Postville Raid Cost $6 Million but Saved Much More
Anti-enforcement entities are crowing about estimates that the raid on the Postville, Iowa meatpacking plant cost more than $6 million thus far to deal with only 389 suspected illegal aliens. And that does sound like a lot. But my rough calculations suggest that if all 389 are deported, taxpayers are likely to save nearly $8 million in the first year alone.
Iowa newspapers' keen interest in the cost is an appropriate inquiry, although the tone of the coverage seems to suggest that $6 million is an outrageously high price for such a small number of illegal aliens out of the estimated 7 million who are working illegally in the United States.
Of course, high-profile enforcement actions like this one are not designed primarily to reap direct financial benefits. Their main purpose is to frighten thousands of other employers from violating immigration laws.
And their second purpose is to make seeking illegal jobs less attractive for foreign nationals.
For laws to be massively obeyed, there has to be a reasonable chance that people (or corporations) may pay dearly for breaking the law. Rarely does the prosecution of any kind of corporate wrong-doing produce more direct society financial benefit than the cost of the prosecution. The point is to whip other corporations into lawful activity.
Nonetheless, when I put the pen to the paper, it looks like this expensive Postville raid will have directly paid for itself in less than a year.
Robert Rector at the Heritage Foundation has done the most exhaustive study ever of the total taxes paid by less-educated foreign workers and of the total amount of government services they consume. He found that the average household headed by the typical less-educated foreign worker costs taxpayers about $20,000 more in services than it pays in taxes each year.
So, $20,000 times 389 is $7.78 million net cost to fed, state and local governments for every year those workers remain in the United States.
Remove those 389 illegal workers and their families and you have nearly $8 million in total taxpayer savings in the first year alone! And you save another $8 million for every year that those deported workers stay out of the country and if the Postville jobs don't later go to new illegal aliens.
Already, 302 of those detained have been convicted of criminal wrongdoing. If only those are deported, the saving the first year would be around $6 million.
Wow!
Of course, I'm doing back-of-the-envelope figuring here, but this gives us a general idea that the cost of an operation like this actually is in the ballpark of paying for itself in just direct benefits -- not counting all the illegal aliens who may be discouraged by the action from entering the U.S., all the illegal aliens already here who may be persuaded by this incident that they need to leave the country before they get caught up in some raid in their town.
The little city of Postville is not likely to reap much of that benefit, however. That is because the legal workers who are replacing the illegal aliens are mainly coming from outside Postville. The local tax savings will occur in the cities where the new legal workers used to live, because these low-paid workers (or unemployed workers) no longer will live there.
(It is important to note that average less-educated American workers and their households also cost taxpayers a net of around $20,000 each a year. The point is that they are Americans who are supposed to live within our borders. They require most services whether or not they are employed. So they cost taxpayers less if they can get a job that has been vacated by an illegal alien. And the taxpayers save all the costs of the less-educated illegal alien when he/she leaves the country.)
But because the meatpacking plant pays so poorly, every job at that plant ends up costing the city of Postville a lot of money, regardless of whether the job is filled by an American or an illegal alien.
That’s the problem with enticing and encouraging a low-wage economy. What Postville officials should be doing is lobbying for an end to illegal immigration and an end to Chain Migration because that would tighten the labor market and cause meatpacking wages to rise, and thus the taxes on these workers to rise. When Congress last cut immigration in the 1920s, meatpacking wages soared, eventually to the equivalent of more than $20 an hour.
However, if an unemployed Postville resident takes a job vacated by an illegal alien, that ends up being a real savings in Postville tax expenditures.
The big beneficiaries of the Postville raid are the federal taxpayers and the taxpayers of whatever states from which the new legal Postville workers come from. But in all, American federal, state and local governments save about $20,000 a year for every illegal household that gets deported (or is persuaded to go home voluntarily).
The key to all $20,000 of tax savings being realized, of course, is to make sure the illegal workers actually leave the country.
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ROY BECK is Founder & CEO of NumbersUSA