Advanced industrialized countries have long relied on immigrants to address deficiencies in the labor market. Immigrants are employed in skilled and unskilled work in a range of industries, helping to offset economic problems such as aging workforces, mismatched skills, and increasing competition from low-cost producers in the developing world. However, as the number of irregular migrants (both those who enter through unauthorized channels and those who overstay temporary visas) has grown since the 1990s, the question of whether undocumented workers are an economic benefit or burden has become one of the most controversial political debates of the 21st century.
Undocumented workers around the world are overwhelmingly concentrated in so-called “3-D” occupations: jobs that are dirty, dangerous, and difficult. Because they are not legal residents, they rarely benefit from the types of protections that citizen workers receive, such as minimum wage guarantees or workplace safety precautions. The cost savings enjoyed by their employers typically translate into lower-priced goods for consumers, while income taxes levied on undocumented workers help support social programs such as Social Security, even though indocumented immigrants themselves are usually ineligible to receive such benefits. Despite a relative lack of data on unauthorized populations and their effects on labor market outcomes, economists are nearly unanimous in their findings that undocumented workers are a net benefit to society.
But, as David Lipton, first deputy managing director of the International Monetary Fund, remarked in a January 2017 speech, “The politics and scholarship of migration are at odds.” Many workers in receiving countries worry that undocumented workers take jobs from citizens and drive down wages in the industries in which they work. They argue that undocumented immigrants are a drain on social services and in some cases a serious national security threat. These fears, largely unsupported by research but grounded in real economic and political challenges faced by an increasingly globalized world, have been exploited by anti-immigrant political groups at various points throughout history. Such concerns were a leading cause for the introduction of immigration restrictions in the 19th century and laid the foundation for the increased militarization of border areas in the United States and Europe in the early 21st century.
The idea of the undocumented immigrant is a relatively new one. Prior to the late 19th century, there were few restrictions on immigration. Immigrant workers were largely viewed as a valuable source of inexpensive labor, particularly after the abolition of slavery in Europe and the Americas. Beginning in the 1820s hundreds of thousands of Indian and Chinese laborers were imported to European colonies in South America, Africa, Southeast Asia, and the Caribbean to work on sugar plantations. In the 1840s Chinese laborers began to arrive in the western United States, where they worked in gold mines or helped build the transcontinental railroad.
Derogatively known as “coolies,” these early immigrant laborers worked in slavelike conditions. Many were tricked or forced into signing long-term contracts that bound them to an employer at low wages or for no payment at all. Although the United States effectively ended the importation of indentured Chinese laborers in 1862 with the Act to Prohibit the “Coolie Trade” by American Citizens in American Vessels, voluntary Chinese immigrants continued to cross the Pacific in search of gold and opportunity in California and throughout the American West.
As the Gold Rush subsided, Chinese immigrants increasingly came into competition with US citizens and other immigrants for jobs in mining or construction, leading to a surge of anti-Chinese sentiment among labor unions and political groups. The argument that Chinese workers stole jobs from citizens and undercut wage negotiations led to the first major immigration law in the United States, the Chinese Exclusion Act of 1882. The act prohibited Chinese immigration for 10 years and was renewed in 1892 and extended indefinitely in 1902. It would not be repealed until 1943.
WORDS TO KNOW
Foreign nationals who apply to a government for refugee status but have yet to receive approval.
An agreement between Mexico and the United States that allowed Mexican agricultural workers to find temporary employment in the United States because of labor shortages.
The increasing integration of the global economy through such practices as free trade and the establishment of multinational corporations.
A migrant who receives permission to work in a foreign country on a temporary basis.
A path of migration that does not follow authorized, legal channels.
The number of people in an economy who are willing and able to work, regardless of citizenship status.
The movement of people to other countries for the purposes of finding employment.
To send someone back to his or her country of origin.
Also known as unauthorized immigrants, this term describes foreigners who enter and reside in a country illegally or without proper documentation.
A legal document that allows a person to enter and stay in a given country for a particular period.
Immigrant Labor during the Two World Wars
Following the Chinese Exclusion Act, the United States passed several laws aimed at restricting “undesirable” immigrants from Asia and Europe but placed no limits on countries in the Western Hemisphere. Thus, as agriculture and industry began to spread to the American Southwest in the early 1900s, employers in the region increasingly relied on migrant workers from Mexico, many of whom fled across the border to escape the Mexican Revolution (1910–1920). When the United States entered World War I (1914–1918) in 1917, the government enacted a guest worker program that allowed approximately 75,000 Mexican nationals to perform temporary work on US farms, offsetting the loss of native workers who were drafted into military service or moved north to work in higher-paying factory jobs. When the program was ended in 1922, less than half of the workers returned to Mexico, creating one of the first groups of undocumented workers in the United States.
