Published: Jul 12, 2006 in Knowledge@Emory
Supply and demand. It’s an age-old theory that seems simple enough to grasp. But, according to many U.S. business owners and economists, the nation’s current immigration policy falls far short in reflecting this basic premise. As undocumented workers become a growing proportion of the nation’s workforce, many business leaders argue that a shortfall in unskilled labor necessitates this sort of extra-legal relationship.
Today, according to the U.S. Census Bureau, an estimated 9 million undocumented immigrants reside in the country. Figures from other sources, including the Pew Hispanic Center, a nonpartisan research organization supported by the Pew Charitable Trusts, indicate that this estimate may fall significantly short of the true number. The Pew Hispanic Center estimates the current number at 11.5 to 12 million as of March 2006.
Jagdish Sheth, professor of marketing and corporate strategist at Emory University’s Goizueta Business School, admits, “You can police the borders, but you cannot stop the flow of labor from country to country. It’s like the flow of water, and it finds its way even with physical borders. Instead, we need to adopt an immigration policy that allows for a market driven philosophy, as long as the demand for workers continues. We need to encourage legalized immigration.”
Sheth believes that there is a history lesson to be learned about immigration, which can be applied to the current debate. “We created the first wave of immigration after the Civil War by the government policy of Abraham Lincoln to shift the economy from agriculture and raw materials exports to value added manufacturing,” he notes. “This led to the development of the steel, textile and auto industry in the U.S. Even then, the number of people slipping in without documentation was astounding. But since these were mostly European individuals (Italian and Irish), their European heritage helped them to eventually fit in. After WWII, though, Cold War policies changed the open door approach to immigration. And, still today, the State Department and the Defense Department have essentially hijacked the immigration policy. In my view, the immigration policy should be designed around market demand and supply as it was before World War II.”
George J. Benston, professor of accounting and finance at Goizueta Business School, agrees with Sheth’s contention. Benston also blames political motivations for the current dilemma. Anti-immigration sentiments, influenced by post-9/11 fears and concerns over job displacement, continue to drive immigration policy that limits legal access ways into the country. Benston adds that the weak economic situation abroad contributes to migration, as individuals from Mexico, South and Central America, and many other parts of the world flock to the U.S.
Certainly, the shrinking U.S. labor supply is also a factor in the current debate. According to the Bureau of Labor Statistics, the principal fact-finding agency for the Federal Government, “by 2010, 77 million baby boomers will retire and, by 2030, one in every five Americans is projected to be a senior citizen.” The Bureau of Labor Statistics also projects that by 2012, those aged 45 and older will have the fastest growth rate and will be the largest age group in the labor force.
However, the solution to the workforce shortfall isn’t as simple as automation or offshoring jobs, says Goizueta’s Sheth. “Businesses have already automated enormously, whether it is manufacturing or service industries such as airlines and banking,” he says. “And, offshoring causes a tremendous backlash. Even guest worker programs in Europe have been relatively unsuccessful, because guest workers cannot put their roots down. They have no real say or attachment to the country they work for.”
Considering the pressures, says Robert B. Ahdieh, associate professor of law at Emory’s School of Law, it’s easy to understand the motivations of American business owners who do employ undocumented workers. “For businesses, this is about their bottom line. Of course, those on the opposite side of the debate argue that the distortion comes in the failure to regularize this sector of the population into the economy. The loss of income taxes, social security revenue, and the like, then become the concern.” Still, Ahdieh admits that it remains particularly hard to quantify the real impact of an extra-legal and off-the-radar workforce.
In December 2005, the House of Representatives passed a bill—Border Protection, Antiterrorism, and Illegal Immigration Control Act of 2005 (H.R. 4437), toughening penalties for undocumented immigrants. A host of divergent forces from business, union groups, civil liberties and immigrant rights organizations, religious groups, and privacy advocates, including the National Council of La Raza, the American Civil Liberties Union, the American Hotel and Lodging Association, the AFL-CIO, and the U.S. Chamber of Commerce, criticized the act for its protectionist measures and the anti-immigration stance.
