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Lost amid the debate over a refugee moratorium in St. Cloud: the economic impact of immigration on the region

More than 300 people gathered at St. Cloud’s City Hall on Monday
MinnPost photo by Ibrahim Hirsi
More than 300 people gathered at St. Cloud’s City Hall on Monday, where city officials discussed the proposed refugee resettlement ban.

On a recent evening in St. Cloud, an hour before the city council would debate the fate of a proposed moratorium on refugee resettlement in the city, Feisal Ali stood in the parking lot of the city’s largest Somali-American strip mall, trying to make sense of the controversial plan.   

As he thought about it, several passersby waved and shouted greetings as they walked into the mall, which serves as both a social and business hub for the growing Somali-American community in the region. They stopped by the Somali-owned Afya Pharmacy, or joined people chatting over tea, or squeezing into the packed coffee shop, where young men took turns playing dominoes.  

Later that evening, more than 300 people — Ali among them — gathered at St. Cloud’s City Hall, where city officials would discuss the proposed refugee resettlement ban.

And though the moratorium wasn’t voted on — in fact, a resolution “in support of a just and welcoming community” passed in response to the proposed ban — the meeting nevertheless included discussions about the cost of having people born in other countries settle in St. Cloud.

Even amid the expressions of support, though, Ali couldn’t help but notice what wasn’t much talked about. Not just the costs, but the business and economic benefits those same immigrants and refugees have created in the city. “These days, politicians like to use immigrants and refugees as a tool to promote their personal goals,” said Ali, a student at St. Cloud State University who also owns the Pelican Pro Logistics trucking company. “Everybody sees these thriving Somali-owned businesses, but they don’t want to talk about it.”

The cost of resettling refugees 

St. Cloud City Council Member Jeff Johnson first brought up the moratorium at an Oct. 9 meeting. Under Johnson’s proposal, St. Cloud would temporarily impose a ban on primary refugee resettlements in St. Cloud until the city conducts an economic impact study of the costs of refugee services and the number of refugees expected to come in the city.

The resolution also proposed that the St. Cloud government take more of a role in any resettlement activities, and cites the Refugee Act of 1980, which notes that “local voluntary agency activities should be conducted in close cooperation and advance consultation with (s)tate and local governments.”

In proposing the moratorium, Johnson has said that those agencies haven’t been in communication with city government and that “none of the council members have any idea how we got to this saturation number of people” in St. Cloud.

The catalyst for Johnson’s resolution was a plan by Lutheran Social Services of Minnesota — one of five resettlement agencies operating in the state — to place about 225 refugees in St. Cloud over the next year.

Over the past decade, more than 20,000 refugees — most of them escaping violence and persecution in Burma, Ethiopia, Iraq and Somalia — have arrived in Minnesota through the refugee resettlement program. Of those, roughly 1,400 ended up in the St. Cloud region.

Since the 2016 presidential campaign, however, questions about the vetting of refugees and the cost of resettlement have become political flashpoints in communities across the country, including St. Cloud. 

All of which raises two obvious questions: What does that process really look like — and how much does it cost?         

Before arriving in the U.S., refugees undergo a vetting process that includes multiple in-person interviews, fingerprints and background checks administered by the U.S. Department of State and the Department of Homeland Security. 

Once refugees are cleared for resettlement, they begin another phase of the process: multiple health screenings to record their medical history and detect — or treat — infections or communicable diseases. 

Following that phase is the final stage of the process, where refugees participate in mandatory cultural orientation classes that prepare them for how to live and work in the U.S.  

At that point, the International Organization for Migration (IOM), an intergovernmental organization with 166 member-countries, arranges an interest-free loan program that covers the cost of airline tickets for refugees.

St. Cloud City Council Member Jeff Johnson
MinnPost photo by Ibrahim Hirsi
Under St. Cloud City Council Member Jeff Johnson’s proposal, the city would temporarily impose a ban on primary refugee resettlements in St. Cloud until the city conducts an economic impact study.

While that is happening, each refugee’s case is transferred to one of nine agencies in the U.S. that are contracted with the federal government to process the refugee’s resettlement. Those agencies arrange a 90-day reception process for the new arrivals, providing them with housing services, cash assistance and other basic necessities.

The U.S. government allocates resettlement agencies a one-time $925 for each refugee to pay rent and buy food and furniture and other material needs. “That’s not very much,” said Micaela Schuneman, director of refugee services at the International Institute of Minnesota. “Most of it goes towards rent.”  

After the 90-day reception period is over, the resettlement agencies discontinue those support services, with the expectation that refugees become self-sufficient and secure employment within that period. At this point, the refugees also start receiving notifications from IOM, asking them to pay back the cost of their plane tickets — payments the agency uses to reimburse the U.S. government for covering refugee transportation.

If refugees aren’t able to stand on their own feet after that period, they’re eligible to access some public benefits — including food, cash and medical assistance — for which all low-income legal residents can qualify. (There are some forms of assistance, however — including housing programs — that new arrivals don’t qualify for unless they’ve lived in the U.S. for a certain period of time.) 

As St. Cloud City Council Member Jeff Goerger pointed out at Monday’s meeting, though, none of costs for any of the resettlement services are borne by the city. As he noted, the federal, state and county governments “are responsible for the funding, management, and relocation of refugees.”

The economic impact

The cost and benefits of accepting refugees in the United States is a highly debated, and often emotional, topic — even within the Trump administration.

