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LABOR & EMPLOYMENT LAW — 4/18/08

Effect of illegal immigration on wages not entirely clear, witnesses say

The presence of illegal immigrants in the American workforce has resulted in lower wages for low-income African-American workers, witnesses generally agreed at a meeting of the US Commission on Civil Rights on April 4, 2008. But less clear was the extent to which illegal immigrants depress those wages. Some of the issues addressed by the panel included whether the effect is positive, neutral or negative, whether immigration contributes to incarceration rates, whether employers prefer immigrants to native-born workers and the effect of illegal immigration on the broader community.

"No groups has benefited less or been harmed more by immigration [than low-wage African Americans]," stated Vernon Briggs, an emeritus professor at Cornell University. Briggs and other witnesses noted that competition for jobs in the low-skill market is very strong. That competition is heightened by the presence of illegal workers. Briggs estimates that 7 million of the 50 million low-skilled workers in America are working illegally.

That strong competition and the presence of undocumented workers may be depressing wages. "When a worker finds himself in a limited employment situation, the worker acts as if the employer is the only one in town," remarked Julie Hotchkiss, a research economist with the Federal Reserve Bank of Atlanta. "The firm takes advantage of this position by paying lower wages."

It is not clear though just how much lower those wages are, the witnesses agreed. Gordon Hanson, a University of California, San Diego, professor estimated that a 10 percent increase in immigration serves to reduce wages by 4 percent. An influx of workers may harm some workers, like those with few skills, Hanson said. But the overall impact is positive, he contended.

Hotchkiss, based on research conducted in the state of Georgia, said the annual earnings of the average legal worker in that state decreased by 2.9 percent from 2000 to 2007 because of an increase in undocumented workers. During that period, the share of undocumented workers in Georgia grew from 4 to 7 percent. "Wages would be higher in the absence of undocumented workers," Hotchkiss concluded.

Other witnesses conceded that illegal workers may have at least a modest effect on wages, but they cited several other factors that may contribute to low and stagnant wages. These included racial discrimination, poor education and the lack of collective bargaining rights. "Immigration is a very small part of this whole story," commented Harry Holzer, a Georgetown University professor.

The US Commission on Civil Rights is an independent, bipartisan agency charged with monitoring federal civil rights enforcement.

For more information on this and other topics, consult CCH Employment Practices Guide or CCH Labor Relations.

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