Undermining U.S. Workers

Undermining American Workers

Record Numbers of Illegal Immigrants Are Pulling Wages Down for the Poor and Pushing Taxes Higher

Cover story: LA TIMES Magazine

July 20, 2003|Fred Dickey, Fred Dickey last wrote for the magazine about Indian gaming in California.

The perils of illegal immigration rattle around in the attic of public policy like a troubled spirit. We pretend not to hear the dragging chains because we don't know how to silence them, but the ghosts will endure, especially in California. Because the nation can't control its borders, the number of illegal immigrants grows by an estimated half-million each year. They come because we invite them with lax law enforcement and menial jobs. Their presence makes our own poor more destitute, creating a Third World chaos in the California economy that we are only beginning to understand.

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Patricia Morena has no time for a philosophical discussion on unauthorized immigration. She lives with it, or tries to. She's a U.S. citizen of Mexican descent, and a motel maid in Chula Vista, six miles north of the border. She's short and heavyset, and dresses with care in tasteful thrift shop. She earns $300 before taxes, when she's fortunate enough to have a five-day week. She's a single mom with three children, all stuffed into a ratty little one-bedroom apartment. The eldest, an 18-year-old boy, has taken to stealing; she thinks it's because he's always been poor.

Sitting in the pale yellow kitchen light, she looks resigned rather than angry. She has the fear of anyone who's 39, broke and tired: being replaced. If she didn't have to compete with unauthorized workers in the cheap motels that cluster just north of the border, she thinks, she could lift her wages from $7.50 per hour to maybe $10 and bargain for some health insurance.

But she won't ask for a raise. "If I ask for money, the bosses say, 'I can get a young girl who is faster and cheaper,' " she says. "The bosses have power over illegals. They know they're afraid and not going to ask for overtime, even though I know the law says they should get it." So Morena remains mired, one of 32.9 million people the U.S. Census Bureau says lived in poverty in 2001.

The 1996 welfare reform act was pitched as a means for poor people to elevate themselves through work. President Clinton said at the time that the act was "to give them a chance to share in the prosperity and the promise that most of our people are enjoying today."

Well, seven years later, Morena is still poor. Although she never studied economics, she has learned a fundamental economic truth: The only leverage unskilled workers have is scarcity of labor. Morena can't work her way up the economic ladder because the bottom rungs have been broken off by the weight of millions of new illegal workers. The census bureau says the number of illegal immigrants in the country doubled in the 1990s, from 3.5 million to 7 million, the largest such increase in the nation's history.

So Morena soldiers on at $7.50 an hour, living with a reality that the late Cesar Chavez, champion of the farm worker, understood back in the 1960s. Chavez, says David M. Kennedy, Pulitzer Prize-winning historian from Stanford University, advocated limited immigration to protect the wage levels of the Chicano workers he struggled to unionize. Without such restrictions, demand for labor would fall, and with it the pressure to pay higher wages.

The people who traditionally benefit from the Patricia Morenas and other low-paid workers are farther up the economic ladder--businesses, industries and homeowners. For them, stagnant low wages mean they can hire maids, farm laborers, seamstresses, roofers and carpet cleaners for about the same wages as they paid a quarter-century ago. That helps industries grow cheap lettuce and make down-market shirts. It frees up enough money for homeowners to afford those sports cars whose price tripled even as the cost of getting their lawn mowed stayed the same.

Yet the relentless flow of illegal labor is now changing life for Californians on those higher rungs too.

Apart from the proliferation of workers standing on street corners waiting for jobs, it's difficult to see that migration from Mexico into California during the past two decades is on a scale that astonishes even those who specialize in making sense out of human patterns. One such expert is Victor Davis Hanson, a professor of classics at Cal State Fresno and the author of "Mexifornia," a recent book that reveals the extent of the changing culture and demographics of California. He says that no immigration in American history even remotely compares to the one underway along the southwest border, which, incidentally, is the longest that has ever separated First- and Third World countries.

