15 Telecommunications 5 334 14,666 50.6
16 All other miscellaneous
professional services 9 322 14,988 51.7
17 Hospitals 5 321 15,308 52.9
18 Offices of physicians, dentists, and
other health 4 313 15,622 53.9
19 Other new construction 15 277 15,899 54.9
20 Non-depository credit
intermediation and related 4 246 16,145 55.7
Source: Based on IMPLAN® simulations
51
page
Would this economic activity occur if immigrants were not
part of the workforce?
Our analysis to this point has focused on measuring the portion of Arizona’s economic
activity attributable to immigrants in its workforce. This raises the following question: would
the jobs filled by immigrants be taken instead by native-born workers if immigrants were
not part of the labor force in Arizona? The answer to this question is complex but largely
depends on the availability of native-born workers with skills similar to immigrants. Educational
attainment data, both for Arizona and for the United States, indicate that immigrants and
native-born workers tend to have different skills, with immigrants filling specific gaps in the
native-born workforce by providing needed low-skilled and high-skilled workers. Immigrants
in Arizona are an important source of low-skilled labor and of specific high-skilled labor that
is relatively scarce in the native-born population and thus are vital to the total output of the
industries that employ them. It is difficult to make the case that all or even most jobs filled
by immigrants would, instead, be filled by native-born workers if immigrant workers were
not available.
In Brief
Immigrants are 14 percent of the workforce in Arizona. For naturalized citizens, the
share of Arizona’s economic activity that can be attributed to them includes 121,400
full-time-equivalent jobs and $14.8 billion in output, including $4.9 billion in labor
income and $1.9 billion in other income. For non-citizens, the share of Arizona’s
economic activity that can be attributed to them includes 278,100 full-time-equivalent
jobs and $29.0 billion in output including $10 billion in labor income and $3.3 billion
in other income. The state tax revenues that can be attributed to immigrants (both
naturalized citizens and non-citizens) is approximately $2.4 billion.
Contributions to Specific Industries
Measuring immigrant workers’ contributions to specific sectors of the economy is
accomplished by analyzing what would occur if certain industries were to lose their
immigrant workers. We focus on agriculture, construction, manufacturing, and certain service
sectors because they employ large numbers of low-skilled, non-citizen workers. This analysis
quantifies the magnitude of the consequences of such a workforce reduction for output,
employment, labor and other incomes, and state tax revenues.
How did we decide the industries and the size of employment
reductions to analyze?
The 2000 U.S. Census was used to identify those industries in Arizona whose workforce is
significantly made up of non-citizen immigrants. We focused on non-citizen workers because
they are the most recent additions to Arizona’s workforce, a significant number are low
skilled, and a significant number are unauthorized. The number of employees in the selected
industries was reduced in the IMPLAN® model by the percentage comprising mostly non-
52
page IMMIGRANTS IN ARIZONA
citizen workers to allow for some replacement of immigrants by native-born workers. The
IMPLAN® model then calculated the resulting reduction in employment, output, incomes,
and tax revenues for Arizona. These simulations should be understood as a series of “what
ifs” that quantify the magnitude of the reductions in output, employment, income, and taxes
consequent upon a specific reduction in employment. Table A-5 in the Appendix details the
employment reductions that were used in the simulations.
What were the consequences of these reductions?
The reductions in employment and output including labor and other income that resulted
from these workforce reductions are detailed in Table 14, below.
Table 14. Workforce Reduction Simulations
Consequences of Workforce Reductions Direct Industry Impacts
Sector
Employment(1)
(thousands)
Industry output(2)
(million $)
Labor income
(million $)
Other income
(million $)
Agriculture
(15% workforce
reduction) -3,294 -601 -199 -116
Construction
(15% workforce
reduction) -55,721 -6,564 -2,600 -451
Manufacturing
(10% workforce
reduction) -12,286 -3,771 -741 -268
Services (16%
workforce
reduction) -53,960 -2,475 -901 -273
Notes: (1) Full-time-equivalent jobs; (2) Labor income and Other income are subcategories of Output.
Source: Based on IMPLAN® simulations
The reductions in tax revenues to the state of Arizona that resulted from these workforce
reductions are detailed in Table 15.
