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      Article # 8: Dollars without Sense: Underestimating the Value of Less-Educated Workers
                                 by Walter A. Ewing, Ph.D. and Benjamin Johnson

                               

           The Immigration Policy Center (IPC)  ( www.immigrationpolicy.org ) has rebutted a recent report by the Heritage
           Foundation that is one in a long line of deeply flawed economic analyses which claim to estimate the contributions and "costs"
           of workers based solely on the amount of taxes they pay and the value of the public services they utilize. According to this line
           of thinking, if the taxes paid by workers do not cover the cost of the public services and benefits they receive, then these workers
           are draining the public treasury and, ostensibly, the economy as a whole. However, according to the most recent report by Walter
           Ewing and Benjamin Johnson of the Immigration Policy Center, this kind of simplistic fiscal arithmetic does not accurately gauge
           the impact that workers of any skill level--foreign-born or native-born--have on the economy. It also is a dehumanizing portrayal
           of all workers who labor for low wages in physically demanding jobs that are essential to the economic health of the nation. Simply
           put, according to IPC Director Benjamin Johnson, "You cannot assess a person's value based solely on how much the pay in taxes."

            The full text of the IPC report, formatted with graphics, is available as a PDF file.

            Among the findings of this report:
           
            -- The Heritage report calculates the cost of means-tested public benefits which are utilized by some low-income households,
                suchas Medicaid and SCHIP, without mentioning that most immigrants are not eligible for these benefits for many years
                after their arrival in the United States, if ever.

            -- The Heritage report dismisses the fact that investments in public infrastructure, public health, and public education are
                necessary to maintain the strength and competitiveness of the U.S. economy and U.S. workforce as a whole, to the
                benefit of all.

            -- Children whose educations are counted in the Heritage report as "costs" attributable to their parents grow up to become
                tax-paying adults who often earn higher incomes than their parents. This is especially true among the children of
                immigrants. 
    
            -- The Heritage report does not account for the economic impact that all workers have through their consumer purchasing
                power and entrepreneurship, both of which create new jobs. For instance, the buying power of Hispanics in the United
                States, many of whom lack a high-school diploma and are immigrants, totaled $798 billion in 2006 and is expected to
                increase to $1.2 trillion by 2011.

            -- The Heritage report fails to mention that the U.S. economy continues to produce less-skilled jobs at the same time the
                native-born labor force is growing older and better educated.

            -- The Heritage report overlooks the value that is added to the U.S. economy by industries in which less-skilled workers tend
                to be employed. For example, the Commerce Department estimates that nondurable-goods manufacturing (textiles, apparel,
                etc.) added $685.5 billion to the U.S. GDP in 2006, while construction added $647.9 billion and accommodation and food
                services contributed $349.9 billion.

            --  A person's value, economic or otherwise, cannot be measured or predicted by his or her level of formal education. Prominent
                examples of high-school dropouts who defied expectations and contributed enormously to our economy and society include
                self-made billionaires David Murdoch and Kirk Kerkorian, businessmen Ray Kroc and Dave Thomas (the founders of McDonald's
                and Wendy's, respectively), and newscaster Peter Jennings.
 
 
            The full text of the IPC report, formatted with graphics, is available as a PDF file:
            
            http://www.ailf.org/ipc/policybrief/policybrief_050807.pdf
 

 

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