Thread: A huge underground economy is undercutting U.S. taxpayers

http://www.mercurynews.com/mld/mercuryn ... 011772.htm

Posted on Wed, Jun. 29, 2005


A huge underground economy is undercutting U.S. taxpayers

By Diana Hull

How much is 20 million? The population of the state of New York is approaching 20 million. Add up the populations of Alaska, Arkansas, Delaware, Hawaii, Idaho, Iowa, Maine, Montana, Nebraska, New Hampshire and New Mexico, and the number is nearly 20 million too.

Twenty million is also the estimated number of illegal immigrants in the United States, according to a research report issued earlier this year by investment banking and securities firm Bear Stearns, with recent years chalking up as many as 3 million illegal entrants annually.

Bear Stearns' research indicates that the illegal immigrant population is underreported by the U.S. Census by as much as half. The Census Bureau estimates 8.7 million illegals; the Urban Institute, 9.3 million; and a Center for Immigration Studies report suggests an illegal population of 10 million, while Time magazine estimates 15 million.

Bear Stearns' conclusion of dramatic underreporting was calculated by analyzing various data not included in other reports: border crossings, foreign remittances, housing permits, school enrollments, demand for language proficiency programs and service demand in gateway communities for illegals -- all of which lead to findings contrary to Census Bureau numbers.

Robert Justich and Betty Ng, the Bear Stearns analysts who conducted the study, believe the impact of the sheer numbers of people is of major significance for the future of the country.

Among the many implications are increased costs related to public sector services and loss of government revenue. Skirting labor laws may yield short-term economic benefits, the report states, but funding for added demands on education, health care, law enforcement and retirement costs taxpayers approximately $30 billion per year. Moreover, the wages paid in cash to these workers translate to uncollected income taxes totaling as much as $35 billion annually.

The financial publication, Barron's Magazine, one of many outlets that reported on the Bear Stearns analysis, stated, ``The best guess as to the size of the output of this shadow economy is about $970 billion,'' an amount which, if taxed, could eliminate the current budget deficit and return us to the land of milk and honey, more commonly known in economics as ``surplus.''

Having a large underground workforce accounting for 8 percent of workers (12 to 15 million U.S. jobs) also contributes to a skewed economic view, helping news look rosier, including government productivity reports that may be reflecting the outputs, but not the complete picture on labor inputs, thus inflating the often-touted high productivity numbers in the United States.

Further, wages to imported lower-priced workers have decreased average annual earnings by as much as 6 percent. This illegal population also makes accurate government forecasting in areas of tax collection, budget projection and school planning impossible, since these assessments rely on accurate head counts for the calculations, the report continues.

Why no relief from this flood? Business is taking advantage of the lack of immigration law enforcement to hire cheap, illegal labor to be more competitive with other countries' low wages.

In California, the huge footprint of the illegal immigrant community is unmistakable. The population has doubled in 40 years, and virtually all of the state's growth is currently due to immigration and births to foreign-born women. The short-term benefits mentioned in the Bear Stearns report are in force throughout California's economy from output on farms, in construction, in service industries and private homes.

However the short-term benefits of cheap labor -- like any purported free lunch -- has a steep price for Americans pushed out of the workforce and for taxpayers who pick up the billions of dollars in taxes unpaid by the underground economy.

DIANA HULL is president of Californians for Population Stabilization in Santa Barbara. The Web site is www.capsweb.org.

Outstanding Article, Diane and a GREAT POST JP!!

But, there are 50,000,000 illegal aliens in the United States.