Table 15. Workforce Reduction Simulations
Consequences of Workforce Reduction Direct Tax Impacts
Sector
Corporate
taxes
Sales
taxes
Personal
taxes
Totals by
industry
Agriculture -10 -10 -5 -25
Construction -99 -109 -61 -269
Manufacturing -48 -39 -17 -104
Services -61 -75 -21 -157
Totals -219 -234 -104 -555
Source: Based on IMPLAN® simulations
53
page
To summarize the results of these simulations:
o For agriculture, a 15-percent workforce reduction would result in losses of 3,300
full-time-equivalent jobs, $601million in output, labor income of $199 million, and other
income of $116 million. The lost tax revenue to the state would be approximately $25
million.
o In construction, a 15-percent workforce reduction would result in losses of 55,700
full-time-equivalent jobs, $6.6 billion in output, labor income of $2.6 billion, and $451
million in other income. The lost tax revenue to the state would be approximately $269
million.
o In the manufacturing sector, a ten-percent reduction in the workforce would
result in losses of 12,300 full-time-equivalent-jobs, $3.8 billion in output, labor income of
$741 million, and other income of $268 million. The lost tax revenue to the state would
be approximately $104 million.
o In the service sectors analyzed, a 16-percent reduction in the labor force would
translate to losses of 54,000 full-time-equivalent jobs, $2.5 billion in output, labor income
of $901 million, and other income of $273 million. The lost tax revenue to the state
would be approximately $157 million.
How were the impact percentages calculated?
Table 16 describes the base levels of output, employment, labor income, and other income
in each of the industry sectors analyzed. These base levels were used to calculate the percent
changes in each measure of economic activity consequent on the work force reductions.
Table A-5 in the Appendix includes a detailed list of the industries included in each sector
category.
Table 16. Workforce Reduction Simulations
Base (Pre-Simulation) Levels in IMPLAN® Model
thousands million dollars
Simulation
Sectors Employment Industry output(1) Labor income
Other
income
Agriculture 22 3,775 696 6400
Construction 290 34,054 13,503 2,347
Manufacturing 126 38,220 400 2,734
Services 333 16,147 392 1,853
Note:
(1) Labor income and Other income are subcategories of Output.
Source:
Based on IMPLAN® simulations
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page IMMIGRANTS IN ARIZONA
Why is this important?
By looking structurally at immigrants in the economy, we go beyond a simple understanding
that immigrant workers are important to sectors, such as construction and agriculture, and
begin to quantify the magnitude of that importance. This analysis provides an estimate of the
dollar amounts that can be attributed to these workers and, equally importantly, of the tax
consequences of their work for the state of Arizona.
Generally, when considering the fiscal impacts of immigrants, attention is given to direct
taxes paid, particularly in the form of income taxes relative to services used. The ancillary
tax consequences of their role as workers are rarely considered, in part because these
are difficult to measure. This analysis provides insight about the magnitude of these fiscal
impacts.
What about the indirect impacts of immigrants as workers?
This report has focused on the direct impacts of workforce reductions in the affected
industries. For example, a 15-percent reduction in employment in construction resulted in
about a 19-percent reduction in output in construction. But we know that there are also
indirect consequences that ripple through the economy. We understand, for example, that
a reduction in construction output will also cause reductions in sectors such as household
appliances, and veneer, plywood, and engineered wood products. The magnitude of these
indirect impacts, however, is quite small. The indirect impact of the 15-percent reduction in
construction employment was an additional 1.6 percent reduction in output and two percent
reduction in employment in Arizona. For this reason, we focus on the direct consequences
for the construction industry and on the direct fiscal impacts for Arizona.
In Brief
A hypothetical 15-percent workforce reduction in agriculture resulted in a reduction
in output in Arizona of $601 million and lost tax revenues of approximately $25
million. A simulated 15-percent workforce reduction in construction resulted in a lost
output to the Arizona economy of $6.6 billion and lost tax revenues of approximately
$269 million. A simulated ten-percent manufacturing-workforce reduction resulted in
reduced output of $3.8 billion and lost tax revenues of approximately $104 million. A
simulated 16-percent workforce reduction in the service sectors analyzed resulted in
lost output of $2.5 billion and reduced tax revenues of $157 million.