Today, nearly half of California's residents are immigrants or the children of immigrants, and the state's population is projected to increase by 52%, to 49 million, between 2000 and 2025. An estimated 950,000 Mexicans without papers live in the five-county Greater Los Angeles area, says Jeffrey Passel, a demographer at the Urban Institute public policy center in Washington, D.C. They are mostly nested in communities of the 2.4 million Mexican-born migrants. Statewide, there are 1.6 million undocumented Mexicans, and 4.8 million in the country, Passel says. They make up more than half of the 8.5-million-plus undocumented persons of all nationalities.

The image of migrants popularized by their advocates is of work-tough campesinos who cross the border spitting on their hands and eagerly looking for shovels. That is true to a considerable extent, because a lot of shoveling gets done. As the U.S. Chamber of Commerce says in support of a new amnesty for unauthorized immigrants: "There are approximately 10 million undocumented workers employed throughout the country who are working hard and performing tasks that most Americans take for granted but won't do themselves."

The second half of that sentence has been accepted as a truth for generations. Illegal immigrants are just doing the work Americans won't. But is it true today?

In April, I shopped for a contractor to paint my house trim. I got three bids. One was for $1,600, about $400 less than the others. The only condition was that payment be in cash. That wasn't remarkable. Is there a Californian alive who doesn't know they can pay under the table for cheap immigrant labor? You pay cash. There are no checks. There is no tax record.

But this bargain didn't come from an undocumented worker. It came from an established businessman with good references. I asked why the ethical gyrations.

He vented: "If I'm going to stay in business, I have to do what the illegals do. They never pay taxes, on profits or on their employees' pay. Right there, I'm at a 20% disadvantage. They'll come in here with about six guys with paintbrushes who work for peanuts, do a fair job, and then they're gone." These competitors have driven every American out of gardening, he added, and are doing it to house-painting, roofing and car repair. He concluded in frustration, "What am I supposed to do?"

Roy Beck, executive director of Numbers USA Education and Research Foundation, a Washington, D.C., organization devoted to immigration control, says it's not that millions of unemployed Americans "are too lazy and shiftless to bus tables or wash dishes." What the Chamber of Commerce and like-minded business groups really mean, he says, is that "Americans won't work like slaves, like serfs. Americans want to be paid and treated fairly."

"The National Restaurant Assn., for one, doesn't want their customers to know that this system forces illegal workers to live in abject poverty," Beck says. "It's the serfdom thing. If customers thought about it, they'd say, 'No, I don't want people who are hidden in the kitchen or serving me to be so poor and neglected that they might be TB carriers, and hate my guts for not caring about them.' "

Terry Anderson, a black talk-radio host in Los Angeles, says he sees similar displacement throughout the African American community. "I defy you to find a black janitor in L.A.," Anderson says. "In the '70s, the auto body-repair business in South-Central was pretty much occupied by blacks. Those jobs are all gone now. They're all held by Hispanics, and all of them are illegals. And those $25 jobs that blacks used to hold in the '70s now pay $8 to $10, and a black man can't get hired even if he's expert. It's absolute discrimination, because there's a perception that a Hispanic works better. Well, he works cheaper. They're in the country illegally, so they have no bargaining power, and the wages get driven down."

The point he and Beck make is decidedly not a racial one, not black versus Latino or Mexican versus white. Their point is about money. Illegal, powerless immigrants versus relatively empowered American citizens. Who among us could survive if every day, the streets outside our workplaces were lined with people willing to do our jobs for two-thirds or half the pay because in the world they came from, in the world where their money is sent, half of our pay amounted to riches?

Anderson particularly despairs of the effect the scarcity of low-end jobs has on poor youths. In May, 6.1 million whites and 1.7 million blacks in the country were unemployed. But of those without jobs, young people took the worst hit. The unemployment rate for whites ages 16 to 19 in the labor force was 15.4%, with 892,000 unemployed; for black teenagers, it was 270,000 out of work, at a scary 35% rate.

