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Illegal -- but Essential

Experts say undocumented immigrants are a driving force in the economy, despite a toll on public services and unskilled workers

October 01, 2006|David Streitfeld | Times Staff Writer

Waterson grew up in Fontana in San Bernardino County, the son of a computer programmer and a billing clerk who were able to buy a three-bedroom house, own two cars and build a nest egg. That status, achieved by millions of Californians after World War II, now feels out of reach.

"There are a lot of places in Los Angeles I want to live that I can't afford," said Waterson, 27. "The places I can afford, I don't want to live."

It's not just his perception. The Brookings Institution recently found that Los Angeles was the nation's most polarized city by wealth. Fewer than a third of L.A. neighborhoods are middle class, according to its study. The rest are either rich or poor.

Waterson keeps looking for all those benefits the economists say immigration has brought to him. But if the informal economy benefits both the immigrants and the well off, it doesn't seem to be helping him and his wife, Julia, very much.

They don't use immigrants to mow the lawn or wash the car or take care of the kids. They can't afford to eat out, so they don't gain from the toil of illegal restaurant workers. They're renters, so any immigrant-driven boost to real estate just puts a home of their own further out of reach.

The informal economy that much of California has embraced so enthusiastically can be criticized on other grounds.

Small cash-and-carry shops and vendors who cater to immigrants may not pay sales taxes to the state or business license fees to local government. People who hire day laborers cheat the state by not using companies that pay payroll taxes. The laborers cheat the state by not paying income taxes. All of these groups put legal workers and legal businesses at an unfair competitive disadvantage.

The most sweeping criticism: By creating a market for illegal labor, the informal economy increases the supply. If illegal laborers weren't in such demand, they wouldn't risk so much to come here. For better or worse, immigration would not be an issue.

But for Los Angeles County, the informal economy has been better than nothing -- and nothing, urban affairs expert and Economic Roundtable President Daniel Flaming says, is what the county would have had otherwise.

"When manufacturing collapsed, there was no effort to salvage the infrastructure for other purposes," he said. "The formal economy here has been stagnant since the beginning of the 1990s. The only growth has been in under-the-table employment, predominantly fueled by desperate workers and in particular undocumented workers."

Without immigrants, Flaming said, Los Angeles would be smaller and weaker and poorer -- Detroit or Pittsburgh or Cleveland with better weather.

In that L.A., Waterson would be able to find an affordable house. But because the population might be falling, his house could very well decline in value.

"We should be thankful to immigrants," Flaming said. "Without them, things would be much worse."

First the newcomers stabilized Panorama City. Now they are pushing it forward. The median value of a single-family home has doubled since 2000. And on the edge of the Plant mall, there's a sign that the informal economy might be yielding to a more traditional, bigger-budget state of affairs. Starbucks, that dispenser of $4 venti tangerine frappuccinos to the middle class, has just opened a store.

History of Ambivalence

Five days a week, Lissette Rodriguez starts work at 6 a.m., preparing banquet food for a mid-priced hotel southeast of downtown. After eight hours of chopping and slicing, she goes home and takes a shower. Four days a week, she heads to Beverly Hills, where she works from 5 p.m. to 1 a.m. washing dishes at a luxury hotel.

"Not many people could make it through 16 hours like that," she said proudly.

Rodriguez, 32, arrived from El Salvador in 2004, not to save or damage L.A.'s economy but to help herself.

"In Salvador, there's no money, no jobs," she said in Spanish. "It's more expensive here, but I can make a lot more."

That would be $9 an hour, a fortune to her and a pittance to the hotels. The fact that both sides consider it a good deal binds them together in a "don't ask, don't tell" policy. Rodriguez's employers no more want to catch her than she wants to be exposed.

The history of California is full of ambivalence to immigrants.

"From 1907 to 1940, 'the Mexican problem' was a hardy perennial in Southern California," historian Carey McWilliams wrote in 1946. "Every winter, the business interests of the region worked themselves into a lather of excitement over the cost of Mexican relief, hospitalization and medical care. With the return of the crop cycle in the spring, however, 'the Mexican problem' always somehow vanished or was succeeded by the problem of 'an acute labor shortage.' "

For most employers, any ambivalence appears to be gone. Instead, the business community speaks in dire terms about the consequences of a widespread crackdown on the hiring of illegal workers.

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