One thing that annoys me a lot is the illegal immigration debate. People say we need immigration reform and I agree! We need to make it easier to get work visa’s and to come to our country. Statistically speaking, we see increased illegal immigration when the economy is doing well and we need labor, and we see a decrease in illegal immigration when the economy is bad. These migrant workers should be allowed to enter our country on a documented basis to ensure we are doing our due diligence to promote safety within our borders.
But MLR, what about all of the services they use? The first misconception hardly worth addressing is whether or not they pay taxes. Many pay income taxes using fraudulent social security numbers or ITIN’s, they pay sales tax on everything they buy, they pay gas taxes for driving, they pay capital gains taxes on investments, etc. And what does this all add up to? A cost benefit analysis.
Benefit: The money illegal immigrants make at work + the taxes they pay + the extra profits their employer’s realize by paying lower wages and/or actually meeting their employment needs.
Cost: Value of public services they receive + Money sent back to their native country + Costs associated with border security and incarceration of illegal immigrants.
Francine Lipman, a Professor of Law, Business and Economics at Chapman University (Cali) wrote (in a peer reviewed journal) “Taxing Undocumented Immigrants: Separate, Unequal, and Without Representation.” She goes on to say that “Every empirical study of illegals’ economic impact demonstrates … undocumented immigrants contribute more to public coffers in taxes than they cost in social services.”
What About Americans?
On Mr. Souza’s 250-acre farm, people occasionally drop by looking for work. “Once Americans get the job description, they lose interest real quick,” he says. So six out of the eight employees are Mexicans. They deliver calves, milk cows and scrape manure.
I don’t mind this argument if it had some truth to it. As the above quote illustrates, Americans don’t exactly think dairy farming is an attractive opportunity. Even when they are facing an employment shortage across the agriculture industry and our nation is facing increasing unemployment rates, they just can’t find enough workers.
And it’s not just dairy farms. In California, the farmers watched as their pear farms rotted away because of stepped up border security. Apple farmers in Washington and Upstate New York have similar complaints. And what do they pay? $150 per day and up. Even if you work an insane 15 hour day that is $10/hr. If you work a more feasible 12 hour day you are making $12.50/hr, much more than minimum wage.
”Americans do not raise their children to be farm workers.”
And here is an article on the lettuce fields rotting. It doesn’t stop. I think it’s pretty obvious, Americans don’t want these jobs even though they pay more than McDonalds, FedEX, and a number of other low-skill jobs.
A Large Percentage of the Workforce
A study commissioned by the dairy industry found that immigrants account for 40% of the dairy labor force and are responsible for nearly two-thirds of U.S. milk production. Despite the poor economy, one-fifth of surveyed dairy farmers said they expected to face a worker shortage this year.
If you take this one step further, in a state like Texas they account for nearly 6% of the population. If they were to be kicked out of the state essentially, you would see a mass outflux of workers and a subsequent economic strain.
In a case like Texas, the 6% exodus of illegal immigrants would lead to a .6% increase in wage rates. Sounds great, right? Instead of making $11.80 for working on a dairy farm, you can now earn $11.87. Surely that will cause Americans to change their tune and start beating the door down, right?
And furthermore, if you have a good understanding of economics and business, with a higher wage rate comes either higher prices or lower profit (and potentially an inferior product). Texas exports would decrease by .3% due to being less competitive. All because “dey took err jobs.”
We Need Honest Debate and Reform
Our country has gotten to the point where all debate is tainted by lies from both sides.
We need to look at all of the data. Anecdotal stories about “dey took err jobs” and criminal immigrants needs to leave the discussion and be replaced by actual data analysis. It makes a great sound byte when we claim illegal immigrants use tax payers dollars to go to the hospital, but does the data support the fact that they use more then they give?
Even if you walk away from an article like this and don’t change your opinion, I would hope you realize how tainted our discussions on hot button issues are.
Give me your tired, your poor, your huddled masses yearning to breath free your thoughts.
I'm MLR. After graduating from college debt free, I decided to write a blog encouraging people to adapt responsible and sensible personal finance rules.