As the United States entered the Great Depression (1929–1941) following the stock market crash of October 1929, nativist groups complained that Mexican immigrants were straining relief programs and reducing job opportunities for citizens. In 1931 Labor Secretary William N. Doak (1882–1933) authorized sweeping raids against undocumented workers throughout the Southwest, while state and local officials encouraged legal residents to voluntarily return to their homeland. By the end of the decade, approximately 1 million Mexican immigrants, as well as US citizens of Mexican descent, had been forcefully or voluntarily deported to Mexico.
Yet, as quickly as US immigration policy turned against Mexican workers in the 1930s, the onset of World War II (1939–1945) reversed it once again. With growers facing another labor shortage, the government enacted the Bracero Program, in which approximately 4.5 million Mexican agricultural workers were granted temporary visas between 1942 and 1964. To ensure that growers could not exploit immigrants at the expense of domestic workers, the program included protections such as a guarantee that guest workers would be paid the going wage in the area in which they worked, but the provisions were rarely enforced.
Rather than complying with the law, growers frequently hired undocumented workers, who were not subject to wage guarantees or required to return home at the end of their contract period, and the government largely ignored the violations. In 1952 the United States enacted the Immigration and Nationality Act, which made harboring undocumented immigrants a felony, but included a clause known as the “Texas Proviso” (because its main advocates were Texas farm owners) that exempted employers from the rule. Although the United States deported over 1 million undocumented workers in 1953 and 1954, many of them were simply taken to the border and legalized under the increasingly relaxed rules of the Bracero Program. As barriers to legal entry were reduced in the mid-1950s, rates of illegal immigration declined and did not increase until the mid-1960s when the Bracero Program was phased out and new limits on legal immigration (including from countries in the Western Hemisphere) were imposed with the Immigration Act of 1965.
Globalization and Labor Mobility after World War II
Guest worker programs were also put in place across Western Europe in the 1940s and 1950s to stimulate economic growth in the wake of the war. In England, for example, the European Voluntary Workers scheme brought nearly 100,000 workers from continental Europe who had been displaced or made destitute by the war. In West Germany a Gastarbeiter (guest worker) program brought 14 million migrant workers, primarily from Turkey. Political agreements such as the 1951 Treaty of Paris and the 1957 Treaty of Rome also allowed for the free movement of workers in certain industries across national borders.
However, by the early-1970s a global economic recession and oil crisis began to strain industrial profits. Mirroring the trend in the United States, European guest worker programs were eliminated and new, more restrictive immigration controls were put in place. In some cases, however, guest workers remained in their host countries and brought family members to join them, often through unauthorized means. In Germany, for example, the number of ethnic Turks, who were ineligible for naturalization as German citizens, grew from around 600,000 in 1973 to more than 2.5 million in 2000.
Labor migration, both legal and illegal, spread throughout the developing world in the late 20th century. Oil-producing countries in the Middle East saw an influx of migrant workers from Asia and Africa beginning in the 1970s. The rise of manufacturing and rapid economic growth in Southeast Asia beginning in the 1980s brought extensive migration from nearby countries such as Indonesia, the Philippines, Vietnam, and Cambodia. In both cases economic downturns often led to mass deportations of undocumented workers, such as in Malaysia and Thailand, where more than 500,000 irregular migrants were deported during the Asian financial crisis of 1996–1997.
In the United States the number of undocumented immigrants grew from approximately 1 million in 1970 to more than 2.5 million in the early 1980s. Although initially opposed by labor unions, the growth of the undocumented worker population in heavily unionized industries such as agriculture, hospitality, construction, food processing, and textiles led to increasing calls on behalf of organized labor to provide a pathway to citizenship for undocumented workers and to impose punishments on employers who used migrants as a means of undercutting minimum wage and workplace safety laws. In 1986 the Immigration Reform and Control Act proposed to do just that. Approximately 2.7 million undocumented immigrants were granted legal permanent resident status, while the government promised increased border surveillance and stronger penalties for businesses employing undocumented workers.