55
page
Net Fiscal and Economic Impacts _____________________________
56
page IMMIGRANTS IN ARIZONA
57
page
Net Fiscal and Economic Impacts
Having examined the fiscal costs of immigrants and measured their aggregate contributions
to Arizona’s economy, we now look at what the consequences have been, on net, for
Arizona’s fiscal health.
Discussions of the fiscal impacts of immigrants generally focus on the costs of services
used by immigrants compared to the direct personal taxes paid by immigrants. However,
there are also indirect tax consequences of immigrants’ roles as workers and as consumers.
Because immigrants are filling gaps in and expanding the size of labor markets, they are
making possible economic activity that would not otherwise occur. This economic activity
also generates tax revenues in the form of business, sales, and personal taxes, which should
also be considered when evaluating the net fiscal impacts of immigrants.
What were the net fiscal costs and benefits of immigrants in
Arizona in 2004?
Discussions of the fiscal impacts of immigrants generally focus narrowly on the difference
between taxes paid relative to the cost of public services consumed by immigrants. While
these direct fiscal impacts are part of the story, they are not the whole story. There are very
real additional fiscal consequences resulting from the economic activity that immigrants
make possible as consumers and as workers.
Table 17 recaps the fiscal costs of immigrants in each of the major public service categories
for Arizona and by major metropolitan region. We see that the total fiscal cost of all
immigrants (naturalized citizens plus non-citizens) was approximately $1.4 billion in 2004.
Table 17. Summary of 2004 Fiscal Costs of Immigrants
million dollars
Total
Phoenix
metro
Tucson
metro Yuma
All other
Arizona
Foreign-born ELL costs 544.1 352.2 74.8 47.2 69.9
Uncompensated care
costs 149.3 125.6 4.9 1.8 17.0
AHCCCS Costs 641.9 352.2 100.8 62.9 126.0
Law enforcement 91.0 64.3 11.9 3.0 10.7
Subtotal 1,425.2 894.3 192.4 114.9 223.6
Less federal
SCAAP(1)
reimbursement -12.1
Total 1,414.1 894.3 192.4 114.9 223.6
Note: (1) State Criminal Alien Assistance Program
Source: Based on IMPLAN® simulations
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page IMMIGRANTS IN ARIZONA
Table 18 summarizes the Arizona tax revenues that accrue as a result of immigrants in
Arizona’s workforce. The economic output that these workers generate also generates tax
revenues which would not accrue absent that output. We see that approximately $2.4 billion
in tax revenues can be attributable to immigrants as workers.
Balanced against the $1.4 billion in estimated fiscal costs, there is a positive fiscal impact of
approximately $940 million, most of which is in the form of sales and business taxes.
Table 18. 2004 Net Fiscal Impacts of Immigrants in Arizona
Estimated Contributions of Immigrants in the Workforce
To Arizona Tax Revenues (1)
million dollars
Personal
taxes(2)
Business
taxes(3) Sales taxes Total
Naturalized citizens 132.7 376.0 352.7 862.0
Non citizens 234.0 590.1 669.3 1,493.5
Total estimated tax
revenues 366.8 966.8 1,022.1 2,355.6
Total estimated
fiscal costs
(see Table 17) 1414.1
Net fiscal impacts 941.5
Notes:
(1) The IMPLAN® model calculates total tax impacts by category of taxes. The direct share of business tax impacts
was estimated to be in proportion to direct-to-total output impacts. The direct share of sales and personal taxes were
estimated to be in proportion to direct-to-total labor income impacts.
(2) Personal taxes includes income taxes, personal motor vehicle taxes, property taxes, fines and fees
(3) Business taxes includes taxes on corporate profits and dividends, business motor vehicle taxes, business property
taxes, severance taxes, and other state/local business non-tax fees.
Source:
Based on IMPLAN® simulations
In Brief
Fiscal costs of immigrants in 2004 were an estimated $1.4 billion. Tax revenues
attributable to immigrants as workers were approximately $2.4 billion, resulting in a
net fiscal gain of approximately $940 million.
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Conclusions ______________________________________ _____
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61
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Conclusions
The purpose of this study is to bring consistent data and careful analysis to an examination
of the role of immigrants in Arizona’s economy and their effects on economic output,
incomes, employment, and the state’s fiscal condition. Arizona’s porous border with Mexico,
the recent rapid growth of its immigrant population, and the number of immigrants in the
United States illegally has made immigration a contentious issue in Arizona as elsewhere.