August 18th, 2009 at 1:29 pm |
Debate on any hot topic issue is tainted by misconceptions from both views. This is a great post written in a mature factual manner. Hats off to you for bringing this up.
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MyLifeROI Reply:
August 20th, 2009 at 11:41 am |
@Mr Credit Card,
Thanks Mr. CC. I’ve noticed a degradation of debate on hot button issues in this country. It is really sad….
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August 18th, 2009 at 6:10 pm |
I’m really surprised no one has commented to this.
Illegal immigration and visa (H1B) abuse artificially suppresses wages by skewing the supply and demand curve.
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MyLifeROI Reply:
August 20th, 2009 at 11:53 am |
@Mike,
The H1B system is VERY broken… I’m surprised you think that is a viable alternative. The current limits would leave us very under-staffed. A guest worker program would be more beneficial for everyone involved. The H1B process also effectively creates a whole class of indentured servants in our economy.
For any readers who think I am being facetious, this is why I said indentured servants: H1B is a SPONSOR based visa. If you lose your job, you go back to your country. If you can’t find a job within a year of graduation, you go back to your country. So the “kind” company will offer to sponsor you… for a price! They may charge you 20% of your paycheck, they may charge you 70%. They essentially scare you and blackmail you into working for them at a lower wage then you are due. When the government sends the approval back there are two parts: One part for the employer, one for the employee. Often times the employer will hold onto both sections to have even more power over the worker.
Sound fair? No.
And Mike, they are paying fair wages as evidenced by the fact that migrant workers come to our country to do it. The immigration system is broken, not the supply and demand curve. (And re-read the part about Texas… one of the countries largest economies would experience a .3% decrease in exports for a .6% increase in personal wages. Not everything HAS to be done in America. Cows can be milked in Mexico.)
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Mike Reply:
August 20th, 2009 at 12:50 pm |
@MyLifeROI, No I don’t think that H1B is an alternative. I said abuse of the visa system and H1B specifically. The shortage of skilled labor is a fallacy.
I did not mean migrant workers specifically more in general, look at construction, meat packers, janitorial etc.
If you artificially increase the supply of labor )through a broken immagrations system) the demand for wage will fall. Fixing the immagration system is not an easy job.
We as a country and economy have gotten addicted to low prices, and fixing it will be painful and nobody want’s to do it.
And I’ll agree if they can’t import the labor they export the job.
And I’m in Texas! They are not all migrant workers in the fields.
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MyLifeROI Reply:
August 20th, 2009 at 1:09 pm |
@Mike,
Shortage of skilled labor is a fallacy? Our country is shifting away from math and science, we don’t have enough people trained in technical fields.
Migrant workers do work in construction and other industries, not just agriculture.
And if you didn’t turn your cheek to the illegal immigration and “artificially” increase the supply of labor, we would have a labor shortage. As evidenced across the country, fields would rot. The lettuce/pear/apple farmers mentioned in this entry are perfect examples of people who were burned by the crackdown on illegal immigration. The argument that we could cover that labor demand without illegal immigrants is laughable, really.
And I assure you, the production of milk (and other agri) would be exported to another country before prices rise substantially. So, as Americans, we can accept the fact that we need migrant workers for our economy to grow, or we can get all isolationist and decline the economic growth.
And obviously they aren’t all migrant workers. But of the 6% of Texans that are illegal immigrants, I don’t know how people can argue that they aren’t a boon to the economy. Arguments otherwise neglect the fact that “Every empirical study of illegals’ economic impact demonstrates … undocumented immigrants contribute more to public coffers in taxes than they cost in social services.”
Thanks for the discussion, Mike.
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Mike Reply:
August 20th, 2009 at 6:58 pm |
@MyLifeROI, Not being much of a writer or debater, it’s difficult for me to express my views. I tried to find some unbiased data out there but that is close to impossible. Navigating the bls is close to impossible.
This story seems to express the point I was trying to make.
http://gmj.gallup.com/content/24448/Real-Impact-Illegal-Immigration.aspx
What about, I guess you could call it opportunity costs, of illegal/abuse of immigration. The loss of the dollars being exported or unearned. Has that been calculated in the economic impact?
