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Wednesday, 20 June 2007 08:29

The Illegal Employer Problem (from Thom Hartmann's book Screwed)


(Editor's note: We have permission from Thom Hartmann to run this chapter from his book, "Screwed: The Undeclared War on the Middle Class - and What We Can Do About It." You can purchase this book at the BuzzFlash store.)

The Illegal Employer Problem

Working Americans have always known how to create a middle class. It's a simple equation: more workers, lower wages; fewer workers, higher wages.

Today wages are low in America because there are too many workers. Facilitating a rapid increase in the workforce by encouraging companies to hire noncitizens is one of the three most potent tools conservatives since Ronald Reagan have used to convert the American middle class into the American working poor. (The other two are ending tariffs [chapter 13] and destroying government protections for unions [chapter 15]).

Do the math. According to the Bureau of Labor Statistics (BLS), there are more than 7 million unemployed Americans right now. Another 1.3 million Americans are no longer counted because they've become "long-term" or "discouraged" unemployed workers (the BLS calls them "marginally attached"). And although various groups have different ways of measuring, most agree that at least another 5 million to 10 million Americans are either working part-time when they want to work full-time or are "underemployed," doing jobs below their level of training, education, or experience. That's between 8 million and 20 million unemployed and underemployed Americans, many unable to find above-poverty-level work.

At the same time, there are between 7 million and 20 million working illegal immigrants diluting our labor pool.1

If illegal immigrants could no longer work, unions would flourish, the minimum wage would rise, and oligarchic nations to our south would have to confront and fix their corrupt ways.

The cons like to blame the immigrants. They call what's happening an "illegal immigration" problem. It's not. We don't have an illegal immigration problem in America. We have an illegal employer problem.

Illegal Workers: The Cons' Secret Weapon

As David Ricardo pointed out in his 1814 treatise On Labor, there is an "Iron Law of Labor": when labor markets are tight, wages go up. When labor markets are awash in workers willing to work at the bottom of the pay scale, unskilled and semiskilled wages will decrease to what Ricardo referred to as "subsistence" levels.

Two years later Ricardo pointed out in his On Profits that when the cost of labor goes down, the result usually isn't a decrease in product prices but an increase in corporate and CEO profits. This is because the marketplace sets prices but the cost of labor helps set profits. For example, when Nike began manufacturing shoes in third world countries with labor costs below those in the United States, it didn't lead to $15 Nikes; their price held-and even increased-because the market would bear it. Instead that reduction in labor costs led to Nike CEO Phil Knight becoming a multibillionaire.

Republicans understand this very, very well, although they never talk about it. Democrats seem not to have read Ricardo, although the average American gets it at a gut level.

In the 1980s Ronald Reagan got it. His amnesty program, combined with his aggressive war on organized labor, in effect told both employers and noncitizens that there would be few penalties and many rewards for increasing the U.S. labor pool with undocumented immigrants.

The fact is that before Reagan's crackdown on organized labor, illegal immigration was never a serious problem. Take Mexico as an example. Before Reagan's presidency, an estimated 1 million people annually came to the United States from Mexico,2 and the same number, more or less, returned to Mexico at the end of the agricultural harvest season. Very few stayed because there were no jobs for them.

But Reagan put an end to that. One million people per year continued to cross our southern border, but they stopped returning home each fall because they were able to find permanent employment.

The magnet drawing them? Illegal employers.

Between the start of the Reagan years and today, the private workforce in the United States has gone from being about 25 percent unionized to 7 percent, according to the Bureau of Labor Statistics. Much of this is the direct result-as César Chávez predicted-of illegal immigrants competing directly with unionized and legal labor. Although it's most obvious in the construction trades over the past thirty years, it's hit all sectors of our economy.

Cons of both parties appreciate the impact of illegal immigrants on the U.S. workforce. During the past campaign cycle, Democratic Party strategist Ann Lewis sent out a mass e-mail on behalf of a current Democratic senator, suggesting that the United States create "an earned path to citizenship for those already here, working hard, paying taxes, respecting the law, and willing to meet a high bar for becoming a citizen." Sounds nice. The same day on his radio program, Rush Limbaugh told a woman whose husband is an illegal immigrant that she had nothing to worry about with regard to deportation of him or their children because all he'd have to do, under the new law under consideration, is pay a small fine and learn English.

