Here’s a perplexing pair of statistics: Compared with native-born Americans, immigrants are more likely to start a business — and they’re also more likely to depend on welfare.
These dissonant data are even more irksome considering the state of the U.S. economy. Government social-aid programs consume an ever-growing portion of the federal budget, surpassing a trillion dollars even before Medicare and Social Security are factored in. And entrepreneurial activity is slowing. Census Bureau statistics show that start-ups accounted for 12 percent of American businesses in 1980 but less than 8 percent today. And earlier this fall, the Hudson Institute found that under the Obama administration, we’ve averaged 7.8 start-up jobs per 1,000 people. During the Bush years, it was 10.8, and during Clinton’s years in office, it was 11.2.
The question then becomes how to devise an immigration policy that encourages entrepreneurship and discourages government dependency.
First, the facts. Already, immigrants make a significant contribution to the American economy. Earlier this year, a study by the Fiscal Policy Institute found that immigrants account for 18 percent of all small-business owners, even though they make up only 13 percent of the overall population. These immigrant-owned businesses provide around 4.7 million jobs. And the Department of Labor reported that, last year, foreign-born workers (including both legal and illegal immigrants) had higher labor-force participation than native-born Americans, especially among men.
But despite their entrepreneurial vigor, immigrants are disproportionately dependent on welfare. Senator Jeff Sessions (R., Ala.), crunched numbers from the Department of Agriculture and found that the number of non-citizens on food stamps has risen to 1.634 million, roughly quadrupling since 2001. Moreover, in August, the Center for Immigration Studies found that 36 percent of immigrant-headed households received at least one major welfare benefit. Food assistance and Medicaid have become especially popular among immigrants.
Two policy trends are driving the problem. First, the United States has promoted broader welfare use in recent years, also leading campaigns that market social aid specifically to immigrants. And second, our immigration rules are not crafted to weed out would-be freeloaders and give preference to highly skilled, highly educated applicants.
Welfare use is becoming more common among all American households, immigrant or not. Census Bureau data revealed that in the early months of 2011, 49.1 percent of Americans lived in a household where at least one person drew a government benefit. Last year, 54 million people were on Medicaid, according to the Senate Budget Committee. And 46.7 million people — more than one in seven Americans — received food stamps in 2011, according to the Department of Agriculture.
But the deliberate expansion of welfare has been particularly targeted at immigrants, and that represents a major cultural shift. The United States has long preached that opportunity and liberty together constitute a sufficient guarantor of success, for immigrants and non-immigrants alike. That’s been one of America’s big selling points. But government marketing has shifted, and any number of “outreach” programs, both public and private, now seek to persuade immigrants to utilize the benefits newly available to them. Legal immigrants are potentially eligible for dozens of welfare programs, and even illegal immigrants can benefit indirectly, provided at least one member of their household is here legally.