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

In September 2018, the Trump Administration announced new regulation that would potentially bar 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, the rule has received more than 200,000 public comments, with the majority opposing its implementation. Meanwhile, at least 20 states have moved to ask the courts to put a hold on it amid ongoing legal challenges. Last week, on the eve of its implementation, three federal judges in New York, California, and Washington temporarily blocked the “public charge” rule, temporarily preventing it from taking effect.

The public charge rule goes against America’s history of accepting immigrants to our shores, regardless of wealth, who go on to build better lives for themselves and their children. But it would also have real and harmful economic effects for industries, cities, states, and the nation as a whole.

In this short brief, New American Economy analyzed the latest census data to quantify that economic impact and understand precisely which classes of immigrants would be impacted by the new rule. NAE found that the new public charge regulation would primarily affect immigrants who are working, often in key industries, many of whom have at least some college education. Collectively, immigrants potentially touched by this regulation are already paying billions of dollars in U.S. taxes each year.

With the rule change, anyone who uses public benefits for more than an aggregate of 12 months in a 36-month period would be considered a “public charge” and deemed inadmissible. New American Economy used the data of the Annual Social and Economic Supplement (ASEC) of the 2017 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:

  • In 2017, there were more than 3.9 million non-citizens who would likely be affected by the public charge rule.
  • Nearly 90 percent of all adults active in the labor force who would likely be affected by the public charge rule are employed.
  • More than 867,000 people likely to be affected by the public charge rule have at least some college education, including:
    • More than 105,000 workers in the trade, transportation, and utilities industries,
    • At least 74,000 workers in the education and health services industries, and
    • At least 58,000 workers in the professional and business service industry.
  • The total annual income of workers who would likely be affected by the public charge rule is more than $48.0 billion. Should they leave the United States, our economy would suffer an indirect economic loss of more than $33.9 billion. The total cost to the U.S. economy could therefore amount to $81.9 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, recreation, and food services, where 2.7 percent of all workers (more than 328,000 people) would likely be affected.
    • Professional and business services, where 1.7 percent of all workers (more than 322,000 people) would likely be affected.
    • Trade, transportation, and utilities, where 1.2 percent of all workers (more than 352,000) would likely be affected.
    • Manufacturing, where 1.4 percent of all workers (more than 217,000 people) would likely be affected.
    • Construction, where 1.7 percent of all workers (nearly 191,000 people) are likely to be affected.
    • Natural resource and mining industries, where 3.8 percent of all workers (nearly 131,000 people) would likely be affected.
  • More than 222,000 immigrant entrepreneurs would likely be affected by the rule change, hurting businesses across the country and limiting employment opportunities for American workers.

The new regulation is 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 expands 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 U.S., 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 defines “public charge” as immigrants who are “primarily dependent” on cash-based welfare, receiving public benefits for at least 51 percent of their income. The new regulation abandons this 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 new regulation, one could be deemed inadmissible if one ever needed to use public benefits such as food stamps, Medicaid, and Section 8 housing vouchers. As a result, 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 2017 and SIPP 2014 waves 1, 2 and 3

The estimates presented here reflect the results of NAE’s most recent analysis as of October 1, 2019. Our methodology focuses only on the population that would be affected by the rule change as published by USCIS on August 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
  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…