Certainly illegal immigration is a serious problem, but, stepping back from narrow debates
over illegal immigration, this study is intended to deepen our understanding of the costs and
contributions of immigrants in Arizona regardless of legal status.
Arizona’s foreign-born population grew by more than 200 percent between 1990 and 2004,
to a total of 830,900 persons. Most of this growth occurred among non-citizens and an
estimated 450,000 to 500,000 of non-citizens are unauthorized. Immigrants in Arizona are
primarily of working age. Between 1990 and 2000, immigrants accounted for 52 percent of
the increase in the number of 20-to-45-year-old persons in Arizona. Immigrants fill specific
gaps in the labor force. They comprise over half of those lacking a high-school education, and
thus are an important source of low-skilled workers. These workers are employed primarily
in construction, agriculture, manufacturing, leisure, and service industries. Among high-skilled
workers in Arizona, immigrants are 15 percent of those with professional degrees and 17
percent of those with Ph.D.s. Sixty-eight percent of Arizona’s foreign-born residents are
from Mexico and more than two-thirds live in Maricopa County.
The IMPLAN® input-output model, used for this study, is a final-demand-driven regional
accounting system that quantifies the structural relationships among sectors of the economy.
For calendar year 2004 we used IMPLAN® to examine the economic contributions of
immigrants as consumers and as workers, and to estimate the fiscal gains resulting from
these economic contributions. The fiscal costs of immigrants in the areas of education, health
care, and law enforcement were also estimated. Foreign-born naturalized citizens and non-citizens
were analyzed separately because of their differing demographic characteristics.
The incremental fiscal costs of immigrants largely fall into three categories: education, health
care, and law enforcement, and these totaled about $1.4 billion in 2004. Discussions of the
fiscal impacts of immigrants generally focus on the costs of services used by immigrants
compared to the direct personal and sales taxes paid by immigrants. However, there are
also indirect tax consequences of immigrants as workers. Because immigrants are filling
gaps in and expanding the size of the workforce, they are making possible economic activity
that would not otherwise occur. This economic activity generates tax revenues in the form
of business, sales, and personal taxes that should also be considered when evaluating the
net fiscal impacts of immigrants. The 2004 state tax revenues attributable to immigrants
as workers were approximately $2.4 billion. Thus there was a net fiscal contribution of
about $940 million toward costs of services such as law enforcement, fire protection, road
maintenance, and so forth.
Immigrants are 14 percent of the workforce in Arizona. The portion of Arizona’s economic
activity that can be attributed to naturalized citizens includes 121,400 full-time-equivalent
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jobs and $14.8 billion in output, which includes $4.9 billion in labor income and $1.9 billion
in other income. For non-citizens, the share of Arizona’s economic activity that can be
attributed to them includes about 280,000 full-time-equivalent jobs and $29 billion in output,
which includes $10 billion in labor income and $3.3 billion in other income.
As consumers, immigrants command significant spending power. The 2004 spending
power of naturalized citizens was approximately $6.1 billion and that of non-citizens was
approximately $4.4 billion. The economic activity that can be attributed to this spending
power includes 66,400 full-time-equivalent jobs and $10 billion in output. The state tax
revenues attributable to this spending power were approximately $780 million.
Our simulations of the consequences of eliminating a significant share of Arizona’s low-skilled
workers quantified the implications for the industry sectors that employ them. In
agriculture, a 15-percent workforce reduction resulted in lost output of $600 million and
lost tax revenues of approximately $25 million. In construction, a 15-percent workforce
reduction resulted in a lost output of $6.6 billion and lost tax revenues of approximately
$270 million. A ten-percent workforce reduction in manufacturing resulted in reduced
output of $3.8 billion and lost tax revenues of approximately $100 million. A 16-percent
workforce reduction in the service sectors analyzed resulted in lost output of $2.5 billion
and reduced tax revenues of about $160 million.
In summary, immigrants make significant contributions to Arizona’s economy. While just 14
percent of the workforce in the aggregate, they are a much larger share of the workforce in
specific sectors and a much larger share of specific categories of workers–i.e. low-skilled as
well as specific types of high-skilled workers. Any industry is a dynamic whole and depends
on the availability of the full complement of skills needed to generate its output. A state’s
economic and fiscal health is directly intertwined and this study brackets the range of costs
and contributions that result from the presence of immigrants in Arizona.