These kids are the millions of potential burger-flippers and mowers of lawns that Beck and Anderson say employers are bypassing in favor of undocumented migrants. "There was this kid in my neighborhood--good kid, 17 years old, and he goes down to the local McDonald's to get an after-school job," Anderson says. "The manager tells him that because he doesn't speak Spanish, she can't hire him because it would have a disruptive effect on all the other workers who don't speak English. I mean, think of that: Here's a kid trying to get a little ahead--American born, four generations in South-Central--who's told he can't sell French fries because he can't speak a foreign language. You want to talk about disillusionment?"

As cheap, illegal workers flood the labor force, governments and taxpayers are feeling the pinch. Just as one dishonest act often leads to another, illegal labor has led to other illegalities. The most pervasive is the untaxed cash transaction. It has created a surging "underground economy" that has become a hole in society's pocket through which falls many of our democratic values, and a lot of loose cash.

John Chiang of Los Angeles, one of five members of the state Board of Equalization, California's tax oversight agency, says off-the-books businesses can have a "profoundly dislocating effect" on the economy. It pushes some businesses to compete by also cutting legal corners, and discourages other businesses from coming to California.

A study last year by the Economic Roundtable, a Los Angeles research group, found that the underground sector in Southern California probably accounts for 20% or more of the economy, says economist Dan Flaming, author of the report. Nationwide, the International Monetary Fund reported in a 2002 issues paper, underground work amounted to 10% of the total economy.

As the underground sector surged in the '90s, an unpleasant snowball began to gather mass. The amount of tax revenues generated by the economy didn't keep pace with the population growth and accompanying rise in demands for government services. That, in turn, "adds significantly to the tax burden of honest taxpayers," Chiang says. He estimates that the state is losing $7 billion a year in unpaid taxes.

The state Employment Development Department's estimates are somewhat lower, at $3 billion to $6 billion annually in lost income and wage-related taxes. Any way it's counted, that's a pile of money for a state running a $38-billion deficit that Sacramento is attempting to close by cutting services, raising taxes and borrowing money.

Certainly, not all of the loss is due to illegal immigrants, and the state, with scrupulous political sensitivity, avoids placing blame there. But Jerry Hicks, whose job until recently was to measure the underground economy for the Employment Development Department, reluctantly agrees that common sense would put undocumented workers at the head of the tax-avoidance list. It's anybody's guess how much fault lies with businesses forced to compete by dealing in cash.

That loss of tax revenue is key to understanding why unchecked illegal immigration creates a downward economic spiral. Jan. C. Ting, Temple University law professor and former assistant commissioner of the Immigration and Naturalization Service, says the swelling population of poor people who have little more than manual labor to offer, and who pay few taxes, will inevitably draw heavily on social services. That drain will, in turn, increase taxes on businesses and homeowners, who may depart for other states, which in turn will drive tax rates even higher.

An often-cited National Research Council study in 1997 concluded that each native household in California was paying $1,178 a year in state and local taxes to cover services used by immigrant (legal and illegal) households. The demand for such offsetting taxes undoubtedly has increased in proportion to the numbers of illegal immigrants since then.

What is known is how the tax drain is changing society. As the IMF's issue paper warned last year, the lost revenue can lead to "a deterioration in the quality and administration of the public goods such as roads and hospitals provided by the government."

Hospitals provide a clear warning signal. Here's how it happens: An illegal immigrant, without health insurance, has a serious health problem and goes to a public hospital, incurring a catastrophic medical cost. At bargain basement wages, that patient has as much chance of paying the hospital bill as paying off the national debt. So the patient scribbles out a passable IOU, and disappears.

Someone else pays. America's health system draws its lifeblood from private health insurance, and if large numbers of patients have no insurance or can't pay, the money has to be taken from taxes--siphoned from the state treasury. A robust society can absorb a certain amount of those losses, but if the tax base isn't expanding as fast as the demands placed on it, the system begins to shut down--as Los Angeles County's has.

In 2002, 33% of L.A. County residents were without health insurance or were grossly underinsured. The county thinks that rate is the highest in the United States, which helps to explain why the county prepared to close two hospitals last year because there was too much demand and too little revenue.