The directors of Wal-Mart are smiling.

Meanwhile the millions of American citizens who came to this nation as legal immigrants, who waited in line for years, who did the hard work to become citizens, are feeling insulted, humiliated, and conned.

The Cons' Twofer: Guest Workers

Cons can't just come out and say that they are pleased that the estimated 7 million to 20 million illegal workers in the United States are driving down wages. They can't admit that, behind oil revenue, Mexico's second-largest source of income is money sent home from illegal "cheap labor" workers in the United States. They won't acknowledge the corporate benefits of a workforce whose healthcare is paid for by U.S. taxpayers but whose productivity belongs to their corporate masters.

Instead, catering to compassionate Americans who don't realize that this is all about driving up corporate profits and driving down workers' wages, cons like Arlen Specter are promoting legislation that would decriminalize the illegals currently in the United States, thus making legal our increased workforce, while not giving those new workers the rights of citizenships-that's a twofer for the cons: workers who can't vote.

As Rachel L. Swarns reported in the New York Times on February 25, 2006: "Advocates for immigrants said the [Bush/Specter] plan failed to protect the rights of immigrant workers, who they argue deserve a clear path to citizenship. And the AFL-CIO warned that a guest worker program of unlimited scale would depress wages and working conditions while creating a perpetual underclass of foreign workers."

Shouldn't we invite people to become Americans and share in our great traditions of freedom and democracy? Of course. Shouldn't we show compassion to those who suffer in countries where there is no strong middle class? Of course.

But there is nothing compassionate about driving down the wages of any nation's middle class.

There is nothing compassionate about being the national enabler of a dysfunctional oligarchy like Mexico. By sending an estimated $20 billion to Mexico every year,3 illegal immigrants here are effectively supporting an anti-democratic, antiworker administration there that gleefully ships out of that nation its troublesome citizens-those lowest on the economic food chain and thus most likely to foster "labor unrest." Mexico and other "sending nations" need not deal with their own social and economic problems so long as U.S. employers are willing to solve them for them-at the expense of our middle class.

But what about repressive regimes? Aren't we denying entrance to this generation's equivalent of the Jews fleeing Germany?

This is the most tragic of all the arguments put forward by the cons in the hopes that compassionate progressives will bite. Our immigration policies already allow for refugees-and should be expanded. It's an issue that needs more national discussion and action. But giving a free pass to already corrupt oligarchies to send unwanted, troublesome workers to the United States-and equating this to the Holocaust-is an insult to the memory of those who died in Hitler's death camps and to those suffering in places like Darfur under truly repressive regimes. There is no equivalence.

Without a middle class, any democracy is doomed. And without labor having power in relative balance with capital/management-through control of labor availability-no middle class can emerge. America's early labor leaders did not die to increase the labor pool for the robber barons or the Walton family; they died fighting to give control of it to the workers of their era in the hopes that we would retain our labor power and inspire other nations with the same idea of democracy and a stable middle class.

Corporatist Cons and Racist Cons

Con strategists have noticed that the workers-the voters-of the United States are getting nervous about the fact that, according to the Pew Hispanic Center, "undocumented workers fill one out of every four agricultural jobs, 14 percent of construction jobs, and 12 percent of those who work in food preparation." This has led con commentators and politicians to resort to classic wedge-issue rhetoric, exploiting Americans' fears, while working to retain the status quo.

While corporatist cons quietly continue to talk about amnesty, racist cons worry out loud about brown-skinned Middle Eastern terrorists slipping in among the brown-skinned South and Central Americans. They even find themselves obligated-catering to both working-class fears and the bigots among us-to promote the idea of giant fences around the country to keep illegals out.