Enforcement of the prohibition against employing noncitizens remained lax, however, and the undocumented population in the United States continued to grow, reaching 3.4 million in 1992 and 5 million in 1996, according to estimates by the Immigration and Naturalization Service. Harsh anti-immigration laws passed in 1996 amid growing public upheaval, including the Illegal Immigration Reform and Immigrant Responsibility Act and the Antiterrorism and Effective Death Penalty Act, led to much stronger border control measures and higher levels of deportations. Yet, at the same time, the Internal Revenue Service quietly introduced a method for noncitizen workers to pay income taxes using Individual Taxpayer Identification Numbers (ITINs).
Meanwhile, political violence and sluggish economic growth pushed migrants northward from Central America. Increasingly strict immigration policies, particularly after the terrorist attacks of September 11, 2001, led to everhigher numbers of undocumented immigrants in the United States, reaching a peak of 12.2 million in 2007, 8.2 million of whom were in the labor force, according to a 2016 report for the Pew Research Center.
THE ECONOMIC CONSEQUENCES OF DEPORTING UNDOCUMENTED WORKERS
Critics of undocumented immigration commonly argue that deporting unauthorized workers will reduce unemployment rates and raise wages for native workers while also saving governments money typically spent on emergency health care and other social services. But the evidence suggests that a mass exodus of undocumented workers does not always benefit the domestic workforce and may do more harm to the economy than good.
One commonly studied test case is that of the US border state of Arizona, which saw a sharp decrease in its population of undocumented immigrants after the implementation of strict immigration laws. The first of these, the Legal Arizona Workers Act (LAWA) was enacted on December 31, 2007, and required employers to check the immigration status of all job applicants using E-Verify, an online database maintained by the federal government. Any business caught employing undocumented workers would face penalties, including having their business license revoked. The second law, SB 1070 (Support Our Law Enforcement and Safe Neighborhoods Act), was passed in 2010 and gave law enforcement sweeping authority to investigate the immigration status of anyone it suspected of being in the state illegally.
Both laws faced Supreme Court challenges from groups claiming that the legislation unfairly discriminated against immigrants from Latin America and placed an unfair burden on employers. LAWA was upheld in 2010, while several parts of SB 1070 were struck down in 2012. However, by that time the state had already seen a 40 percent decline in its undocumented immigrant population. The Wall Street Journal reported in February 2016 that the state had lost 200,000 undocumented immigrants since 2007.
Proponents of stricter immigration laws attributed several positive developments to the laws. According to the Wall Street Journal, the yearly cost of emergency room care for undocumented immigrants fell by $61 million beginning in 2008. The annual cost of holding noncitizens in jail declined by $22 million. Furthermore, the state saved an estimated $350 million per year after the number of students in Englishintensive schooling fell by 80,000. Workers also saw some benefits, as wages for low-skill natives and legal immigrants increased between 10 and 15 percent in industries such as agriculture and construction.
But critics of the law suggest that the savings to the state did little to offset the decline in productivity that resulted from the exodus of undocumented workers. Arizona’s gross domestic product (GDP) fell by an average of 2 percent per year between 2008 and 2015, according to analysis by Moody’s Analytics. That was the equivalent of a $6 billion decline in economic activity per year, compared to a savings of around $410 million. While some workers did see an increase in wages, employers reported that the increases came in response to a severe labor shortage, as citizens and legal residents filled only around 10 percent of the jobs left open by the departure of undocumented workers.
Some of the economic decline in Arizona can be attributed to the collapse of the housing industry in late 2007 and subsequent global economic crisis of 2008–2009. But a comparison with neighboring states seemed to show that the effects of the recession were felt deeper and lasted longer in Arizona than in states with less stringent immigration policies, such as California, New Mexico, and Nevada. According to the Cato Institute, Arizona experienced a nearly 46 percent decline in construction employment between July 2007 and December 2014 (well after the national economy had begun to recover) compared to a decline of approximately 30 percent in the surrounding states. Employment in crop production stood at around 80 percent of its pre-crisis levels in 2014 compared to 90 percent in California and nearly 110 percent in New Mexico. While some Arizona businesses raised wages in an attempt to attract more workers, wages increased at roughly the same rates in neighboring states, where employment rates and economic growth recovered at a faster pace.
Although the experience in Arizona does not prove conclusively that undocumented immigrants are a benefit to the economy, the rapid loss of inexpensive and highly productive workers seems to have harmed the state’s economic prospects over the long run. Agriculture-heavy states such as Alabama and Georgia saw similar economic troubles after imposing restrictions on undocumented labor in 2011 and 2012, losing an estimated $300 million to $400 million in wasted crops and as much as $1 billion each in total economic activity amid a shortage of workers. Outside of the United States, Thailand experienced a massive labor shortage in its construction and fishing industries in 2014 after 200,000 Cambodians fled the country during a crackdown on undocumented workers. The effects on the national economy were so severe that the government quickly announced a program allowing undocumented workers to register for temporary legal status.
