Jan 24, 2017
Syrian Refugees in America
An Economic Burden or a Potential Boon?
by Craig R. Smith
With some 6 ½ million Syrians now displaced, the latest Middle East refugee crisis is being called the worst humanitarian calamity of our time. Make no mistake, it is a mass exodus.
The refugee crisis had its genesis in the Arab Spring which started back in 2011. After largely peaceful protests that urged democratic reforms were forcefully put down by the government, the Syrian Civil War was born. And as President Bashar al-Assad was busy fighting various domestic uprisings, a radical spinoff of al-Qaeda was slowly but surely becoming one of the most violent terrorist organizations the world has ever known. ISIS or Islamic State would ultimately carve a path of death, destruction, torture and brutality and overtake nine Syrian provinces.
According to UN statistics, armed conflicts raging between Assad loyalists, anti-government forces, and ISIS militants have killed more than 250,000 people and forced some 11 million Syrians from their homes. Over 4 million have fled the country with scores inundating neighboring Turkey (2.5M), Lebanon (1.1M), Jordan (635K) Iraq (245K) and Egypt (117K). Ten of thousands have also flooded into Italy and Greece.
A recent report by Amnesty International states that “One-in-every-two of those crossing the Mediterranean this year – half a million people – were Syrians escaping the conflict in their country.”
The sheer volume of the human migration has overwhelmed neighboring borders and produced massive tent cities as well as spikes in crime, assaults, illness and concerns about terror infiltration. This has triggered a backlash across the political spectrum in both Europe and America. In an attempt to maintain order and safety, discussions of refugee quotas and bans have been circulated. And as the tide of refugees rise, so does concern about the hard costs to host, house and feed tens of thousands of displaced peoples.
Reuters reports that the refugee crisis will cost the German government some 93.6 billion euro by the end of 2020 and German states have complained that they cannot cope with the influx and associated costs for “jobless payments and rent subsidies” as well as “language courses” for asylum seekers.
According to the BBC, the UK government’s pledge to re-settle some 20,000 Syrians by 2020 will cost half a billion pounds with officials conceding that the cost is “huge.” The refugee crisis is said to have played a crucial role in the EU referendum vote back in June and Britain’s ultimate decision to “Leave” the European Union after over forty years.
This year alone the Canadian commitment to refugee resettlement will end up costing Canadian taxpayers close to $1 billion as reported by Huffington Post Canada, where monthly assistance stipends barely cover affordable housing, food, clothing and language courses.
In the United States, President Obama has pledged that the US will take up to 10,000 refugees by the end of 2016 and has left the door open to accept up to 100,000 more in fiscal year 2017, far beyond the worldwide cap.
So what is the potential impact of tens of thousands of new Syrian immigrants on an already fragile US economy? That depends upon who you ask.
A recent PBS article titled “What’s the economic impact of refugees in America?” states that refugees “add to the labor market, add skills and generally, earn less than what they can contribute to the society as a whole.” But the article also cites “distributional consequences” which include the fact that “migrants get social services. And if they pay less in taxes and receive social services, that’s kind of a tax on the rest of the society.”
The article also cedes that an influx of unskilled, immigrant labor increases competition for unskilled American jobs which could result in a direct decline in wages.
A Bloomberg article entitled “Admitting Syrian Refugees is Good Economics,” states that immigrants can positively impact GDP “more people equals more production overall” but quickly points out that the impact on per capita GDP “is more ambiguous” and directly depends on the skill level of the arriving immigrants. “If you import a bunch of engineers, local average income probably will go up, simply because engineers tend to make more money. If you import a bunch of farmworkers, the opposite will happen.”
It’s important to understand that refugees coming to the US fall into a special asylum category and unlike traditional immigrants, they are eligible for a host of social services and welfare benefits immediately upon arrival. The Center for Immigration Studies states that “the costs of resettling refugees in the United States are quite high, even without considering all of the costs refugees create.” They estimate that the costs “total $64,370 in the first five years for each Middle Eastern refugee.”
The Economist cites a paper from the IMF that uses existing data on immigrants from Afghanistan, Eritrea, Iran, Iraq, Somalia, Syria and the former Yugoslavia to conclude that prior immigrants from these countries were 17% more likely to rely on government benefits as a main source of sustenance and 15% less likely to be employed. It also cites an Australian study which found that “they paid less tax than they received in benefits for their first 15-20 years of residency.”
Others disagree. US News & World Report writes that the city of Cleveland spent $4.8 million in 2012 for refugee support services and received a positive economic impact of some $48 million, a tenfold return on resettlement investment. It also suggests that refugees are highly entrepreneurial and “enjoy higher rates of successful business ventures compared to natives.” The report goes on to suggest that a vibrant refugee population could perhaps revitalize communities in decline as well as those with dwindling populations.
We’ll have to wait for data from certain municipalities in California, Texas and Michigan who have received the majority of the first wave of Syrian refugees to fully assess the impact at the regional, local and community level.
Clearly one of the most compelling reasons to bring any refugees into one’s country is to fulfill a humanitarian calling and live up to our shared responsibility as global citizens. But in doing so, we cannot deny the burdens that will be placed upon the American tax payer or the weight that will be carried by local support services in a time of ballooning federal, state and municipal debt and historically weak GDP. We also cannot deny the ongoing risk of terror intrusion and the very real threat of a radical belief system that would not stop short of infiltrating the ranks of displaced women and children in order to spread their evil ideology to the West.
Learn about the economic fallout of various government decisions with our 2016 RESEARCH REPORT SERIES providing all you need to know about Gold, Silver and Paper Money.