Monday, October 02, 2006

Illegal Aliens and the American Economy

Sunday's Los Angeles Times ran an informative article arguing that illegal immigrants are essential to the economy:

The presence in the United States of [Los Angeles day-laborer Adrian] Lopez and 12 million other illegal immigrants is one of the most contentious issues of the era. Hundreds of thousands of immigrants have repeatedly demonstrated this year for legal recognition, sparking a backlash from many native-born Americans. Congress has been stalemated between legalization advocates and those pushing punitive measures.

Economists are less divided. In the main, they say the American engines of industry and commerce have always been fueled by a steady supply of new arrivals. Immigrants, they contend, contribute to consumer spending and, instead of replacing native workers, create jobs.

"Overall, immigration has been a net gain for American citizens, though a modest one in proportion to the size of our $13-trillion economy," 500 economists wrote in an open letter to Congress on June 19. Measuring the contributions of illegal workers is a difficult task, however. Many numbers are vague or open to dispute. A few experts contend that the gains are not clear-cut and that any benefits are far from being universally shared.

Special interests that benefit from immigrant labor — including agribusiness, restaurant operators and unions courting new members — tout their gains as gains for all, said Michael Teitelbaum, who was vice chairman of the bipartisan U.S. Commission on Immigration Reform in the 1990s."

It all comes down to where you sit," said Teitelbaum, a demographer at the Alfred P. Sloan Foundation. "The upper tiers benefit from immigration, and the lower tiers lose."

The 500 economists concede that a "small percentage" of native-born Americans may be hurt by competition from illegal immigrants who are willing to work cheaply. But any harm, they say, is outweighed by the benefits to the overall economy.

Lopez is a case in point. Start with his willingness to work for little. Add his eagerness to spend. Multiply that by the more than 2 million illegal workers in the state.

One result: Restaurant prices are pushed down by illegal labor in the kitchen, fruit and vegetable prices by illegal field hands, new-home prices by illegal drywallers.

Immigrants aren't just a weapon against inflation. The tens of thousands of illegal nannies in the Los Angeles area, for example, lower the cost of child care, freeing mothers to return to work. This in turn increases families' incomes, which encourages spending and fuels the economy.

Many immigrants send a portion of their earnings home to their families, but their influence here remains potent. The Economic Roundtable, a Los Angeles think tank, estimates that the 400,000 illegal workers in L.A. County spend $5.7 billion annually on food, rent, transportation and other necessities.

The sales taxes they pay on all those consumer purchases boost the state treasury. The growing number of immigrants who use false papers to get payroll jobs are contributing to Social Security without the right to receive payments from the fund.

That props up the beleaguered system by at least $5 billion a year, analysts say.

Other benefits may be less obvious, such as the gains in property values enjoyed by homeowners.

Prices surged for a number of reasons over the last few years, including very low interest rates, but experts say immigrants made a big difference in California. Their apartments and houses may be shabby, but their sheer numbers exert a profound effect. In a state that never has enough housing, the hundreds of thousands of units rented to immigrant families put upward pressure on all prices.

Then there are the bad things that aren't happening despite the immigrants' presence. For instance, they don't seem to be creating an unemployment problem. Joblessness in California, with 24% of the country's illegal immigrants, has tracked the low national rate.

All this evidence, many economists say, makes a powerful argument that immigrants' role can be characterized as somewhere between important and irreplaceable."

The only people to benefit from the deportation of millions of low-skill workers would be other low-skill workers, who would get an immediate increase in pay rates," said Timothy Kane, an economist with the conservative Heritage Foundation. "However, they would also be the first to lose their jobs during a recession — which would be inevitable if the economy were shocked in this fashion."

Many Californians forcefully disagree with this assessment, saying immigrants have dragged down the quality of life in the state. They point to neighborhoods overflowing with poor immigrants. In some occupations, such as landscaping and construction, workers who don't speak Spanish say they can't get hired.

Other costs carry a more defined price tag. The California Hospital Assn. says emergency-room care for uninsured immigrants, including delivery of babies, costs taxpayers and private insurers about $650 million a year.

Whether born here or brought here, children of illegal immigrants have access to a free education. The Palo Alto-based Center for the Continuing Study of the California Economy estimates that this schooling costs as much as $6 billion annually.

Teitelbaum says the cost is even higher if you take into account how the influx has strained classrooms. "

California used to have one of the best systems of public education," he said. "Now it has one of the worst."
Read the whole thing. The article continues with personal vignettes from those interviewed for the story. For example, Kevin Waterson, who grew up in Southern California, bemoans a type of Third-World-ization of the U.S., saying the quality of life in much of the country today "is much more like that in Mexico."

Another interesting story was that of Lissette Rodriguez, an undocumented worker who puts in 18-hour days to stay afloat:

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....

By working for less than a native citizen would, Lissette Rodriguez is helping her employers' bottom lines.

To an extent, she's also helping taxpayers, although unintentionally. The hotels deduct the usual taxes from her payroll checks. But she won't see a refund or, later in life, a Social Security check."

That money is just gone," she said. "Most illegals are scared to do tax returns."

Rodriguez is the admirable and problematic face of immigration in 2006. She crossed the border without permission and obtained a bogus Social Security number. She knows she is breaking the law.

Yet she wants only to do what legal immigrants have done throughout U.S. history: work hard and sacrifice mightily to get ahead. In less than two years, she has become deeply embedded in the local economy and the community.

All of these contradictions in one person. All of them in 12 million people. And more tomorrow."

I miss my children," Rodriguez said. She wants to bring them — a 6-year-old girl, a 15-year-old boy — to Los Angeles. This is her home.
The author of this piece, David Streitfeld, is perhaps attempting to generate some sympathy for illegals by concluding the article with Rodriguez's story, which is certainly moving. But what Rodriguez is doing is wrong, and her employers are breaking the law.

As for the larger question of the propriety of 12 million illegal aliens in the American workforce? We certainly can't do without them. When pro-illegal immigration activists sponsored the May 1st employee walkouts earlier this year, whole sectors of the retail, restaurant, hospitality, and construction industries either slowed down or closed-up for the day. A wide variety of services and products would be much more expensive without the downward effect on prices cheap illegal labor provides -- we all benefit, without a doubt.

But it's a travesty of public policy that the country has come to this. We are a nation of immigrants, and that heritage is a source of strength. But continued mass illegal immigration tears at the fabric of legitimacy in society -- in the economic, cultural, and political realms -- and puts into question the basic premise of the United States as a nation under the law.

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