However, various immigration reduction organizations, some associated with zero population growth movements and others more closely aligned with more reactionary movements, favor stricter limits on immigration and recommend stronger border patrol policies. They argue that undocumented individuals not only displace American workers, but that they serve to depress the average wage for American citizens and legal immigrants working in the U.S., and that these undocumented workers place an undue strain on the country’s healthcare and other social service systems.
Meanwhile, the Senate recently passed much more immigrant-friendly legislation—allowing for limited work visas and the possibility for citizenship for some of the millions of undocumented workers in the U.S. As the political debate heats up, and the House and Senate bills differ quite dramatically in their approach to handling the current situation, a legislative resolution this year appears unlikely. (Many advocates sitting on both sides of the debate contend that members of the House and Senate may have orchestrated this impasse, as incumbents try to bury a heady issue during an election year.)
In response to the more stringent measures in the House legislation, immigrants and sympathetic parties staged protests and marches across the nation on April 10, 2006 for the National Day of Action for Immigrant Justice. An additional protest on May 1, 2006—referred to as the “Day Without An Immigrant” work stoppage—also garnered significant press and served to show the number of marginalized undocumented workers incorporated into the fabric of the U.S. labor force. In fact, reports of plant closings for chicken producer Perdue Farms and meat producer Tyson Foods and other prominent companies on the day of the walkout seemed to indicate the prevalence of undocumented workers at these businesses.
Brad Baldia, a spokesperson for the “Day Without An Immigrant” work stoppage, notes, “The intent of the walkout wasn’t to alienate, but to get attention. We need to figure out in what ways we can all work together to resolve the immigration debate for everyone involved, and we need to determine how the legislation will ultimately impact business. As it stands, it’s hard to tell how the legislation will evolve. If you talk about the extreme of detention and deporting some 11 million people, there will be a negative impact on the economy.” A coalition of trade, union, nonprofit, legal services, and social action organizations organized the “Day Without An Immigrant” job strike.
Regarding the House bill passed in December 2005, Baldia notes that efforts to criminalize the workers and the businesses that employ undocumented workers “haven’t been very well thought out. H.R. 4437 is harsh and draconian, and simply appears to be another wave of anti-immigration influenced sentiment post 9/11.” Today, Baldia notes that undocumented workers from Mexico, parts of Central and South America, and from all across the globe, remain an integral part of the U.S. workforce, particularly essential in lower wage positions in the landscaping, agricultural, construction, and restaurant sectors. He adds, “People need to remember that this is a country founded by immigrants.”
Now, President George W. Bush, while recommending a guest worker program, remains torn between business leaders arguing for additional labor, and social conservatives concerned about the negative impact of undocumented workers on the economy. Harry Holzer, a visiting fellow at the Urban Institute, a nonpartisan economic and social policy research organization, notes that simplistic arguments from social conservatives in favor of restricting immigration may not play out as planned. “Businesses need workers,” he notes. “Some might argue that if wages were raised in certain industries, such as in agriculture, then there would be more workers available. But, how would employers respond to rising wages? Would they shift to other businesses? Some argue that many of these jobs might not exist absent the immigrants, and that we need to understand how all of it nets out. Maybe there is a modest cost to the least educated native born workers, but in turn, we reduce the cost and price for products in key sectors.”
There are fears that the introduction of protectionist measures into law could have a sweeping and negative impact on the U.S. economy, says Susan P. Gilbert, associate dean and director of the Evening MBA Program, as well as an associate professor in the practice of finance at Goizueta Business School. She notes, “From an economic perspective, laws which discourage immigration are a form of supply limitation in the market for unskilled workers. The direct impact is higher wage rates in those labor markets, which leads to higher variable costs for firms that employ these workers and higher prices for the goods and services produced by these firms. In other words, the job protection that we may gain will likely result in higher inflation and slower growth of the economy.”
Goizueta’s Benston adds, “There also needs to be some acknowledgement of the humanitarian aspect of this situation for the people who are already in this country. As well, the cost to stop individuals from crossing the border might be too high to bear. There is a pragmatic argument to be heard in favor of some sort of guest worker program or some pathway to naturalization—that if you come into the country illegally and remain working here for some set period of time and do not violate the laws, then you have proven yourself in some way. Many would argue that this is the type of industrious person that we want to encourage to be a part of this country.”