Carol Gunter is acting director of county emergency medical services, the person who has to try to run a "business" in which about a quarter of the customers don't have the means to pay for her product, but are entitled to its full service. So just how many emergency room patients are illegal? Federal law prevents her from knowing because hospitals are forbidden to ask about citizenship. What Gunter does know is that, despite billion-dollar federal bailouts, the number of public L.A. County hospitals recently went from six to five, and another is going to close.

In March, Democratic Sen. Dianne Feinstein announced she had joined other senators in supporting a bailout bill to reimburse state and local hospitals for emergency medical costs incurred by undocumented immigrants. She estimated those costs in California at $980 million in the past year. Celebration over the proposal becomes somewhat muted when we consider that a bailout is--by sinking-lifeboat definition--intended to overcome the effects of a leak, and her statement mentioned nothing about patching the boat. Feinstein declined to be interviewed on the subject.

Jim Lott, executive vice president of the Hospital Assn. of Southern California, puts it bluntly: "We are in a [health-care] meltdown in Los Angeles County to the extent we have never seen before."

The state can't be far behind. An estimated 20% of patients throughout California are uninsured, with hospitals incurring $3.6 billion in uncompensated care. Fifty-one percent of the state's hospitals operated in the red last year.

After the "please pay cash" painting contractor left my house, I put pencil to paper on the bids. Considering that his line of work is labor-intensive, if I accepted the above-board bid of $2,000, probably about $1,500 would go toward wages, and maybe 10% of that would go to the government. If I went for the underground bid, I would get off cheaper--and the government would lose $200. Multiply that by the countless such transactions in California daily, and a lot of hospitals are going to run short, and a lot of potholes are going to grow.

Author Hanson describes the practical effect of the massive immigration numbers: "The unfortunate message we give migrants is, 'You can work here, but only undercover, and you can't join our society.' "

Chiang sees the same ominous divisions. "California is becoming a dichotomy society--high-wealth, low-wealth; educated, undereducated; and the underground economy plays a large role in creating the unregulated atmosphere that tends to widen those social and economic gaps."

So the people on either side of the divide go to their corners. The wealthy to West L.A. and its counterparts around the state. The poor? "We have towns in the Central Valley that are--literally--100% Mexican, and consist mainly of illegal migrants," Hanson says. "In those towns, Spanish is the only language spoken; there is no industry, and the towns are huge pockets of poverty. We can legitimately fear that this is the California of the future."

Two small cities of about the same size in Fresno County underscore Hanson's point. The town of Parlier in 2000 was 97% Latino, with 36% of the town living in poverty, and a per capita income of $7,078, Hanson says. The town of Kingsburg, whose population was 34% Latino, had just 11% living in poverty. The per capita income was $16,137.

The dependence upon agricultural labor, which usually has to be done by hand, puts a low ceiling on what immigrants can earn. That ceiling could be lifted either by stemming the flow of illegal labor, or by mechanizing the farm work. But neither is happening, which suits many farmers just fine.

Philip Martin, professor of agricultural and resource economics at UC Davis, says farmers could quickly mechanize labor-intensive harvesting if it were not so cheap to hire migrants. "Back in the late '60s and '70s, there was a fear there wouldn't be enough farm workers, so that spurred mechanization research," Martin says. "Then there were 70-some subsidized projects at the University of California aimed at figuring out how to pick oranges mechanically. Today, there aren't any, because there is plenty of cheap farm labor. There is probably a machine available to harvest every crop grown in the U.S., but they won't be used as long as the laborers are available at low wages."

Martin's point reveals this turned-around truism: Agriculture in Mexico is modernizing, which forces many laborers off their jobs there. Machines are displacing laborers in the cornfields of Mexico, so they come north to the "advanced" United States to pick fruits and vegetables by hand.

Because the United States makes no real effort to count its undocumented workers, their true impact on the job market is unclear. Common sense does say, however, that if millions of Mexicans are here illegally, they must be working or they would go home. An estimated $10 billion was sent back to Mexico in 2002 by workers in the United States, an increase of $800 million from the year before, says the nonprofit Pew Hispanic Center in Washington, D.C.

