Illegal Workers and the Cost of Doing Business

Contractors hire undocumented Mexicans who will work for peanuts and won't complain if they're exploited. And as long as employers keep hiring them, the seemingly relentless migration from south of the border will continue. Oh, and one other thing -- the employers don't give a rip about the Mexican workers.

It's a convenient scenario that rings true. It would be ridiculous to say that it never happens.

But after spending some time last week on the phone with the owner of a roofing company -- who had called specifically to talk about illegal immigration -- I was persuaded all over again how complex the issue is.

He talked about how he has grappled with the immigration issue, about losing sleep over breaking the law and about his admiration for the Mexican laborers. He talked about the make-or-break decisions that he and other business owners have had to make between earning a living and violating the law.

And he points to the workers' compensation requirements that he says have drained business owners and contributed mightily to the continuing flow of illegal workers into California.

I agreed not to identify him, because he readily admits that he and others have broken the law by not paying as much as they should into workers' comp and by hiring illegal workers. "Talking to you scares me to death," he says. "I would hate to have the IRS knock on my door and pound me down."

He insists he's calling because he wants lawmakers to solve the illegal immigration problem and says that any "honest" discussion must include the burdens imposed by workers' comp. When employers had to pay $10 to $20 to workers' comp for every $100 in wages earned, the burden was bearable, he says. But as the rate steadily rose over the years and neared dollar for dollar, it became crushing.

"You've got to look at a $4,000 payroll for a week and then sending $4,000 to the state fund" in workers' comp, the owner says. "You've got to imagine what it's like to write checks like that. If you hire illegal aliens, you're not taking out taxes on him. You're paying him cash. The reason you do that is so you don't have to pay workmen's comp. So we'd carry workmen's comp and say we only had one employee, and we carried, maybe, four employees."

He isn't gloating about it. "Nobody wanted to break the law," he says, "but we knew we'd go out of business [if we didn't], and other people were doing it too."