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Appendix: Data tables and Acronyms _________________________
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App endix: Data Tables
Table A-1. Arizona Native Born and Foreign Born by Age Cohort
Native born Foreign born
1990 2000 1990 2000
Age group Number
% of
total Number
% of
total Number
% of
total Number
% of
total
0-4 297,206 9 374,681 8 4,555 2 13,178 2
5-19 786,536 23 1,051,814 23 36,954 14 103,069 16
20-24 228,793 7 270,387 6 25,331 9 66,540 10
25-64 1,635,377 48 2,146,558 48 165,160 61 412,436 63
65+ 448,699 13 634,972 14 36,729 14 56,997 9
Totals 3,396,610 100 4,478,413 100 268,729 100 652,220 100
Note:
In 2000, of the 1,365,000 Arizonans under 18 years of age, 263,000 have at least one foreign-born parent.
Sources:
1990-2000 U.S. Census
Table A-2. Immigrants and the Age Structure of Arizona’s Population
1990 to 2000 Change Share of Change (Percent)
Age group
Number of
native born
Number of
foreign born Total
Native
born
Foreign
born Total
0-4 77,475 8,622 86,098 90 10 100
5-19 265,278 66,115 331,393 80 20 100
20-24 41,594 41,209 82,803 50 50 100
25-64 511,182 247,276 758,458 67 33 100
65+ 186,273 20,268 206,541 90 10 100
Totals 1,081,803 383,491 1,465,293 74 26 100
Sources:
1990-2000 U.S. Census
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Table A-3. Arizona’s 2000 Foreign Born Population
By County of Residence
Maricopa Pima
Apache &
Navajo Coconino Yavapai
Naturalized citizen 109,589 38,011 1,541 2,114 4,425
Non-citizens 314,147 53,915 2,094 3,853 6,658
Foreign born 423,736 91,927 3,635 5,966 11,083
Native born 2,479,593 701,631 201,180 124,960 175,892
Total population 2,903,329 793,557 204,815 130,926 186,975
La Paz &
Mohave Yuma
Gila &
Pinal CGGS(1)
Arizona
total
Naturalized citizen 5,196 10,886 6,697 16,418 194,878
Non-citizens 9,878 33,388 14,264 19,144 457,342
Foreign born 15,074 44,274 20,962 35,562 652,220
Native born 200,291 120,692 244,881 229,293 4,478,412
Total population 215,365 164,966 265,843 264,855 5,130,632
Table A-4. Calculations of Immigrant Buying Power
Average
household
income (1)
Disposable
share of
income(2)
Household
disposable
income(3)
Number of
households(4)
Total buying
power (5)
Naturalized citizens $71,703 70% $50,192 120,720 $6.059,190,312
Non citizens $42,344 70% $29,641 148,744 $4,408,891,155
Notes:
(1) The 2004 American Community Survey estimates average wage and salary income for naturalized citizen households as
$56,282. IMPLAN® increases household income by a factor of 27.4 percent to include non-wage income such as interest and
dividend income. This is reasonable for naturalized citizen households and results in average household income for naturalized
citizens of $71,703. The 2004 American Community Survey estimates average wage and salary income for non-citizen households
as $42,344. Because non-citizen households include many recent and illegal immigrants, we determined that it is not realistic to
assume these households would have significant non-wage income. Consequently, we did not increase household incomes beyond
wage and salary incomes.
(2) We assume disposable income to be 70 percent of total household income to adjust for taxes, savings, and remittances.
While we presume that non-citizens are the primary senders of remittances, this ratio was used to calculate disposable income
for both naturalized citizen and non-citizen households because remittances are treated as a form of savings. Research by the
Inter-American Development Bank indicates that 42 percent of Arizona’s Hispanic immigrants send average remittances $240 per
year.
