Speaker: PAUL HAGSTROM

JULIA VITULLO-MARTIN: When we were first putting this conference together – we came up with a list of subjects that we thought were essential. And at the top of the list, was immigration. And that was before we had heard Richard’s presentation letting us know that in- migration here is at the bottom. So we were particularly delighted to come across Paul Hagstrom’s study of immigrants in Utica. This is one of the most specific and useful immigration studies that I’ve come across in any city in the United States. Paul is an Associate Professor of Economics at Hamilton College. Welcome Paul.

MR. PAUL HAGSTROM: Good morning. I’m very happy to bring good news. I’m moved to the Utica area in 1991. Watching the decline in the next several years was one of the most depressing experiences in my life. Sixteen years later I am still there, and I’m happy to say that I love living in the Utica area. It is a great, great place to live.

The study that I’m going to discuss is a detailed study. And what I hope to do this morning is to really just give you enough of an overview so you will have questions to ask and to continue the discussion in the future. Some of this stuff I can move through very quickly because it’s been very nicely set up by others. I just want to make the point that in the Utica Rome MSA where this study focuses, population change is one of the key issues (Hagstrom, PPT 1). We all know that we need population for growth and development. Some places in the country are struggling with rapid growth. We have the opposite problem in Utica.

At its peak, Utica was a city of 100,000, now we are under 60,000 as a city. In terms of the larger MSA area, I want to make clear that we do not have a situation in which we have falling birth rates and all these kind of things. Our problem that has been nicely set up is, that the native population seems to have been leaving at a very rapid rate.

What I’m looking at is an inflow of refugees into our area. And I’d like to basically describe the impact of that inflow of refugees. We’ve already seen that the population is leaving the area. We’ve already heard that we’ve had some minor growth in employment. Huge change in industry sector shifts (Hagstrom, PPT 2) where we have had a decline in manufacturing and transportation and a big upsurge in service jobs. I won’t go more into that.

At the same time that we’ve had this huge outflow of the native population, in particular those in the 20 to 35 year age category, we’ve had another phenomenon going on in Utica. In 1975, the Lutheran Immigration Refugee Services, one of the larger refugee resettlement agencies, established a center in Utica. I believe it was a humanitarian effort and it was established with all kinds of good intentions. In the years since 1975 (Hagstrom, PPT 3), we’ve had refugees from 32 or more countries. My wife teaches English as a second language in the Utica School District. At one point there were 27 different languages spoken in the high school. The Mohawk Valley Resource Center for Refugees has settled about 11,000 refugees, that’s up to 11,500 by now. The refugees have come in waves as they’re assigned to our city by the State Department. They started with the Vietnamese kind of wave. The next wave to follow was from the former Soviet Union. The largest wave, roughly 40 percent, is from Bosnia. And more recently, we’ve been getting the African and I just heard last week that we’ll have 200 Burmese refugees coming in the next couple months.

The refugees as they come tend to be relatively young. They come in relatively small family sizes. Very few are elderly. Only five percent are over the age 65.

Now where are they coming? They’re coming to our city of Utica. And there’s probably a lot of ways to demonstrate the concept I want to show, but this is just one of them (Hagstrom, PPT 4). The light areas in the map on the screen are the relatively low-income areas. Very low-income areas. I shouldn’t have to qualify that. The darker areas around the periphery are the higher income areas. And, this is limited a couple of Hamilton students made this slide for me. If we had extended it outside the Utica area you’d see much higher incomes outside of Utica.

That center city, it turns out to have been what makes part of our refugee resettlement program most successful. That there is the vacancy in housing that was referred to in our previous speaker, creates an environment which refugees can be resettled into very low income, but quality housing.

So, the refugees come. They take jobs (Hagstrom, PPT 5) which are fairly readily available as in small assembly jobs, the clothing industries, machine operators, nurses aides, tend to be relatively low paying jobs, but these jobs are relatively available in the area. About the top ten-job descriptions account for about 75 percent of the jobs that people take. And we have employers in the area that have hired more than 100 refugees (Hagstrom, PPT 6). Many who find the refugees to be a very high-quality labor population for them.

