Immigrants and wages

http://washtimes.com/commentary/2006050 ... -3288r.htm

Immigrants and wages
By Alan Tonelson
Published May 8, 2006

Ever since President Bush unveiled his first guest worker plans early in his first term, employer claims of labor shortages have dominated the economic side of the national immigration debate. Without an ever-greater inflow of immigrants, representatives of numerous industries have warned, their sectors literally will run out of workers. Indeed, these business leaders insist, U.S. immigration policy has been so restrictive they have been forced to hire illegal immigrants to stay in business and thereby keep the economy growing.
These views, and related calls to open U.S. borders wider, have been reinforced by much of the conventional wisdom surrounding the American economy. The native-born population's birthrate is relatively low and consequently this population is aging and stabilizing. Moreover, as President Bush and his allies keep repeating, legal and illegal immigrants alike are mainly doing "the jobs Americans won't do" -- physically demanding labor in low-paying but essential industries.
Yet the most important statistics available show conclusively that, far from easing shortages, illegal immigrants are adding to labor gluts in America. Specifically, wages in sectors highly dependent on illegals, when adjusted for inflation, are either stagnant or have actually fallen.
Both textbook economics and common sense teach that wages are a surefire measure of labor market abundance or shortage. When labor is genuinely scarce, and too many employers are chasing too few workers, businesses typically bid wages up in the competition to fill jobs. When too many workers are chasing too few jobs, employers typically cut wages, confident that beggars can't be choosers. Labor Department data reveal that the wage-cutting scenario is exactly what has unfolded recently throughout the economy's illegal immigrant-heavy sectors.
Take restaurants. According to the Pew Hispanic Center, illegal immigrants comprise 17 percent of the nation's food preparation workers, 20 percent of its cooks, and 23 percent of its dishwashers. National Restaurant Association spokesman John Gay recently told the press his industry will need about 1.9 million workers in the near future though he "doesn't know where they will come from." According to data from the U.S. Bureau of Labor Statistics (BLS), though, inflation-adjusted wages for the broad Food Services and Drinking Establishments category fell 1.65 percent between 2000 and 2005.
Urging Congress to loosen immigration controls, Marriott International Chairman J.W. Marriott Jr. insists the hospitality industry "needed a supply of immigrant workers to fill jobs" and condemned those "in Congress [who] want to criminalize the undocumented and their employers." Ten percent of the nation's hotel workers are illegal immigrants, the Pew Center estimates. But the BLS data show their inflation-adjusted wages fell nearly 1 percent from 2000-2005.
In the booming construction industry, illegal immigrants make up some 12 percent of the work force. But from 1993 -- when median home prices began surging at a record pace -- through 2005, inflation-adjusted wages in the sector rose only 3.02 percent. And from 2000 to 2005 -- the height of the boom -- inflation-adjusted wages actually fell 1.59 percent.
Illegal immigrants are even more prominent in food manufacturing, where they comprise 14 percent of the workers. From 2000 to 2005, inflation-adjusted wages in this sector dropped 2.24 percent. And in the "animal processing and slaughtering" subcategory, where Pew research contends illegals make up fully 27 percent of all workers, inflation-adjusted wages fell 1.41 percent between 2000 and 2005.
Similar figures emerge for many other illegal immigrant-heavy sectors as well, ranging from dry cleaning and laundry services, to parking facilities, golf courses and country clubs.
Examining more closely the pattern within the 2000-2005 period provides compelling evidence illegal immigrants have been used deliberately to force down wages. In most industries that use illegal immigrants heavily, inflation-adjusted wages rose modestly during the first years of the current decade. Yet soon after, they dropped significantly. Obviously, the nation's restaurateurs, hoteliers, contractors and cleaners decided paying workers $12 per hour and often less, with few or no benefits, was outrageous. In response, they stepped up efforts to bring Mexican and Central American labor markets and standards into the United States.
The wage trends in illegal immigrant-heavy industries make it clear these sectors are not facing shortages of native-born workers. They're facing shortages of native-born workers who will accept poverty-level pay. If the president and Congress have any interest in ensuring American immigration policy helps raise and not depress living standards, they'll tell these employers to stop the special-interest pleading and do what their predecessors throughout U.S. history have done: Raise pay high enough to attract the U.S. workers you need, and if your business models aren't good enough to accommodate living wages, invest in developing new labor-saving technologies.
Denying pauper-wage industries the crutch of a wage-depressing flood of illegal immigrants is essential for keeping the United States a high-wage, First World economy. It is also essential for offering real economic opportunity to legal immigrants and native-born low-income Americans.

Alan Tonelson, a research fellow at the U.S. Business and Industry Council Educational Foundation, is a columnist for the americaneconomicalert.org Web site and author of "The Race to the Bottom."