Economic growth may be good for some but not necessarily for all. The recent “jobless recovery” as an example.
I’ve enjoyed the discussion, surprised there hasn’t been more.
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August 18th, 2009 at 9:30 pm |
Not sure I agree with everything, I think it’s not the whole picture. I was talking with a buddy this weekend who works in construction and said he has friends who will not work for 60/hr…that’s 120k a year. Says they have to much pride? WTF, so we have to have people who are willIng to produce for us. I think overall we do have to look at reform, but illegal immigrants are using up resources, I lived in California for 8 years and saw the effects and I see the effects in NC now, ex. directly within the school system.
Sorry on mobile…
Atlas´s last blog ..Tocqueville – Democracy In America
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MyLifeROI Reply:
August 20th, 2009 at 11:55 am |
@Atlas,
They are using services, but keep in mind: “Every empirical study of illegals’ economic impact demonstrates … undocumented immigrants contribute more to public coffers in taxes than they cost in social services.”
And those friends seem like prima donnas.
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August 19th, 2009 at 1:22 pm |
I’ve always been curious what taxes people think the typical illegal immigrant would be paying if they were citizens. Most of them would not pay significant taxes other than sales taxes, which they pay by virtue of living here. I’ve always thought this particular issue was a red herring, used to stir up people.
Brad´s last blog ..Should You Be In the Stock Market?
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MyLifeROI Reply:
August 20th, 2009 at 11:58 am |
@Brad,
Very good point. $11/hr @ 55 hrs/wk @ 45 wks/yr (downtime in agri) = $27,225 per year. That would put them in a lower tax bracket that doesn’t pay much in income taxes. And as I’ve said, many of them do pay income taxes using ITIN’s or fake SS #’s.
Good point to bring up though, it does seem like a red herring.
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August 22nd, 2009 at 1:53 am |
Great post, and good points. In general, I think opposition against illegal immigration has less to do with the actual effects of immigration and more to do with the people of immigrating. I doubt if legal immigration were vastly expanded that most of the opponents would say, ‘Oh, that’s alright, then.’
The biggest problem with the debate, as I see it, is people don’t acknowledge the fact that cutting down the supply of labor would inevitably increase the costs. If people really want to cut down demand for foreign labor, they’re going to have to accept much higher prices for agricultural products (and other things produced using foreign labor). If faced with the choice of accepting immigration or paying $3 (or more) per apple to compensate the demands of an native American workforce, I think there would be a lot more support for immigration.
At least articles like this will hopefully get the needed conversations started.
Roger´s last blog ..Investing 101: Indexes
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September 6th, 2009 at 7:35 pm |
http://www.lvrj.com/news/53343302.html
So Illigals are not costly?
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MyLifeROI Reply:
September 7th, 2009 at 1:33 am |
@caprsoson,
Who said they aren’t costly? They just provide a net benefit… which justifies the costs.
“Every empirical study of illegals’ economic impact demonstrates … undocumented immigrants contribute more to public coffers in taxes than they cost in social services.”
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September 10th, 2009 at 8:45 am |
Such a usefule blog wow !!!!
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September 24th, 2009 at 12:59 pm |
Your $11.80 + 6% is actually $12.50, not $11.87. And, no farmer pays illegal workers $11.80/hr… try $4/hr + room/board.
Farmers can not make profit paying any labor unit $11.80/hr. Get government out of our business and maybe we can start seeing some profit, which will result in higher wages for all.
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MyLifeROI Reply:
September 24th, 2009 at 3:37 pm |
@John,
The number cited was .6%, not 6%. So the $11.87 was correct.
And you are incorrect, the average wage for dairy workers in California is $11.38. http://online.wsj.com/article/SB124890678343891639.html
Can you show me data for the “$4/hr + room/board.” Just wondering because I think your statements are misguided.
And the problem here is that government is trying to get into the business by restricting their workforce. They ARE making a profit, now. Once they restrict illegal immigrants from working, that will make them unprofitable, or at least less profitable.
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