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The Nation | NEWS ANALYSIS

Immigrant Bill's Benefits May Be Elusive

April 01, 2006|David Streitfeld | Times Staff Writer

To understand landscape contractor Barbara Alvarez's position on illegal immigration, it helps to know she has an employee with his own chauffeur.

A key, longtime worker confessed a few months ago that his driver's license renewal had been rejected. In other words, he was in this country illegally.

Alvarez's solution: hire an $11-an-hour driver to take the worker to his lawns throughout the day. What else could she do? "My clients love him," the San Dimas, Calif., entrepreneur said.

Like much of the business community, Alvarez is solidly behind the immigration proposal that emerged from the Senate Judiciary Committee this week. It would offer the estimated 11 million illegal immigrants here a path toward citizenship while bringing in 400,000 guest workers annually.

These changes -- which are also endorsed by organized labor, most Democrats and some Republicans -- are described by supporters as benefiting just about everyone. The undocumented will no longer have to live in fear. Companies will get a more stable workforce. Society as a whole will be helped when the underground economy emerges into daylight. Tax revenue will rise.

Yet this prediction of good times all around rests on the most slender of assumptions, economists say.

It presumes that the flow of illegal immigrants will shrink from a torrent to a trickle, they say. It takes for granted that the government will have the resources to find the illegal workers who get through as well as the money and political will to enforce the laws that forbid their hiring.

Unless these things come to pass, economists say, the proposed legislation will increase the pool of legal workers while hardly denting the underground economy. Some employers will still choose to hire illegal workers at wages lower than those for new legal immigrants.

The result: an entrenched, two-tier labor system in which workers on the bottom rungs compete to drive wages down.

Los Angeles is believed to have the nation's largest underground economy, the result of its proximity to Mexico. Researchers at the Economic Roundtable used government data to calculate that the city has about 300,000 "informal" workers, two-thirds of whom are undocumented. That would make illegal immigrants 11% of L.A.'s workforce.

"A lot of restaurants only take cash now," reflecting the widespread employment of illegal immigrants who must be paid in cash, said Roundtable President Daniel Flaming. The same for auto-repair shops and beauty salons. Remodeling your house? There's one price for checks and one for cash.

Changing that dynamic won't be easy. "The risk of hiring undocumented workers has to exceed the benefit," said Ross DeVol, director of regional economics at the Milken Institute in Santa Monica. "Otherwise, there's a substantial possibility we could end up in a worse situation" as legal workers compete with a replenished pool of illegal immigrants.

Laws against knowingly hiring illegal workers have been on the books since the 1986 immigration overhaul. But as Government Accountability Office official Richard Stana testified to a House subcommittee last year, "Work-site enforcement has been a low priority."

Fraudulent worker documents were so plentiful and of such high quality, Stana said, that companies could convincingly claim they had no idea that their workers were illegal. The number of U.S. firms that were warned that they would be fined for hiring illegal workers declined from 417 in 1999 to three in 2004.

"Enforcement won't happen unless we make it happen," said the Economic Roundtable's Flaming. "For everybody to make progress, there needs to be a rule of law in the workplace."

As they enter the larger economy, many newly legalized workers will have greater workplace protections and bargaining power, economists say. One result: They'll earn more. Meanwhile, if enforcement indeed increases, businesses will have to clear more regulatory hurdles.

Companies, in short, will pay upfront for the legislation. Many of these costs will be passed on as higher prices for restaurant meals, groceries, child care, car repairs and house remodeling.

That, in turn, could reignite demand for the off-the-books economy.

"People have dual interests," said Jared Bernstein, an economist who supports the legislation. "Ask them, do you want your lawn to be mowed as cheaply as possible? They'll say yes. Ask if they want to control the border. They'll say yes. Ask them if controlling the borders means they're willing to pay more for lawn care, they'll say how much? And that's what we're going to find out."

The Judiciary Committee bill had its roots in a measure co-sponsored by Sen. Edward M. Kennedy (D-Mass.). By making illegal immigrants legal and giving them "a fair day's pay for a fair day's work," Kennedy said last year, "we are protecting American workers' rights and wages, too."

The notion that these changes are the right thing, not only morally but also economically, has been picked up by employer groups.

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