Economic Impact of Proposed Rule Change: Inadmissibility on Public Charge Grounds

The Trump Administration has proposed a new regulation that would potentially bar millions of working-aged, aspiring immigrants in key industries from being able to come to America and gain permanent residency, and potentially bar millions more who are working legally in these industries now from being able to stay. The new proposed regulation would do this under the guise of the long-standing public policy to deny permanent residency and certain temporary visas to anyone who is likely to become a “Public Charge.” Currently, the federal government may deem prospective immigrants as “Public Charges” when they are likely to become wards of the state. The proposed rule change expands this practice in two separate and detrimental ways that could hurt the U.S. economy.  First, the proposed rule change so broadens the definition of “Public Charge” as to include millions of people who are already contributing members of society and the economy.  Second, it implicitly and incorrectly assumes that people who receive benefits now cannot become productive contributors in the future, a proposition belied by America’s long history of having immigrants – often poor – come to our shores, work hard, and find success for themselves. The children of these immigrants, who generation after generation have found even more success than their parents, have played a central role in shaping America’s economy. Nearly 44 percent of America’s Fortune 500 companies were founded by an immigrant or a child of an immigrant.

The new regulation suggests that it is targeting immigrants who would become wards of the state, but the reality doesn’t match the rhetoric. Under current practice, the Department of Homeland Security defines “Public Charge” as immigrants who are “primarily dependent” on cash-based welfare, which means that public benefits account for 51 percent or more of their income. The new 400-page regulation abandons that premise, adding a slew of new factors to potentially bar admission that have little to do with one’s ability or likelihood to contribute to the economy. Under the proposed regulation, one could be barred for having a child with a chronic illness, a home mortgage, a past dispute that has impacted one’s credit score, or an annual income under $63,000 a year (above the median household income for U.S.-born families), to name just a few of the numerous potentially disqualifying factors.  As a result, many immigrants who are working full time, supporting a family, and contributing to the economy could be barred admission or denied permanent residency.

In this short brief, New American Economy analyzed the latest census data to understand precisely which classes of immigrants would be impacted by the new rule.  As shown below, the new “Public Charge” regulation would primarily impact immigrants who are working, often in key industries, many of whom have at least some college education. Collectively, the immigrants potentially impacted by this regulation are already paying tens of billions of dollars in U.S. taxes each year.

With the proposed rule change, anyone who uses more than 15 percent of the poverty line in public benefits—a mere $2.50 per person daily for a family of four—would be considered a public charge and deemed inadmissible. According to analysis by the Cato Institute’s David Bier, this means that legal status could be denied even to immigrants who are up to 95 percent self-sufficient.

To better understand the potential economic impact of such a dramatic expansion of the grounds for inadmissibility for individuals applying for legal status in the United States, New American Economy analyzed the Annual Social and Economic Supplement (ASEC) of the 2017 Current Population Survey (CPS).

NAE’s analysis shows:

  • More than 91 percent of all adults active in the labor force who would be affected by the public charge rule are employed.
  • More than 1.4 million people likely to be affected by the public charge rule have at least some college education, including:
    • More than 220,000 workers in the trade, transportation, and utilities industries,
    • Almost 150,000 workers in the education and health services industries, and
    • More than 125,000 workers in the professional and business service industry.
  • The total annual income of workers who would be affected by the public charge rule is more than $96.4 billion. Should they leave the United States, our economy would suffer negative indirect economic effects of more than $68 billion dollars. The total cost to the U.S. economy could therefore amount to $164.4 billion.
  • By encouraging or forcing workers to leave or go underground, the public charge rule change will have a destabilizing effect for several major industries in particular, including:
    • Construction, where about 5 percent of all workers (almost 540,000 people) are likely to be affected.
    • Natural resource and mining industries, where more than 6 percent of all workers (more than 200,000 people) would be affected.
    • Hospitality, recreation, and food services, where about 4.4 percent of all workers (more than 525,000 people) would be affected.
    • Professional and business services, where nearly 3 percent of all workers (about 515,000 total) would be affected.
    • Manufacturing, where more than 2.6 percent of all workers (more than 450,000 people) would be affected.
    • Trade, transportation, and utilities, where more than 2 percent of all workers (more than 650,000 people) would be affected.
  • In 2017, there were almost 7 million non-citizens who reported receiving monetary or non-monetary aid for themselves.

The sweeping changes resulting from this proposed rule would severely limit legal immigration to the U.S. and undermine our ability to receive hard-working individuals and families that strengthen our communities and bolster our economy. New American Economy opposes this rule change. We encourage you to make your voice heard during the 60-day public comment period, here.

 

Methodology

Data Source: CPS ASEC 2017

The estimates presented here reflect the results of NAE’s most recent analysis as of October 28, 2018. Our methodology focuses only on the population that would be affected by the proposed rule change as published by USCIS on October 16, 2018, which can be seen at: https://www.uscis.gov/legal-resources/proposed-change-publiccharge-ground-inadmissibility.

We define a person as a possible public charge if they directly receive one or more of the following benefits for themselves:

  1. Cash assistance for income maintenance
  2. Medicaid
  3. Medicare
  4. Supplemental Nutrition Assistance Program, (SNAP or food stamps)
  5. Any benefit the provides for institutionalization for long-term care at government expense
  6. Section 8 Housing Choice Voucher Program
  7. Section 8 Project-Based Rental Assistance
  8. Public Housing

Income definition: farm, business, and wage income earned by benefit recipients or by parents of children receiving benefits.

Multiplier: We use the value-added Bureau of Economic Analysis RIMS household multiplier to calculate the indirect economic impacts of the disruption caused by the public charge ruling. [1] U.S. calculations use state multipliers weighted by state GDP (nominal USD as of 2018 Q1 seasonally adjusted annual rate). Source: BEA, July 24 2018. [2]

[1] https://apps.bea.gov/regional/rims/rimsii/

[2] https://www.bea.gov/system/files/2018-08/qgdpstate0718_2.pdf

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