Lou Dobbs, the most visible media champion of this issue, always starts the discussion with a basic syllogism:

1. Our border is porous.

2. People are coming across our porous border and diluting our labor pool, driving down U.S. wages.

3. Therefore we must make the border less porous.

Lou's syllogism, however, ignores the real problem, the magnet drawing people to risk life and limb to illegally enter this country: illegal employers. The fact is that some 20 percent to 40 percent of all immigrants working here illegally didn't coyote across the border; they came here legally, with tourist or student visas, then simply stayed when their visas expired.4 From 2000 to 2005, the greatest percentage increase in illegal immigrants didn't come from Mexico-it came from India and Brazil.5 A border fence just doesn't make any sense.

Fifty years ago we didn't have an illegal immigration problem because we didn't have a conservative illegal employer problem.

As the Washington Post noted in a June 2006 article:

Between 1999 and 2003, work-site enforcement operations were scaled back 95 percent by the Immigration and Naturalization Service, which subsequently was merged into the Homeland Security Department. The number of employers prosecuted for unlawfully employing immigrants dropped from 182 in 1999 to four in 2003, and fines collected declined from $3.6 million to $212,000, according to federal statistics.

In 1999, the United States initiated fines against 417 companies. In 2004, it issued fine notices to three.6

The hiring crimes of illegal employers are being ignored by the law and rewarded by the economic systems of the nation. Politically, this is not a civil rights issue, it's a jobs issue, as working Americans keep telling pollsters over and over again.

So long as progressives argue this issue on the basis of "illegal immigration," they'll lose-even when they're right. The cons, with their hysteric and racist talk of mass deportations and fences, will win. Instead of illegal immigration, progressives need to be talking about illegal employers.

We Don't Need a Fence

We don't need fences or posses to keep the American middle class healthy. All we need is for employers to follow the laws we currently have.

Start penalizing illegal employers, and noncitizens without a Social Security number will leave the country on their own. Tax law requires that an employer must verify the Social Security number of all employees to document, and thus deduct, the expense of their labor. This is a simple task, and some companies, such as AMC Theatres, are already doing it.

The Washington Post noted in a piece on April 30, 2006, that AMC, not wanting to be an illegal employer,

has long submitted lists of its employees' Social Security numbers to the Social Security Administration [SSA] for review. If discrepancies arise, [Bell] said in an e-mailed response to questions, "we require the worker to provide their original Social Security card within 3 days or to immediately contact the local SSA office." She said the process is part of payroll tax verification and occurs after hiring.

Easy, simple, cheap, painless. No fence required. No mass deportations necessary. No need for Homeland Security to get involved.

The Republican (and Democratic) corporatists who want a cheap labor force and the Republican (and Democrat) racists who want to build a fence and punish humanitarian aid workers are equally corrupt and anti-progressive. So long as employers are willing and able to hire illegal workers, people will risk their lives to grab at the America Dream. When jobs are not available, most undocumented workers will simply leave the country (as they always have) or begin the normal process to obtain citizenship that millions (including my own sister-in-law-this hits many of us close to home) go through each year.

It's time to stop talking about "illegal immigration" and time to start talking about how the cons are trying to replace the American middle class with a labor pool of "working poor" Americans and powerless illegal (or "guest") immigrants-all so CEOs can fatten their wallets and further reward the conservative investor class.

Only when we start doing something about illegal employers will the countries to our south-and east and west-have an incentive to get their own economic houses in order, and only then will our middle class begin to recover the bargaining power and the living wages that are its due.

Chapter 14
The Illegal Employer Problem

1. A useful table in an online article of the Christian Science Monitor, "Illegal Immigrants in the U.S.: How Many Are There?" shows that reliable estimates of the number of illegal immigrants range from 7 million (U.S. Immigration Services) to 20 million (Bear Stearns).

2. "Unauthorized Migrants: Numbers and Characteristics," Pew Hispanic Center, June 14, 2005.

3. "Remittances Reach US$20 Billion in 2005," February 1, 2006.

4. NPR, All Things Considered, June 14, 2006.

5. Hindustan Times, "Illegal Indians in US Growing Fast," August 19, 2006.

6. Spencer S. Hsu and Kari Lydersen, "Illegal Hiring Is Rarely Penalized," June 19, 2006.