So, what did I do? My study kind of addresses the question that was posed by Sherwood Boehlert, our former congressmen when he was visiting Hamilton College once. He said, “I’m always hearing that the refugees are sapping our resources from one group and from others that refugees are best thing that happened to our community. I wish somebody would do some type of objective study on this.” I was trying to fill that void with this study.

My study is a fiscal impact study. So, I’m not looking at- this is not an economic impact study where somebody says we’re going to build a mall, it cost so much to build it and we’re going to multiply it by a multiplier of 35 and that’s how successful this kind of project will be. I have studies like that about our local casino that I see all the time.

This study is looking at the fiscal impact. What are the costs to taxpayers of having refugees locate in our area (Hagstrom, PPT 7). And then, what are the benefits in a tax sense. So, what are the different sources of revenue that are generated from the refugees who enter into the area?

Well, we have to be honest. Every refugee who comes into the area goes on Medicaid. Every refugee who comes into our area goes on TANF food stamps and other benefits. Not all of these are costs to the local area, however. We must trace them through our public finance system in New York. We share 25 percent of the-we have to match 25 percent of the costs for Medicaid, for TANF. One of the other big costs is education. Now the English as a second language costs, many of those are met by state grants that come from federal grants and so on. But there are additional costs to having children in the school. And not all of the ESL class expenses are covered by outside funding.

Different costs that people come up with for include the cost of resettlement (Hagstrom, PPT 8). Well, those are primarily covered by the state department. Although, one interesting tidbit is that the refugees over time are required to pay back even the cost of their flight to the United States. The education funding, as I mentioned, is a mix of state and other grant funding. Job placement that’s done by the refugee center, they have about seven full time job placement officers at the center in Utica. Those are all operating on state grants. Their objective is to put refugees into jobs as soon as possible by my own view, sometimes way too soon before they’ve really had a chance to be successful learning the language. But there is opportunity for continued language development over time.

Primary benefits to the refugees kind of coming into our area, are the same benefits you would get from others who move in to the area (Hagstrom, PPT 9). Jobs lead to consumption. Consumption in part, generates sales taxes. We have properties that had fallen off the tax rolls. But the properties that fallen off the tax rolls when I moved to Utica, honestly, one of the largest problems there was the burning of houses, right? Arson was a terrible problem in the Utica area in the early and mid ’90s. That’s all stopped.

Property values where the refugees have moved into the area have risen. And so, just to kind of get to a couple of bottom lines here (Hagstrom, PPT 10), my study which kind of puts all these things together, attempts to simulate the impact of these cohorts of refugees coming into the area. And a cohort in my study is about 750 a year. It’s down to about 400, but it’s been as high as 1400 in the ’90s.

A single cohort is very costly for the city in early years and for the county in the early years (Hagstrom, PPT 11). After about seven years, that cohort individually is paying more in taxes and bringing benefits that are greater than the cost. In part, because the decline and the use of other social services and the aging of the children out of the school system. And so, but they don’t come as a single cohort. They come year, after year, after year. And so, those negatives in the early years kind of add up until over time, depending on which discount rate you use, it takes approximately 14 years until the benefit from success of cohorts becomes positive. Now there’s still on an annual basis, that doesn’t mean cumulatively it’s a positive, it’s just that in a particular year, the benefits exceed the costs. It takes about 25 years (Hagstrom, PPT 12), a little bit longer than they’ve been coming to Utica to have a cumulative positive benefit.

And, I will kind of use that as a way to rap things up. I look forward to talking about it later (Hagstrom, PPT 13).

JULIA VITULLO-MARTIN: Thank you, Paul. I think the last point- it takes 25 years for a positive cumulative benefit is very nice sound bite that we probably should send to Congress.