Will illegal immigration offset a wage hike?

Tom Curry National affairs writer • Profile • E-mail

WASHINGTON - As the House votes Wednesday to raise the federal minimum wage by $2.10 per hour, economists are considering the effect of that increase on low-income workers.

Will the benefits to such workers of raising the minimum wage be offset by wage-depressing effects of illegal immigration?

And if so, will Congress fall short of its goal of helping low-income workers until it takes steps to stop the flow of illegal immigrants?

In its assessment last May of the Senate immigration bill, which would have created a new guest worker program and allowed thousands of illegal immigrants living in the United States to become legal residents, the Congressional Budget Office said it was likely that the addition of additional immigrants “would slow the growth of the wages of workers already present in the United States with whom they most closely compete."

'Downward pressure' on wages
The CBO said, "the large influx of foreign-born workers with less than a high school education during the past few decades probably put downward wage pressure on workers (both native and foreign-born) who also lacked a high school diploma.”

Harvard economist George Borjas, in a 2004 study, said, “The 10 million native-born workers without a high school degree face the most competition from immigrants, as do the eight million younger natives with only a high school education and 12 million younger college graduates.”

But other economists, such as David Card at the University of California at Berkeley, dissent from the view that immigrant workers have a dire effect on the incomes of less educated native-born ones.

“It's quite possible that unskilled immigration is having some negative effect on unskilled natives. The question is: How big is the effect? Has it reduced native wages by 20 percent, or has it reduced their wages a couple of percent?” Card asked in an interview published by the journal of the Federal Reserve Bank of Minneapolis last month.

“The best available evidence is the effect is on the order of a couple of percents nationwide over 25 years, and possibly a little bigger in certain local labor markets,” Card said.

He added that research suggests that “there are positive benefits for other workers, for consumers and for the economy as a whole.”

Some Democrats agnostic
Last week as House Democratic Leader Steny Hoyer sketched Democrats’ plans for the first days of the new Congress, he was asked whether he agreed with those who say that illegal immigration most hurts low-income Americans.

“I’d want to think about that more to assess the impact that it (raising the minimum wage) will have,” Hoyer replied. He said whatever impact an increase in the minimum wage has on immigration, “it’s the right thing to do for workers in the United States of America.”

Democratic congressional leaders have not yet announced their timing for putting immigration legislation to a vote.

When Congress does get to debating an immigration reform bill, Rep. Zoe Lofgren, D- Calif., the new head of the immigration subcommittee of the Judiciary Committee, will have a big hand in the final outcome.

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Lofgren, like Hoyer, is something of an agnostic on the question of whether illegal immigrants undermine native-born workers’ wages.

“It’s hard to know the answer to that question,” she said Tuesday. “Economists are on both sides of that question. But it’s worth noting that minimum wage laws apply to people who are here legally and also apply to people who are here illegally. To the extent that the minimum wage is raised — which I support — it would include everybody who is working here. If you don’t pay the minimum wage either to an American, to a legal resident, or to an illegal visitor you’re violating the law and you ought to be prosecuted.”

For employers, the cost of workers is not only the wages that must be paid to them, but other costs such as health insurance, paid sick days, and workers’ compensation insurance in case of injury on the job. In each case, unscrupulous employers can use illegal immigrants to escape and minimize all these costs.

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