Changing Patterns in the 21st Century
Trends in unauthorized labor migration changed significantly in the years surrounding the global financial crisis of 2008–2009. In the United States the number of undocumented immigrants fell from more than 12 million in 2008 to 10.9 million in 2014, its lowest level since 2004. After a period of unprecedented growth between 1995 and 2009, from 3.6 percent to 8.3 percent, the share of undocumented workers in the labor force declined slightly to 8 percent in 2014. Researchers attributed the decline to several factors, including improved opportunities in Mexico, more stringent enforcement efforts in the United States, and a sharp drop in demand for low-skill labor during the recession and subsequent recovery.
The European Union (EU), which had experienced a major influx of undocumented workers and political asylum seekers in the 1990s after the collapse of the Soviet Union, also saw a decline in its irregular migrant population in the first decade of the 21st century. Some of this was brought about by policy shifts that legalized previously undocumented populations virtually overnight. These include the enlargement of the EU to include several Baltic states (traditional sources of undocumented labor) in 2004 and amnesty programs such as the one implemented by Spain in 2005, granting residence to nearly 700,000 undocumented workers. But the severe downturn in the global economy also provided a strong disincentive for migrants seeking economic opportunity, and the number of seizures of undocumented immigrants fell sharply between 2008 and 2009.
Amid the backdrop of stagnant or declining inflows of undocumented economic migrants, the United States and EU experienced a surge in arrivals by asylum seekers beginning in 2014. In Europe more than 1 million asylum seekers arrived in 2015, driven by events such as civil war in Syria, Iraq, and South Sudan, as well as massive drought throughout Northern Africa. In the United States an epidemic of violent crime in El Salvador, Guatemala, and Honduras contributed to a fivefold increase in the number of asylum applications from Central America in 2015.
Because international law prevents asylum seekers from being returned to their home countries unless their safety can be ensured, immigrants seeking refugee status were granted temporary admission to their host countries while their applications were processed. Although asylum seekers are typically held in detention centers during the transition period, some managed to evade detention and take residence in the host country as an undocumented immigrant. Many more, upon having their asylum applications denied, managed to avoid deportation and worked for cash.
Like the undocumented immigrant controversy of the 1990s, the refugee crisis of the 21st century brought significant debate over the economic and social effects of immigration. Nationalist groups argued that immigrants abused the asylum system to gain entry, straining the labor market and public welfare systems. Their concerns were cited as a major factor in the success of populist political movements, including the June 2016 Brexit vote, in which the United Kingdom voted to leave the EU, and the November 2016 presidential election of Donald Trump (1946–), who proposed to deport all 11 million undocumented immigrants in the United States.
Impacts and Issues
The most common arguments against allowing undocumented immigrants to participate in the labor force are that they will reduce the number of jobs available to citizens or pull down wages by accepting lower rates of pay. Although accurate statistics are difficult to pinpoint due to the shadowy nature of undocumented immigration, economists have studied the effects of irregular migration on jobs and wages and generally refute these arguments. Human rights groups, on the other hand, argue that the real victims of undocumented immigration are the immigrants themselves, who are commonly subject to exploitation and abuse, with no legal recourse.
Do Undocumented Workers Take Jobs from Citizens?
The idea that undocumented immigrants take away jobs from citizens is easy to understand. With only a certain number of jobs available in an economy, any job given to an undocumented immigrant means one less job available to native job seekers. But economists point out that this line of thinking falls victim to what is known as the “lump of labor fallacy,” or the mistaken belief that there is a fixed amount of work to be done in an economy and thus a fixed amount of jobs.
In fact, economies are not unchanging. They are dynamic, growing or contracting to meet the demands of consumers at home and abroad. When an immigrant takes a job in a country, he or she also increases demand in that country for food, housing, entertainment, transportation, and so forth. This increase in consumption expands the economy and helps to create new jobs. A 2015 study by the National Bureau of Economic Research, for example, found that each immigrant arrival in the United States (documented or undocumented) creates 1.2 jobs in the local economy, most of which go to native workers.