The migrants who come north used to be regarded as sellouts or deserters in Mexican society. Now, they're heroes praised by Mexican President Vicente Fox for the money they inject into that faltering economy. That is also a first, Hanson says. "Mexico is a failing society that stays afloat by exporting human capital. If you shut that border down, in five years you'd have a revolution, because Mexico can't meet the aspirations of its own people."

There is no question that illegal immigration greatly troubles Americans. The polls show it, both before and after 9/11. They want them to go home. One poll even showed that almost two-thirds want the military to patrol the border. Of course, they never gripe about the cheap hamburgers or the low-cost gardening that migrants make possible.

Yet, curiously, in a decade of unprecedented illegal immigration, the issue has been put on the back burner by most of society's seers and opinion-formers.

Illegal immigrants are the people we used to call illegal aliens in a coarser time. Now, to some, even "undocumented workers" is too harsh so they've adopted "unauthorized." To many critics of illegal immigration, this tiptoe nomenclature is part of the problem. They say a debate or consensus on the issue is made impossible by a barricade of political correctness, up against which a critic is in danger of that paralyzing accusation--racist.

Most politicians would rather swallow their tongues than talk about illegal immigration, and Dick Morris thinks he knows why. Morris, the former political strategist for Bill Clinton, says both political parties, "especially the Republicans, have to know they're running out of white people to split up. Any major politician is facing dodo bird extinction if he or she fails to reach out to Hispanics. It scares them."

Hanson believes the politics of immigration is about greed and power more than ideology. "It's one of those issues that's backed by strange bedfellows--on the right, you have big business types who want open borders to make money on cheap labor, and don't care about social consequences. On the other side, you have this left-wing racist--I think it's racist--separatist industry of Latino groups and leftist legislators" who want more immigration because it expands their power base.

Quixotically, on the border south of San Diego, the U.S. runs a version of "Checkpoint Charlie" to keep them out. Operation Gatekeeper started in 1994 to stem the flow of illegal immigration north by clamping down on the main ports of entry in the Southwest. In addition to forcing many border crossers to attempt a dangerous trip across the desert, it has had the unintended consequence of transforming a fluid population that used to go back and forth into one that simply stays here.

An unauthorized worker probably would prefer to work in this country and return home as often as possible, preserving his Mexican roots. Gatekeeper, however, has cemented that worker's feet in the U.S. It's not hard to understand his hesitancy to go home for a holiday or family event if he knows there's a good chance he'll be caught on his return. So, he does the obvious thing: He hires a coyote (outlaw immigrant trafficker) to bring his whole family north, often one member at a time.

So, what are the options? Close the borders and kick out the undocumented as some arch-conservatives want? Or, on the other extreme, open the borders completely, as libertarians and some Latino groups tend to favor? On both counts, forget about it. Not going to happen. And you can trash amnesty at the present time, too. The War on Terrorism and the tension it has caused between Mexico and the United States, plus a sour remembrance from the results of the 1986 amnesty law, closed the book on "regularization," as Bush and Fox euphemistically called amnesty in the fond days of their mutual affection a couple years ago. A 2002 poll by Zogby International, a polling firm, showed that 65% of Americans opposed a new amnesty.

When the nation tried amnesty 17 years ago, the whole idea was to combine it with a crackdown on hiring illegal workers. Guess what? The amnesty worked for 2.8 million migrants, putting them on the track for citizenship; the crackdown did not, as the rising numbers of illegal crossings demonstrate.

The first amnesty seemed likely to only lead to another, and then another. An advocate of controlled borders is Cecilia Munoz, vice president of the National Council of La Raza, the group considered an arch defender of illegal migration. Munoz says undocumented immigration is bad for both the country and the workers, so she supports amnesty to make them legal, calling it "earned legalization." Her enthusiasm flags, though, when asked if the government should crack down on subsequent illegal immigration that undoubtedly would follow a new amnesty.

But her convictions don't falter. "We are going to ultimately succeed because we're all complicit in this system. We don't like it, but we benefit" from it, and therefore should grant the laborers amnesty.