(3) Household disposable income equals Average household income times Disposable share of income
(4) As estimated by the 2004 American Community Survey
(5) Total buying power equals Household disposable income times Number of households
Source:
2000 US Census
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Table A-5. Workforce Reduction Calculations for Industries Simulated
Non-citizen
percent of
workforce
IMPLAN®
base
employment (1)
Amount
of
reduction
Percent
reduction
Agriculture:
Vegetable, grain, fruit, greenhouse & other
crop production 45 10914 -2182.8 20
Cattle, poultry, egg & other animal production 25 11,114 -1,111 10
Sector Totals 22,028 -3,294 15
Construction sectors
Residential, commercial, industrial, and
institutional construction, maintenance,
additions and alterations 21 to 56 266,906 -53,381 20
Highway, bridge, street, tunnel, water, and
sewer pipeline construction and maintenance 12 to 15 23,397 -2,340 10
Sector Totals 290,303 -55,721 19
Service sector & description
Services to buildings & dwellings 28 45,308 -9,062 20
Waste management & remediation services 12 4,279 -428 10
Hotels & motels including casino hotels 44 29,140 -4,371 15
Other accommodations 15 3,510 -351 10
Food service and drinking places 18 202,426 -30,364 15
Car washes 36 8,692 -2,173 25
Private households 25 36,054 -7,211 20
Sector totals 329,409 -53,959 16
Manufacturing sectors
Sectors with immigrant share of workforce
greater than 15% (252 sectors)
12 to 33 182,907 -18,291 10
Note:
The employment numbers in the IMPLAN® model are full-time-equivalents and are, therefore, lower than those reported in official
statistics. For purposes of consistency, the reductions made in these simulations were calculated as a percent of the numbers in the
model.
Source:
Detailed employment by nativity data from the 2000 US Census
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Table A-6. Insurance Cohorts:
Numbers by Type of Insurance and Nativity (1)
Total
Arizona
Phoenix
metro
Tucson
metro Yuma
All other
Arizona
Native-born 4,912,979 3,047,771 1,037,759 155,147 672,302
Private insurance 3,258,081 2,199,635 582,662 62,059 413,725
Public insurance 486,126 248,235 144,804 17,239 75,849
Others 393,038 168,938 93,088 48,268 82,745
Uninsured 775,733 430,963 217,205 27,582 99,983
Naturalized citizens 211,037 95,307 39,144 27,231 49,355
Private insurance 141,259 62,971 23,827 23,827 30,634
Public insurance 22,125 8,510 5,106 1,702 6,808
Others** 6,808 3,404 0 0 3,404
Uninsured 40,846 20,423 10,211 1,702 8,510
Non-citizens 619,818 459,375 64,177 21,955 74,311
Private insurance 222,932 158,754 27,022 10,133 27,022
Public insurance 64,177 38,844 8,444 6,756 10,133
Others 6,756 3,378 3,378 0 0
Uninsured 325,953 258,398 25,333 5,067 37,155
Note:
(1) Calculated from 2004 Current Population Survey insurance data
Sources:
American Community Survey of the U.S. Census Bureau and the Arizona Department of Health Services
Table A-7. 2004 Number and Percent Uninsured by Nativity(1)
Total
Arizona Phoenix
metro
Tucson
metro Yuma
All other
Arizona
number of persons
Naturalized citizens 39,462 20,589 10,294 26 8,579
Non citizens 325,953 258,398 25,333 5,067 37,155
Total foreign born 365,416 278,987 35,628 5,092 45,734
Native born 775,733 430,963 217,205 27,582 99,983
Total Arizona 1,141,149 709,950 252,833 32,674 145,717
Total
Arizona
Phoenix
metro
Tucson
metro Yuma
All other
Arizona
percent
Naturalized citizens 3.5 2.9 4.1 0.1 5.9
Non-citizens 28.6 36.4 10.0 15.5 25.5
Total foreign born 32.0 39.3 14.1 15.6 31.4
Native born 68.0 60.7 85.9 84.4 68.6
Arizona total 100.0 100.0 100.0 100.0 100.0
Note: (1) Calculated using Census Bureau population data and Current Population Survey insurance data
Sources: American Community Survey of the U.S. Census Bureau and the Arizona Department of Health Services
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App endix: Acronyms
ACS American Community Survey (U.S. Census Bureau)
ADE Arizona Department of Education
ADHS Arizona Department of Health Services
AHCCCS Arizona Health Care Cost Containment System
CGGS Cochise, Graham, Greenlee, and Santa Cruz Counties (Arizona)
SCAAP State Criminal Alien Assistance Program
TEI Teacher Experience Index