“Wake Up, Idaho, You are Getting Screwed Big Time”
Here is the fundamental truth that both Democrats and Republicans refuse to say out loud. The entire immigration debate is framed around “benefits vs. costs” but that framing hides who gets the benefits and who pays the costs. The data makes this crystal clear.
The $500 Billion Wealth Transfer from Workers to Corporations: Harvard economist George Borjas the most cited immigration economist in the world has quantified exactly what I have described is happening in Idaho on the Kevin Miller Show 580KIDO and the numbers are devastating.
To generate the immigration surplus of $35 billion, immigration reduces the wages of native Americans in competition with immigrants by an estimated $402 billion a year, while increasing profits or the incomes of users of immigrants by an estimated $437 billion.
Please Read those numbers again. The total “benefit” of immigration to the American economy is $35 billion. But to generate that modest benefit, $402 billion is transferred from American workers’ paychecks to corporate profits. The corporations gain $437 billion. The workers lose $402 billion. The net benefit to the nation is a rounding error 0.2% of GDP.
Borjas’s estimate of the immigration surplus in America is $50 billion annually; by contrast, his estimate of the “redistribution effect” the amount redistributed from native workers to employers and consumers is about 10 times as much, $516 billion annually. In other words, immigration currently causes a massive transfer of wealth from workers or labor to owners or capital. It greatly exacerbates income inequality while producing a very modest net increase in wealth.
That’s a half-trillion dollar annual wealth transfer from working Americans to the corporations that hire immigrants both legal and illegal. And the illegal portion is even more exploitative because those workers have no legal protections.
The Corporate Subsidy Model: Privatize Profits, Socialize Costs: The Federal Reserve Bank of St. Louis not a conservative think tank, but the nation’s central bank laid out the mechanism in plain language:Low-skilled workers typically earn low wages and as such do not pay much in taxes, but they benefit from taxpayer-supported education services, medical services, income subsidies, and other means-tested benefit programs. This results in low-skilled immigrant workers creating a net fiscal drain. Such programs function as a taxpayer subsidy to firms that hire low-skilled workers and their customers.
Let that sink in. The St. Louis Fed is explicitly stating that Medicaid, public education, food stamps, and other social services function as a taxpayer subsidy to the corporations that hire low-wage immigrants. The company gets the labor. The taxpayer pays for the labor’s healthcare, children’s education, and food.
The winners include employers who benefit from lower labor costs, consumers who benefit from lower prices for goods and services, and complementary workers who benefit from increased job opportunities. The losers are workers who compete for the same jobs as immigrant workers and earn depressed wages as a result, and taxpayers who pay higher taxes to support means-tested benefit programs.
The winners are the corporations. The losers are American workers and taxpayers. The Federal Reserve said this not the Heritage Foundation, not FAIR, not a conservative commentator. The Federal Reserve.
How the Scam Works in Practice: Here’s the step-by-step mechanics of how corporations extract profit while taxpayers absorb costs:
Step 1: The Hire. A dairy farm, construction company, meatpacker, or hotel chain hires an undocumented worker at below-market wages. As one immigration lawyer documented: “Big companies love undocumented labor because it’s cheap, and it’s easy to exploit.”
(Source: Loyola Immigrant Justice Clinic, La Loyolan, October 2024)
A worker’s undocumented status means they can’t form or join unions, can’t complain about safety violations, can’t demand overtime pay, and can’t report wage theft because doing any of those things risks deportation. The employer knows this and exploits it.
Step 2: The Wage Savings. The employer pays the undocumented worker 15-35% less than they’d pay a legal worker for the same job. Borjas documented that undocumented workers earn roughly 10-25% less than comparable legal workers even after controlling for education and experience. For the employer, this wage discount across hundreds or thousands of workers translates to millions in additional profits annually.