The last-gasp alternative to amnesty seems to be a "guest-worker program." The guest-worker idea had two antecedents, one from 1917 to 1921, and another, known as the bracero program, from 1942 to 1964. Each was started in response to farmers' complaints of wartime labor shortages. After studying both, professor Martin is convinced that "there's nothing more permanent than temporary workers." He realizes the folly of inviting a poor laborer into a comparative worker's paradise, and then expecting him to run along home when the job is finished.

David Lorey, author of the scholarly "The U.S.-Mexican Border in the 20th Century," says the lesson of the bracero experience "is that guest-worker programs encourage migration." He adds, "There were horrible conditions in the migrant camps, and a lot of abuses that resulted from this neither-fish-nor-fowl program."

In retrospect, the lasting effect of the bracero program was to draw workers north to the border and give them a taste of American wages. For example, in 1940, Mexicali, a Mexican border town south of El Centro, had a population of less than 20,000 people. In 1960, it was 175,000. The programs succeeded in drawing workers, especially in agriculture, but also left a legacy of exploitation and ineffective regulation that has made bracero a dirty word in the lexicon of Mexican migration.

Memories of the abuses leave Hispanic groups skittish to the idea of guest-worker programs. But Brent Wilkes, executive director of the powerful League of United Latin American Citizens, says that his organization might support such a program provided the workers have labor rights equal to those of American laborers, and have an inside-track to eventual citizenship

However, law professor Ting calls a guest-worker program in any form unworkable. "It's camouflaged amnesty. No one wants to use the word 'amnesty' because the American people recognize it for what it is--admitting defeat of our immigration system. So, they say, 'Let's call it something else. Let's call it a 'guest-worker program.' "

The vacillation over how to effectively control illegal migration drives a senior immigration investigator right up the wall, because he believes the bureaucracy has the answer in its own hands. The investigator has more than 20 years' experience with the INS. Still, he believes he must remain anonymous for fear of retribution.

Currently, he explains, the law requires an employer to make a good-faith effort to ascertain that applicants have valid identification. However, he considers that law a political con job because it gives unscrupulous employers an easy out: They can't be held responsible for not having the expertise to identify illegal or forged documents, so anything short of those being written in crayon can pass muster. The biggest abuses, he says, are of forged immigrant registration cards (green cards) and Social Security cards.

What frustrates him is his conviction that a procedure is already in place that would "immediately identify 70% of the illegal workforce." He explains that as a part of the 1986 immigration law, a voluntary employee verification pilot program was established, and is still operating. Under the program, the validity of Social Security cards and green cards can be quickly checked on all new employees by phone or online. He says the system could easily be expanded into a mandatory nationwide computer hookup by cross-indexing the data bases of the immigration service with the Social Security Administration. The effect would be that honest employers could instantly ascertain the legality of their workforce, and dishonest employers would have no excuse for hiring undocumented workers.

Bill Strasberger, a spokesman for the immigration service, says the pilot program is considered successful. "Employers using it are pleased, and so are we. It provides verification with confidentiality." Asked if it would be expanded or made mandatory by Congress, he laughed briefly, then said, "It really is the direction we need to move in."

Why, then, aren't we doing it? The investigator says that Congress refuses to make the program mandatory so as not to offend big agribusiness and other industries that freely employ illegal workers. These industries then take some of those profits and give generously to members of Congress.

Beck's organization, which advocates immigration control, plans to push for a mandatory employee-verification law. "The American people would not stand for a massive deportation, so what we need to do is use this program to dry up the jobs, then most illegals would gradually go home." If such a law was enacted, he says, the end result would be American workers gravitating to those jobs for slightly higher wages. "You'd end up paying 25 cents more for a hamburger and a dime more for lettuce. Big deal."

This affluent society can certainly afford more expensive hamburgers, but can it afford the hidden costs that currently make those burgers and fries dirt cheap? As Beck asks, "How many unskilled illegal migrants do we allow in? Forty million? Fifty million? What is the end point?"

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