The Real Economics of Immigration Reform

Shortly after the November election, a few congressional offices privately acknowledged that it would be smart for the Obama administration to try to include pro-immigration provisions in the upcoming stimulus package. Some policy staffers were reading studies and hearing testimonies about how hardworking immigrants drive productivity and job creation across many different sectors of the economy. But as the stimulus bill gets finalized in conference this week and heads to Obama's desk for a signature, immigration will be debated only in the narrow terms of E-verify, the Bush-mandated system that all businesses benefiting from the stimulus may be required to use to verify the immigration status of their employees

What more can we expect? After all, immigration reform is a tougher sell in a recession. That’s the blunt observation Wall Street Journal columnist Gerald Seib recently offered: "Pushing any kind of immigration reform, particularly one that includes a path toward legalization, is a lot harder in an environment in which Americans are losing jobs."

Yet the political difficulty predates the Wall Street collapse and job-loss figures. For years, there has been little analysis of how a path toward legalization would increase the positive economic contributions of undocumented immigrants. Instead, conservative critics have found willing partners in the media and government to turn immigration reform into a zero-sum game, a war of us-versus-them in which every job performed by an "illegal" must have been stolen from a more deserving American.

The politics won't change until the real economics of immigration reframe the debate.

Here's a reality check: Consigning undocumented workers to a precarious existence undermines all who aspire to a middle-class standard of living. Employers regularly rely on undocumented workers to perform low-paying, unregulated jobs and to put downward pressure on all wages in certain industries. Immigrants without legal status accept these jobs because they lack power and workplace rights; non-immigrants must accept the same diminished wages and degraded conditions or risk exclusion from many employment opportunities.

As TAP's own Dean Baker has observed, "There are no jobs that U.S. citizens do not want. There would be huge numbers of U.S. citizens willing to work as farm workers, custodians, restaurant kitchen staff, or other jobs frequently held by immigrants, if these jobs paid $60,000 a year and provided benefits. The reason that U.S. citizens do not want these jobs is because the pay is low. Instead of paying higher wages, employers find it much easier to bring in foreign workers from developing countries."

Similarly, economist Francisco Rivera-Batiz has found that undocumented workers earn significantly more only after they attain legal working status. As long as a cheap, compliant pool of undocumented labor is available, employers have every reason to take advantage of the situation, keeping wages as low as possible.

Only when undocumented immigrants have the ability to exercise complete workplace rights will they help exert upward pressure on wages and labor standards that will benefit other workers. To claim that immigrants and non-immigrants simply compete for the same jobs is to misunderstand the power dynamics of a two-tiered labor market that prevents workers from meeting each other on a level playing field. The mere presence of undocumented immigrants does not harm native-born workers. It's their exploitation that makes it harder for workers to exercise control over the conditions of employment.

Under current law, undocumented workers are at the mercy of employers to the same extent that unprotected native-born workers were before the union victories of the 1930s. Distance from those historic triumphs makes it easy to forget that when immigrants and non-immigrants are equally empowered, job quality improves and wages rise, because the common interests of immigrants and non-immigrants become much stronger than the artificial conditions that divide them. Today, as in the past, cooperation and coalition-building would benefit all immigrants and native-born Americans trying to work their way into the middle class.

This point has not been lost on top economists in the Obama administration. In their policy primer on the stimulus package, Jared Bernstein and Christina Romer argue for revitalizing construction and manufacturing not simply because they have been among the hardest hit areas of the economy but because union representation is stronger in those areas, so new jobs created will likely be higher-paying, better quality, and more sustainable over time. As it happens, a large number of documented and undocumented workers perform construction and manufacturing jobs.

By complying with tax law, many immigrants have made it clear that they are willing to help build a new middle class through cooperation. Contra the myth of immigrants as economic parasites, tax dollars from undocumented immigrants are an integral part of our national economy, funding programs like unemployment benefits that support a large number of Americans in a time of economic crisis. This money is more indispensable than ever. The Internal Revenue Service estimates that undocumented immigrants contributed nearly $50 billion in federal taxes between 1996 and 2003. Ironically, it's easy for undocumented immigrants to document their earnings; a passport and proof of address are all they need for a tax-identification number.

I work at the intersection of immigration-policy research and immigration advocacy. Whenever possible, I help undocumented workers obtain tax-identification numbers so they can pay taxes and establish a solid employment history. Good behavior proves they deserve legal residency: This is what they repeat again and again, almost like a comforting mantra, even though they know it requires paying more taxes each year than they get back in services.

Undocumented families have the same goals as the millions of Americans struggling to hold on to jobs right now. And, in another twist of irony, they talk up the same moral virtues that anti-immigrant leaders tout. They are self-reliant, industrious, and resilient. If they had a fully legal livelihood here, they would open more businesses and contribute in other ways that would help jump-start our ailing economy.

The Small Business Administration finds that immigrants are nearly 30 percent more likely to start a business than non-immigrants and that they represent 16.7 percent of all new business owners. In New York City, the borough of Queens -- the most diverse county in the nation -- remains the leading source of job creation in the city. According to the Center for an Urban Future, three zip codes in Queens had employment growth of more than 80 percent in the past decade, adding 66,000 immigrants from 2000 to 2005.

Just east of Queens is Long Island, a seaside epicenter of anti-immigrant vitriol and violence, where Nancy and Carlos, a typical undocumented couple from Guatemala, have been working and paying taxes since 1996. All this time, they have been waiting for their immigration case to be reviewed. "Our attorney says we still have to wait another two to three years until our application is reviewed," Nancy said when I visited the couple recently. Nancy's sister, a U.S citizen, first petitioned on their behalf 12 years ago.

Nancy and Carlos live with the constant threat of deportation, surviving between hope and trepidation as best they can. "We need to hide like criminals, and we go to work in fear, hoping that God brings us back home. You know, we will do any work to survive," Nancy insisted. Some jobs that paid $10 an hour just a few months ago now pay only $4 an hour.

Yet Carlos sounded unfazed by the recession. "We have our savings; the difficult times have taught us that we need to save for emergencies," he told me. "We pay our taxes; our son makes online monthly payments to the IRS because we get paid cash."

A path to legalization for millions of people like Carlos and Nancy is a cost-effective path to short-term stimulus and long-term recovery. We cannot afford to ignore it any longer.

Comments

If we were actually concerned about the availability of super-cheap labor in the US, and how this impacts the wages of all workers, we would start discussing the details of Bill Clinton's welfare "reform"/workfare mandates.

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