Employers Exploit Unauthorized Immigrants to Keep Wages Low

Overall, immigration is good for the country in myriad ways, including its effects on the wages of most workers. But competition with lesser-skilled immigrants can be a problem for low-wage-earning native-born workers during a recession or a time of high unemployment[pdf], though the effect generally equalizes over time.

The only workers whose wages are depressed in a sustained way by lesser-skilled immigration are other immigrant workers with less than a high school degree. That’s evidence we shouldn’t fear immigration, but it’s not an argument for increasing the flow of lesser-skilled, low-wage workers to the United States. The McKinsey Global Institute has projected that in 2020, relative to the number of available jobs, there may be a surplus of about six million workers with a high school degree and of almost one million workers without a high school degree. If these projections are even remotely in the ballpark, then it is highly unlikely that the United States will face labor shortages requiring less-educated, lesser-skilled immigrant workers.

The impact of unauthorized immigration on lesser-skilled native-born American workers, however, is more complicated. Unauthorized immigrants contribute to the economy in vital industries and pay billions in taxes, but it’s also true that 5 percent of the labor force is comprised of unauthorized, deportable workers who aren’t fully protected by U.S. labor laws. Unauthorized workers are often afraid to complain about unpaid wages and substandard working conditions because employers can retaliate by taking actions that can lead to their deportation. This gives employers extraordinary power to exploit and underpay them. When the immigrants’ wages are suppressed, so are the wages of U.S. workers competing for similar jobs.

This exploitation is not just theoretical. A landmark study found that 37 percent of unauthorized immigrant workers were victims of minimum wage violations. An astounding 84 percent who worked full-time were not paid time-and-a-half for overtime when they worked more than 40 hours in a week.

The bargaining power of U.S.-born workers competing in the low-wage labor market is undercut when millions of unauthorized workers cannot safely complain to the Labor Department or sue for unpaid wages.

The solution to this problem is not mass deportation or the criminalization of unauthorized immigrants. Unauthorized immigrant workers aren’t keeping wages down and conditions deplorable in lower-skilled occupations; it’s their employers. Even the largest estimated effects of low-wage immigrants on the wages of U.S.-born workers are so small that they would be more than eliminated by raising the minimum wage to $10.10 an hour, or even better, $12. And the biggest single culprit in the growth of wage inequality has been deunionization. The only way to achieve sustained wage growth is if American and immigrant workers organize and build power together through unionizing and collective bargaining.

Congress could also help native-born American workers by passing a legislative immigration reform package that legalizes all unauthorized immigrants and provides them a path to citizenship. That would allow immigrants to assert their rights, thus raising standards for everyone.

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