If you pay them, they will come.

Most immigrants to the United States come because of higher wages. If you look at any two countries in the world, the net migration almost always flows from low-wage nations to high wage nations because the biggest draw for migrants is economic given the enormous gaps in wages between nations around the world. So the crime of illegal immigration is basically caused by American employers who illegally hire undocumented immigrants. If they had no prospect of jobs, very few would come and most would have to leave.

Some crimes like theft and murder involve victims who help law enforcement fight back. Other crimes like illegal drugs and illegal immigration are victimless and that makes them much harder to combat because none of the participants report the crime and law enforcement is on its own to try to find the crimes. Illegal drugs and illegal immigration are also part of a market system that can be explained with supply and demand which gives policymakers two separate mechanisms for reducing them. We can either reduce the supply or reduce the demand. Reducing the supply of illegal drugs doesn’t work very well because it typically has the perverse effect of increasing the price of drugs which increases the total revenues of the drug markets because of inelastic demand. So efforts to reduce demand are more effective at reducing the drug market than efforts to reduce supply by an equivalent amount. Whereas a reduction in supply will reduce the quantity, but increase the price, a reduction in demand will reduce both the price and the quantity.

Immigration can also be reduced by reducing the supply or the demand. Present enforcement focuses almost exclusively on reducing the supply of immigrants by building a border wall, 20,000 border guards, and raids of workplaces to jail and deport illegal workers. It would be much more efficient to reduce immigration by reducing the demand for immigrants rather than the supply, but for a different reason. This is because the demanders (employers) are easy to find and have money that can be taken away.

Whereas the US government currently spends nearly $40 billion dollars on border enforcement, and imprisoning and deporting undocumented workers, if the government started fining the employers instead, the anti-immigration program could make a profit and it would be more effective because most undocumented workers would self-deport.

Rather than spending billions of dollars jailing and flying undocumented immigrants home, the government could raise billions of dollars in fines by penalizing employers.  Whereas there are 8 million illegal workers in America, there are a lot fewer illegal employers because a relatively small number of big businesses hire many of them including, “24 percent of all workers in farming, fishing and forestry and 15 percent of those employed in construction”.  It is a lot easier to find the illegal employers than to round up all the illegal employees because the employers own property and have stable addresses whereas the employees are forced to live in the shadows.

Currently, most employers know that they are employing illegal immigrants even though they don’t care to find out because it doesn’t matter. “In 2014, the probability that one of the nation’s 6 million employers would be investigated for violating immigration laws was 0.03%” and even fewer actually faced any meaningful penalty. Some years, more Americans are struck by lightning than the number of employers who are penalized for illegally hiring undocumented workers.  Wayne Cornelius again:

The reasons for weak workplace enforcement are widely recognized. For starters, Congress deliberately included a gaping loophole in the Immigration Reform and Control Act, making it extremely difficult to prosecute employers that break the law. The loophole has remained since 1986 because it is politically advantageous.

There has never been much public or congressional appetite for a harsh crackdown on employers, especially the small businesses that depend most heavily on workers in the U.S. illegally. They are pillars of their communities and campaign contributors…

President-elect Trump has called for full implementation of an electronic employment eligibility verification system called E-Verify. Established as a pilot program by immigration authorities in 1996, E-Verify crosschecks basic information provided by job applicants with federal databases. Employer participation is voluntary, and only about 8% of businesses are enrolled… E-Verify, however, is no panacea. …as long as penalties are weak, requiring employers to use E-Verify will not significantly reduce violations.

Will Congress approve crippling fines or even prison sentences for business owners who ignore E-Verify rules? Will lawmakers direct the Justice Department to make these scofflaws a top priority? Unless and until that happens, many employers will continue to view hiring those in the U.S. illegally as a low-risk, high-reward crime.