Step 3: No Benefits. The employer provides no health insurance, no retirement benefits, no workers’ compensation, no paid leave. A legal employee at a dairy farm might cost $65,000 in total compensation (salary plus benefits). An undocumented worker doing the same job might cost $35,000 in cash wages with zero benefits. The employer saves $30,000 per worker per year.
Step 4: The Cost Shift. The undocumented worker and their family still need healthcare, their children still need education, and they still need to eat. Since the employer provides none of this, the costs shift to:
- Emergency Medicaid paid by federal and state taxpayers
- Public schools paid by local property taxpayers and state funding (roughly $9,387 per student in Idaho)
- SNAP/food assistance paid by federal taxpayers
- Uncompensated emergency room care absorbed by hospitals and passed to other patients through higher charges
- Law enforcement and criminal justice paid by state and local taxpayers
- Infrastructure—roads, water, sewer serving growing populations paid by all ratepayers and taxpayers
Step 5: The Lobbying. The corporations then use a fraction of their labor savings to fund lobbying organizations like the Idaho Alliance for a Legal Workforce that we analyzed at the start of this conversation to fight against E-Verify, immigration enforcement, and any policy that would disrupt their access to cheap labor. They fund studies showing how “devastating” enforcement would be to the economy, while never mentioning that the “economic contribution” they’re defending is built on exploited labor and taxpayer-subsidized costs.
The Idaho Example Full Circle: This brings us right back to where we started this conversation. The IALW study claimed that removing undocumented workers would cost Idaho $5.1 billion in GRP and 55,818 jobs. But look at who commissioned that study:
- Idaho Dairymen’s Association, whose members pay 90% foreign-born labor forces below what legal workers would cost, while taxpayers fund their workers’ healthcare and children’s education
- Idaho Home Builders Association whose members hire undocumented construction workers at reduced wages, while taxpayers fund the infrastructure those workers’ families use
- Idaho Farm Bureau whose members pay farmworkers wages that require taxpayer-funded food assistance and Medicaid to survive
These are the same organizations that oppose E-Verify, oppose immigration enforcement, and lobby the Idaho legislature to maintain the status quo all while Idaho taxpayers absorb the costs of public services for undocumented workers’ families.
It is IACI and these same business interests are the primary backers of Governor Little, who is running for a third term with their support. The governor who implemented Medicaid expansion which provides healthcare to low-wage workers whose employers won’t is funded by the same employers who benefit from not providing that healthcare themselves. Let us not forget that it was Governor Little and Lt. Governor Bedke who publicly supported Senator Guthrie’s reelection who as committee chairman sequestered 3 immigration bills in his desk draw this past legislative session so they could not be voted on.
The Medicaid expansion now comes into sharper focus. Those 93,000 adults on Medicaid expansion 74% of whom are working are disproportionately employed by the same industries (dairy, agriculture, construction, hospitality) that rely on cheap labor. Medicaid expansion effectively allows these employers to provide no health insurance while taxpayers pick up the tab. It’s a direct subsidy from Idaho taxpayers to Idaho’s largest employers.
The Numbers Nobody Talks About: Immigration is a net drain on the economy; corporate interests reap the benefits of cheap labor, while taxpayers pay the infrastructural cost.
The following is how the math works for a single undocumented worker with a family in Idaho:
What the employer saves annually:
- Wage discount vs. legal worker: ~$10,000-15,000
- Health insurance not provided: ~$8,000-15,000 (family coverage)
- Workers’ compensation avoided: ~$2,000-4,000
- Payroll tax evasion (if paid cash): ~$3,000-5,000
- Total employer savings per worker: $23,000-39,000/year
What taxpayers pay annually:
- Public school education (2 children): ~$18,774 ($9,387 x 2 in Idaho)
- Emergency Medicaid/healthcare: ~$3,000-5,000
- SNAP/food assistance: ~$3,000-4,000
- Other public services (roads, water, law enforcement): ~$2,000-3,000
- Total taxpayer cost per household: $26,774-30,774/year
The employer pockets $23,000-39,000 in savings. The taxpayer pays $27,000-31,000 in costs. The worker gets exploited at below-market wages with no benefits or legal protections.