Along with creating new jobs, undocumented immigrants often improve the types of jobs available to native workers. Because undocumented workers typically lack proficiency in the language and business practices of the host country, they are commonly given the lowest-ranking position available. More established workers, who may have previously held similar positions, then tend to take on higher-paying supervisory roles to help the new arrivals adjust. This does not always hold true, however. Some low-skill jobs do not require any understanding of the local language or customs, increasing the chance that native workers will be displaced by undocumented immigrants willing to work for lower wages. But on average the skills of undocumented workers tend to complement, rather than substitute, those of even the least-skilled citizens, allowing native workers to advance their careers by filling in more specialized positions.
Do Undocumented Workers Lower Wages for Citizens?
Whereas the positive effects of illegal immigration on job creation is relatively well understood, its effects on wages remains somewhat controversial. In 1990 economist David Card (1956–) published a highly influential study on the topic. To better understand the wage effects of a sudden increase in unskilled workers in the labor force, Card surveyed data surrounding the 1980 Mariel Boatlift, in which 125,000 Cuban immigrants arrived in Miami, Florida, after fleeing the communist regime of Fidel Castro (1926–2016). In comparing wage data in Miami to that of other cities in the United States that did not experience a similar increase in labor force, Card found that wages and employment levels were not measurably affected, even among low-skill workers.
In 2015, however, Harvard economist George Borjas (1950–) reexamined the boatlift and its effects on wages. He found that, in the five years after the boatlift, wages for low-skill workers fell between 10 and 30 percent relative to those of similarly skilled workers around the country. The difference between Borjas’s and Card’s results can be traced to disparities in the groups of workers they chose to study. Whereas Card defined low-skill workers as anyone (male or female) aged 16 to 61 who had a high school diploma and below, Borjas focused exclusively on the wages of male high school dropouts aged 25 to 59, whom he argued would be most affected by the influx of low-skill Cuban immigrants.
Borjas’s study, while acclaimed by immigration opponents, faced criticism from economists Giovanni Peri and Vasil Yasenov. In a 2016 article for the Wall Street Journal, they argue that the exclusion of women and focus on high school dropouts above the age of 25 left Borjas with a group too small (around 25 workers in all) to be considered a representative sample. Peri and Yasenov reexamined the data with an expanded sample group and reached a conclusion similar to Card’s, though Borjas objected that they had made the sample group too large by including 16-to 18-year-old high schoolers with part-time jobs.
A previous study by Peri and Gianmarco I. P. Ottaviano, published in the Journal of the European Economic Association in 2012, did in fact find evidence of a wage decline among low-skill workers between 1990 and 2006, the period corresponding with the largest increase in the US undocumented population. But the wage declines, around 6.7 percent, were concentrated among recent immigrants whose skills could be directly substituted for those of new arrivals. Low-skill American-born workers, on the other hand, saw a slight increase in wages, providing evidence for the theory that undocumented immigrants often complement the skills of native workers, allowing them to take on more specialized and higher-paying jobs.
The Problem of Exploitation
Even among supporters of lowering or eliminating restrictions on immigration, the employment of undocumented workers remains controversial due to the tendency for exploitation and abuse. Undocumented workers live in fear of deportation, a threat employers use to discourage complaints about unpaid wages or dangerous working conditions. This lack of leverage limits their ability to seek other forms of work, keeping them trapped in 3-D professions and subject to the kind of wage suppression highlighted by Peri and Ottaviano. A 2009 study by the Pew Hispanic Center found that the median income of undocumented workers who had lived in the United States for 10 years or more was 37 percent lower than that of legal immigrants who had lived in the country a similar length of time.
Exploitation of noncitizen workers is not limited to the United States. In 1985 German journalist Günter Wallraff published Ganz Unten (Lowest of the Low), an account of a two-year period in which he posed as a Turkish Gastarbeiter. The book documents numerous examples of discrimination and abuse at the hands of employers and helped to spark a dialogue about the plight of Turkish immigrants in Germany. In the 21st century there have been numerous reports of widespread abuse and slavelike conditions for undocumented domestic workers throughout the Middle East, Asia, Europa, and Australia. Human smuggling rings, which lure potential migrants with promises of legal residence and high-paying jobs, operate around the world and place immigrants at risk of a variety of abuses, including robbery, kidnapping, and sex slavery.
Human rights groups argue that governments and employers have long engaged in a pattern of exploitation, tolerating and even encouraging undocumented immigrants during times of prosperity and villainizing them when the economy contracts. To combat these issues, some have called for the legalization of migrant workers via an open border policy or at the very least an expansion of temporary work visa programs. But, as the nationalist backlash against undocumented immigrants and asylum seekers spread throughout Europe and the United States beginning in 2014, the gap between politics and scholarship remained wide.