The New “Public Charge” Rule and Its Negative Impact on the U.S. Economy

Updated on February 2, 2021

In July 2019, the Trump Administration enacted a new “public charge” rule that effectively barred millions of working-age, aspiring immigrants from being able to come to America and gain permanent residency, as well as millions more immigrants already working legally in key industries in the United States from being able to stay. Since the announcement of the rule change, more than 200,000 public comments have been filed, with the majority of them opposing its implementation. 

In early February 2021, the Biden Administration announced that it would review and reverse the previous administration’s public charge rule. Beyond going against America’s history of accepting immigrants regardless of wealth, the public charge rule has real and harmful economic impacts for industries, cities, states, and the nation as a whole.

Updating NAE’s estimates with the latest Census data, this brief quantifies the economic impact and identifies how many immigrants are being impacted by the rule as it currently stands. The data reveals that the current public charge regulation primarily affects immigrants who are working, often in key industries, many of whom have at least some college education. Collectively, immigrants touched by this regulation are already paying billions of dollars in taxes to the American federal, state, and local governments each year.

New American Economy used the data of the Annual Social and Economic Supplement (ASEC) of the 2018 Current Population Survey (CPS) and the 2014 Survey of Income and Program Participation (SIPP) to examine the potential economic impact of such a dramatic expansion of the grounds for inadmissibility for individuals applying for legal status in the United States.

NAE’s analysis shows that:

  • There are more than 4.0 million non-citizens affected by the current public charge rule.
  • More 1 in 4, or more than 1.0 million, people affected by the public charge rule have at least some college education, including:
    • More than 193,000 workers in the trade, transportation, and utilities industries,
    • Almost 163,000 workers in the education and health services industries, and
    • More than 101,000 workers in the professional and business service industry.
  • The total annual income of workers affected by the public charge rule is more than $53.6 billion. Should they leave the United States, our economy would suffer an indirect economic loss of more than $37.4 billion. The total cost to the U.S. economy could therefore amount to more than $91.0 billion.
  • By encouraging or forcing workers to leave or go underground, the rule change will have a destabilizing effect for several major industries in particular, including:
    • Hospitality and food services, where 2.3 percent of all workers (more than 271,000 people) are affected.
    • Personal and general services, where 2.2 percent of all workers (more than 182,000) are affected.
    • Construction, where 1.9 percent of all workers (almost 218,000 people) are affected.
    • Manufacturing, where 1.6 percent of all workers (more than 264,000 people) are affected.
    • Professional and business services, where 1.5 percent of all workers (almost 297,000 people) are affected.
    • Natural resource and mining industries, where 3.6 percent of all workers (more than 122,000 people) are affected.
  • Almost 255,000 immigrant entrepreneurs are affected by the rule change, hurting businesses across the country and limiting employment opportunities for American workers.

The public charge rule is currently being executed under the guise of a long-standing public policy to deny permanent residency and certain temporary visas to anyone who is likely to become a “public charge,” or a ward of the state. The rule change expanded the existing definition of “public charge” to include millions of people who are already contributing members of society and the economy. It also 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 the United States, work hard, and find success for themselves. The children of these immigrants, who generation after generation have found even greater success than their parents, have played a central role in shaping America’s economy. Almost 45 percent of America’s Fortune 500 companies were founded by an immigrant or the child of an immigrant.

Yet while the new regulation suggests that it is targeting immigrants who would become wards of the state, the reality doesn’t match the rhetoric. Under current practice, the Department of Homeland Security could mark someone has a “public charge” and inadmissible if they have needed to use public benefits such as food stamps, Medicaid, rental assistance, housing vouchers, or public housing–a slew of factors that have little to do with one’s ability or likelihood to contribute to the economy. As a result, if the public charge rule is not reviewed and revised, many immigrants who are working full-time, supporting a family, and contributing to the economy could be denied admission or permanent residency, keeping them from ever becoming U.S. citizens.

 

Methodology

Data Sources: CPS ASEC 2018 and SIPP 2014 waves 1, 2 and 3

The estimates presented here reflect the results of NAE’s most recent analysis as of February 2, 2021. Our methodology focuses only on the population that would be affected by the rule change as published by USCIS on July 14, 2019.

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. Supplemental Security Income (SSI)
  3. Medicaid for those above 21 years of age
  4. Supplemental Nutrition Assistance Program (SNAP or food stamps)
  5. Section 8 Housing Choice Voucher Program
  6. Section 8 Project-Based Rental Assistance
  7. Public Housing

Using three waves of data from the 2014 SIPP files, we estimate the number of people that receive at least one benefit for at least 13 months within a 36-month period. This percentage is applied to non-citizens (exclusive of refugees) in the CPS sample to arrive at the total number of potentially affected non-citizens, associated industries and lost wages and productivity.

Income definition: farm, business, and wage income earned by benefit recipients.

Multiplier: We use the value-added Bureau of Economic Analysis (BEA) RIMS household multiplier to calculate the indirect economic impacts of the disruption caused by the new “public charge” rule. U.S. calculations use state multipliers weighted by state GDP (nominal USD as of 2018 Q1 seasonally adjusted annual rate) by the BEA.

About Us

New American Economy is a bipartisan research and advocacy organization fighting for smart federal, state, and local immigration policies that help grow our economy and create jobs for all Americans. More…