Multiply that by the estimated 30,000+ undocumented workers in Idaho and you’re looking at roughly $700 million to $1.2 billion in annual corporate labor savings offset by approximately $800 million to $920 million in annual taxpayer costs. The corporations keep the savings. The taxpayers eat the costs.
Why Neither Party Honestly Addresses This Issue:
Democrats won’t say it because their coalition includes both the immigrant advocacy groups who want open borders AND the corporate donors who fund their campaigns with profits from cheap labor. Acknowledging the corporate exploitation would alienate their donor base while undermining their humanitarian narrative.
Republicans won’t say it because their coalition includes both the working-class voters who are harmed by wage depression AND the business donors (IACI, Chamber of Commerce, agriculture lobby, construction lobby) who profit from cheap labor. Acknowledging the corporate subsidy would alienate their donor base while undermining their free-market narrative.
The result is a bipartisan conspiracy of silence in which:
- Democrats frame immigration as a humanitarian issue and attack anyone who questions it as racist
- Republicans frame immigration as a border security issue and attack anyone who questions enforcement as soft on crime
- Neither party frames it as what it actually is: a massive corporate subsidy funded by taxpayers and paid for by suppressing American workers’ wages
The Chamber of Commerce, IACI, the National Restaurant Association, the American Farm Bureau, the National Association of Home Builders, and the dairy industry lobby all spend millions annually to maintain this system because the system transfers hundreds of billions from workers and taxpayers to their bottom lines.
What Honest Reform Would Look Like: If you wanted to actually fix the system rather than just talk about it, you’d need to target the demand side the employers not just the supply side (the immigrants themselves):
1. Mandatory E-Verify with criminal penalties for employers. Not fines but prison time for executives who knowingly hire undocumented workers. Current penalties are so weak that they’re treated as a cost of doing business.
2. Require employers to provide health insurance or reimburse taxpayers. If a company hires workers who end up on Medicaid, the company should be billed for the cost not taxpayers. This alone would eliminate the corporate incentive to hire undocumented workers at below-market wages.
3. Full-cost impact fees on industries that rely on low-wage immigrant labor. If the dairy industry needs 7,000 foreign-born workers, the dairy industry should pay for the schools their children attend, the healthcare they consume, and the infrastructure they use not the general taxpayer.
4. Eliminate the corporate deductibility of wages paid to undocumented workers. Currently, employers can deduct wages paid to undocumented workers as a business expense while simultaneously evading payroll taxes on those same workers. This is a double subsidy.
5. Prosecute wage theft and labor violations aggressively. As we discussed earlier, 76% of undocumented workers experience wage theft and 37% receive less than minimum wage. Aggressive enforcement of existing labor laws would raise the cost of hiring undocumented workers and reduce the wage advantage.
6. Expand legal immigration pathways that require employer sponsorship with full benefits. If the dairy industry genuinely can’t find American workers, create a visa program that requires employers to pay market wages, provide health insurance, fund education contributions, and take full financial responsibility for the workers they bring in. The H-2A program moves in this direction but doesn’t go far enough.
So What is the Bottom Line: The real beneficiaries of illegal immigration aren’t the immigrants themselves who are exploited, underpaid, and live in fear. And they certainly aren’t American workers whose wages are depressed by $402-516 billion annually. And they aren’t American taxpayers who fund the healthcare, education, and public services that employers refuse to provide.
The real beneficiaries are the corporations, agricultural operations, construction companies, meatpackers, hotel chains, and restaurant groups that pocket the wage savings while taxpayers pick up the tab for the social costs their business model creates.
This is the most successful corporate welfare program in American history and it’s completely bipartisan. The only people who lose are the ones who always lose working Americans who pay taxes, play by the rules, and wonder why their wages never seem to keep up and their tax bills never seem to go down. Now you know why.
“We Get the Government We Deserve”