To make a case for an effort to reduce the annual number refugee additions, some senior officials in the administration have argued that refugees receive more in welfare than they pay in taxes. But in September, according to a draft of a report leaked to the New York Times, the Department of Health and Human Services found that refugees actually generate “$63 billion more in government revenues over the past decade than they cost.” 

In Minnesota, numerous studies have also attempted to quantify the costs and benefits of refugee populations. Ryan Allen, University of Minnesota professor, released the latest such study in January, concluding that the state’s future population and economic growth depends on increased immigrant and refugee admissions.

St. Cloud's largest Somali-American strip mall
MinnPost photo by Ibrahim Hirsi
Restaurants, clothing stores, pharmacies, and other businesses occupy St. Cloud's largest Somali-American strip mall.

Johnson’s proposal includes an economic impact assessment that would cover some of the same ground when it came to foreign-born residents in St. Cloud. But many say they already know the impact of that population. Clark Goldenrod, the policy analyst of the Minnesota Budget Project, said the estimated 9,000 foreign-born residents who call the region home have become an important part of the area’s economy. About 70 percent of those residents, for example, are participating in the workforce — a rate that compares to the overall workforce participation of native-born Americans in the region. “They’re filling important roles in the St. Cloud economy,” Goldenrod said. “Minnesota is increasingly relying on immigrant workers to fill critical roles in our workforce.”  

Many of the foreign-born residents in the area have high levels of formal education, Goldenrod said, and have jobs in a variety of occupations. For example, about a third of them work in production and transportation, while a quarter hold management positions. 

An unsurprising development

Ali is representative of a growing number of St. Cloud's Somali-Americans, the group that is most synonymous with immigrants and refugees in the city. Since moving to the city in 2013, Ali has owned and operated Pelican Pro Logistics, a trucking company in north St. Cloud that manages transportation and freight logistics for businesses.

Over the past five years, he’s noticed many Somali-owned businesses slowly popping up across neighborhoods in south and north St. Cloud: the Mogadishu Grocery; the Hormud Meat and Grocery Market; and the Third Street and the Global Malls.

For all that, though, Ali said he wasn’t surprised that an elected official proposed a plan to ban refugee resettlement in St. Cloud, drawing parallels between Johnson’s resolution and President Donald Trump’s travel ban, which restricts refugees from several predominately Muslim countries from entering the U.S.

He wondered, however, whether people like Johnson genuinely believe that refugee and immigrant residents in St. Cloud are a drain on the economy or if they just want to minimize how important they are to the area’s future. “When you really look at the reality, immigrants and refugees bring much more to St. Cloud than people think,” he said.

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Comments (7)

Economic Reality, Again

I've always supported the resettlement of Hmong refugees to the United States. The Hmong people were allies of the U.S. during the 1960s-1970s wars in southeast Asia, and would been persecuted - probably mass murdered - had they stayed in their home country after the totalitarian Communist takeover. The Hmongs have a moral claim on America, which we should and have made good.

Nevertheless, the hard reality is that Hmong refugees have cost American taxpayers far more money than the Hmongs have collectively paid in taxes. Again, because of their moral claim on America, I support subsidizing them to bring them into American society.

The mathematical fact is that immigrants of any type with low skills and lack of English language proficiency are going to be net drains on public finances for many years, in most cases as long as they live. The St. Cloud economy may benefit from large numbers of refugees settling there - if, as is the case, non-local units of government are paying for the social costs (public schools, Medicaid/ Medical Assistance, housing subsidies, food stamps, etc.). But for the nation as a whole, there is a net economic drain.

Ground your support for these refugees in compassionate or other reasons. But don't ground your support in economic absurdities.

Well put, John.

Well put, John.

Refugee costs

John, do you have some hard numbers for the "cost" of a refugee? What does a full-time worker "cost" the city or state? Everyone who works pays federal, state, and local taxes on his or her income, transportation, and property, as well as sales tax on purchases. The taxes we all pay support the schools, roads, and social services. The workers pay rent or mortgage fees, buy groceries and clothes, pay for oil changes and car repairs, etc., all of which contribute to St Cloud's economy. It sounds as though you are assuming that all or most refugees don't work ever. That is clearly untrue, as the article attests. So can you point to some data on the "costs" of Somali refugees in St Cloud?

Issues with Draft Report?

Also, could you identify the issues in the administration's draft report showing a $63 Billion dollar surplus in taxes from vs. expenditures for refugees in the USA? It seems that allowing these workers in helps even our budgets.

Uneducated ME refugees are a drain

That report has not been made public, I wonder why? I looked for it. Having done a Master's degree project on this very subject I am very sure the report is garbage. We need to look at the population of "refugees" they are citing, then consider most do not have a GED and most do not speak English well.

In Europe, they did a study showing that it took about 5 years for a refugee to become a net positive tax payer if they already knew English or German, and had a high school degree, and didn't have a family with them. Which is close to none of the middle east refugees.

The second and third generations can be net positive if they are hard working and get educated.

However, you have to be delusional if you think the average Somalian family of 6(UNDP stat) with a mother who will likely never work and a father with no education and limited English skills will pay for his entire family in an industrialized country like the US.

Right wing fiction, Again

Prove your numbers. Else clearly state you have no proof.

Economic activity

Will more than pay for the "cost" of these new citizens. We need them and we will be the richer for their contributions to our society.