Illegal Immigration and the American Workforce

February 6, 2008

At the beginning of the new year, one of the nation’s toughest new anti-illegal-immigration laws went into effect in Arizona. The bill, pushed forward by the Arizona legislature and signed into law by Arizona Governor Janet Napolitano, requires business owners operating within the state to verify the legal status of all new hires. Under the new law, businesses risk losing their state and local licenses if they intentionally employ undocumented workers. The law also stipulates the formal investigation of alleged violations and outlines the procedure counties must follow in handling complaints:  “[the law] requires the Attorney General or county attorney, upon receipt of a complaint that an employer allegedly intentionally or knowingly employs an unauthorized alien, to investigate the complaint.” Likewise, the new measure also requires businesses to verify the eligibility of all newly hired employees by using the Department of Homeland Security’s “E-Verify” system.

Vacating the State

Across the state, newspapers are publishing accounts from workers, business owners, and labor and immigration activists who contend that the new law has already had negative effects on Arizona businesses. Numerous business owners have told reporters that they have been forced to lay off many employees to comply with the new requirements. In southern counties, close to the Arizona-Mexico border, owners of apartment buildings in low-and moderate-income neighborhoods claim that their tenants are vacating in droves, leaving behind scores of empty apartments. And several school districts have seen a decline in enrollment attributed to illegal-immigrant families leaving the state. Despite such reports, district attorney offices in most Arizona counties have received few complaints about businesses employing illegals.

Before Arizona enacted its new law, at least 30 other states had passed statutes aimed at curbing the hiring of illegal aliens. During the past few years, the federal government has also attempted to introduce immigration reform legislation. The most recent bill, the Comprehensive Immigration Reform Act of 2007 (cobbled together from components of three failed bills), was sponsored by U.S. Senate majority leader Harry Reid, but failed to progress through the House of Representatives for a vote. The major changes in the bill included giving temporary legal status to illegal immigrants currently residing in the country and providing funding for increased border security. Opposition to the bill was strong from the beginning; many anti-illegal-immigration groups balked at the “guest worker” provisions of the bill; immigration advocacy groups contested the bill’s emphasis on tougher border control.

The Great Debate

In recent months, the national debate over illegal immigration has figured prominently in the presidential race. Candidates on both sides of the aisle are routinely grilled about their proposed solutions to the problem of illegal immigration.

Although it is impossible to pinpoint the exact number of illegal aliens currently employed in the United States, the Bureau of Labor Statistics reports an estimated 12.5 million non-citizens (of whom 75 percent are estimated to be from Mexico and Latin America) are employed in this country. U.S. Border Patrol figures cite similar numbers, noting that more than 12 million foreign nationals have illegally crossed U.S. borders in search of work.

Those who study illegal immigration spar over whether it is beneficial or harmful for the American economy. Some posit that illegal immigrants, who often work for less money and benefits than their native-born, naturalized and legal counterparts, take jobs from Americans. Advocates of tough immigration reform, such as the Center for Immigration Studies (CIS), assert that illegal immigrants cost the federal government $10 billion a year in social services. Likewise, CIS states, because illegal immigrants are undereducated, they are generally limited to low-wage jobs—often being paid “under the table.” (CIS reports that nearly two-thirds of illegal immigrants have not earned a high school diploma, compared to 85 percent of the U.S. population.) They also maintain that taxes paid by illegal workers do not cover the collective cost of the state and federal benefits they receive.

Immigration proponents argue that illegal workers are a necessary and beneficial component of the American economy. According to these supporters, illegal workers fill a void by taking on low-paying, often unpleasant, and physically demanding jobs, including many in the agricultural, construction and service industries that Americans are seemingly less willing to do. Some economists predict that, without the illegal-immigrant workforce, the American labor force would shrink by as much as 3 or 4 percent and that the overall economic growth rate would likewise suffer. Benjamin Powell, an economist at the Independent Institute, cites the 2004 crackdown on illegal workers in the western United States as an example of the negative effect of a decreased immigrant workforce. The regional sweep by authorities reportedly led to $1 billion in losses when farmers couldn’t hire enough workers to pick lettuce crops, which were left to rot in the field.

Border Patrol

Hoover senior fellow Russell Roberts argues that, despite the number and type of jobs immigrants perform, the United States would, if necessary, survive without illegal workers. “If we closed our borders, all the things that immigrants do now would either be done by ‘native’ Americans (presumably at higher wages with resulting higher prices) or be done by machines or would not be done at all,” Roberts states. “The country would not collapse. We’d just be poorer, on average. And so would the people who come here in search of work.”

Regardless of economic forecasts and rallies that support immigrants’ contributions, unfavorable opinions about illegal immigrants appear to be on the rise across the United States. In 2006, the Pew Hispanic Center reported that 52 percent of the U.S. population felt that illegal immigrants are “a burden to the country, taking jobs and housing and creating strains on the healthcare system.”

Timothy Charles Brown, a Hoover research fellow who believes illegal workers can positively benefit American business, calls for regulation of illegal workers. “We need a holistic approach that looks at illegal immigration not as a political problem but as a business opportunity,” Brown explains. “By transforming illegal immigration from a large-scale, off-the-books, black-market operation into a revenue-producing program that manages the movement of workers in and out of the U.S. economy, we could maximize its benefits to all four major stakeholders—the workers, their employers, the countries the workers come from, and the American taxpayers.”

Conversely, Victor Davis Hanson, the Hoover Institution’s Martin and Illie Anderson Senior Fellow, argues, “by closing the borders, the U.S. would stop subsidizing Mexican failure.” Hanson states Mexico must rid itself of the corruption, elitism, and cronyism that has continued to stagnate its economy and forces its citizens to cross the border in search of opportunity. The solution to ending illegal immigration, Hanson believes, lies in the hope that someday, “Tijuana might become as prosperous as San Diego.” The goal of the United States, Hanson explains, should be to help Mexico by providing the “tough love” it needs. According to Hanson, closing borders, but also offering favorable trade incentives, will spur Mexican citizens to seek employment at home and demand more from their own government.

Stephen Haber, the Peter and Helen Bing Senior Fellow at the Hoover Institution and the A. A. and Jeanne Welch Milligan Professor in the School of Humanities and Sciences at Stanford, likewise views illegal immigration as more than a U.S. domestic issue. Haber explains that the influx of illegal immigrants from Mexico increased dramatically during the 1980s and 1990s, coinciding with Mexico’s economic collapse. According to Haber, if the United States were to pull the plug on illegal immigrants, Mexico could face widespread political and social instability, resulting, over time, in serious consequences for its closest neighbor, the United States. And, Haber warns, “there is no scenario in which a politically and socially unstable Mexico is in the interest of the U.S.” —Michelle Bussenius, Editor