Illegal Immigration Victims – The Working Poor

Who suffers most from the influx of illegal immigrants? Did you think it was the taxpayers? So did I, but we were wrong. It is the working poor. At least according to Harvard economist George Borjas who is recognized as one of the nation’s leading experts on the economic impact of illegal immigration.

First a little background. Arizona passed one of the nation’s most comprehensive laws to discourage illegal immigration by imposing employer sanctions on those who knowingly hire illegal immigrants. A second conviction for violating the new provisions that went into effect on January 1, 2008 results in the revocation of the violator’s business license. It is a serious law with serious consequences.

Not surprisingly a consortium of business interests and illegal migrant advocacy groups have filed suit to block enforcement of the law — they have failed twice to obtain a temporary injunction. I say not surprisingly because it is the business interests who benefit from providing substandard wages and no benefits and it is the illegal migrant advocates that benefit by watching their numbers grow into a political force. Both are hoping that the courts will turn their heads so as to allow illegal activities to benefit their respective pocketbooks and political causes.

As part of the challenge, the consortium alleges that there is an insufficient “state interest” to justify adoption of the ban on employment of illegals. Apparently the mere presence of those here illegally, enjoying the fruits of the state welfare system, education system and health care system is insufficient for these employment cheats.

In response Maricopa County (Phoenix and surrounding areas) retained Borjas, the Robert W. Scrivner Professor of Economics and Social Policy at
Harvard University to undertake a study of the economic impact on the Arizona labor forces. Borjas did not include in his study the adverse impact of illegal immigrants on the welfare system, the public education system or the healthcare system in Arizona. He looked solely at the impact on employment.

Borjas found that the illegal immigrants had artificially enlarged the labor pool. When the supply is in excess of demand, the price for labor falls. Add to that that the illegals have little recourse for substandard wages (or working conditions) because any protest runs the risk of exposure and deportation. Borjas noted that in such instances the impact is greatest on those who make the least — entry level, unskilled workers. Borjas found that wages for entry level workers were, on average, 4.7% less than they would have been absent the illegal immigrants. In total that cost Arizona workers approximately $1.4 Billion in 2005. And here is an extra kicker, Borjas found that even this estimate is probably low because federal officials (census takers) routinely undercount the number of illegals and the number of illegals in entry level, unskilled jobs has a greater concentration than estimated by those same federal officials.

Borjas did not take into account the impact that illegals have on the migration of unskilled workers to skilled workers through on the job training. In other words because the illegals are already on site, they are given the opportunity to learn the skills necessary to advance in lieu of legal residents who are denied the entry level jobs because of the artificially suppressed wage levels. For instance, in the construction industry where the illegals may begin as “go-fers” they advance to framing carpenters and then to finish carpenters because they are present for the training. Each improvement in skill level brings a higher wage opportunity and meanwhile those here legally sit idly waiting for a turn.

You would think that organized labor and advocates for the poor would be first in line to protest this impact on America’s working poor. But these groups seem more interested in political power than personal opportunity and they see the illegal immigrant problem as an opportunity for votes rather than improvement in the conditions of the poor. Both sides of the aisle have equivocated on this issue in hopes of attracting a new voting block and meanwhile, as usual, the least able suffer the brunt of the politician’s dalliance.

The cost of illegal immigration to the taxpayers is enormous but since it is defused across all taxpayers, the individual impact is small. In contrast, however, the cost of illegal immigration on wages is concentrated in the working poor and is felt both in the level of wages and the opportunities for employment and advancement.

If the Oregon legislature wanted to do something that is actually useful during this interim session, it would commission a similar study for Oregon and add to it the actual cost of government services — welfare, education, healthcare, and judicial — imposed by illegal immigrants. But then again, if they did that, they may actually have to act on the bad news.