Requiring and enforcing E-Verify would be much more cost effective than building a wall or spending billions on jailing illegal workers and flying them back to their countries of origin, but penalizing illegal employers is never popular because:

  1. The biggest illegal employers are rich corporations that have the money to influence politicians and the media to make it look like they are the victims of illegal employees rather than the ones who profit from hiring them. They want more immigration because they want cheaper employees and they don’t care about ineffective border walls as long as it diverts attention from sanctions on illegal employers. The business lobby loves immigrants and is happy to have ineffective enforcement. When ICE raids a workplace and rounds up illegal workers, it may hurt profits for a few days, but illegal employers know that there is always more where the first group came from. Sorta like in The Field of Dreams, if you pay them, they will come.
  2. Employers can vote and illegal immigrants cannot. This inherently means they are disenfranchised.
  3. Businesspeople are much more popular in America than immigrants. It is impossible to organize a political movement around punishing a super popular group of people. You might as well say that you want to punish puppies for pooping where we walk. Sure, we don’t like the poop, but puppies are popular and nobody is going to go along with a law that penalizes them if there is any other plausible way to address the problem.
  4. There is an active lobby for demonizing immigrants to justify our expensive supply-side immigration system. Tens of thousands of ICE employees and border enforcement unions profit and private prison corporations made about $650 million in 2017 alone. This costly system is extremely profitable because, “it costs $149.58 taxpayer dollars to detain one person for one day in a privately-run immigrant prisons, as opposed to $98.27 in a municipal-run immigrant jail.”

Because of those political impediments, even the very idea of fining employers for hiring illegal immigrants is quite new.  It took over two centuries before American legislators first made it illegal to hire illegal workers. The first fines were imposed in 1989.

Peter Brownell found that increased fines on employers reduced the wages that they paid illegal employees because it reduced the demand for them even though very few of the millions of illegal employers were ever fined. The Obama Administration used fines on employers more than any other Administration.

And that may be one reason why illegal immigration reversed direction and fell during the Obama years.

Although the Trump Administration said it would be tough on illegal employers, according to USA Today, it has reverted back to the older practice of arresting undocumented employees while letting employers take a pass:

It isn’t surprising that Trump prefers to revert to highly theatrical but ineffective supply-side immigration penalties because the Trump organization has a long history of illegally hiring undocumented immigrants and doesn’t even bother to use e-verify to try to screen them out.

Like most (62%!) of Americans, I have positive feelings towards immigrants.

The main economic argument against immigration is that it tends to increase inequality in America, but there is empirical disagreement about whether it has actually hurt any native-born Americans or whether it only brought in low-skilled newcomers who increase inequality not by lowering the wages of low-skilled Americans, but because the low-skilled immigrant population earns very low incomes.

immigration of unskilled workers boosts inequality. This works through two different channels.

One is that, separately from any impact on the labor market, in the short term immigration (regardless of the skill level of the immigrants) means there are fewer capital goods per person, which makes them more valuable to own and boosts the income of capital owners. That mostly means rich people (who own lots of stock) and, to a lesser, extent middle-class people (who generally own houses) and not at all poor people (who generally have debt, not assets). In the long run, this should theoretically even out as a result of new investment, but that could take a while.

The other, even more powerful mechanism is that when a poor person lives in a poor country, that person’s poverty is “off the books” in terms of American income statistics. When he moves to the United States, he goes on the books, and inequality goes up. Annual income per capita in Haiti, for example, is about $400 a year. If an average Haitian family of four moves to the United States, and ends up with one adult working full time at the federal minimum wage of $7.25, the family’s income will jump from $1,600 to $15,080, which would be a phenomenal increase. But the family would be very poor by American standards, and their presence in the country would cause measured inequality to go up.

Your mileage may vary as to whether it makes sense to worry about an increase in inequality that doesn’t make anyone worse off. Kaus himself wrote a pretty good book arguing that worrying about inequality per se is a bad idea, and I take these considerations about immigration to be an example of the reason why.

As a college-educated person, immigration is undoubtedly increases my real income by lowering the costs of goods and services that I buy, so like most educated people, I don’t have much reason not to be welcoming of more immigrants, but if we are going to spend resources on reducing illegal workers, we should at least start by doing the most efficient thing and start fining illegal employers. Anyone who claims that they want to reduce immigration, but doesn’t focus on illegal employers first simply shouldn’t be taken seriously.

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Posted in Globalization & International, Labor

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