The Illegal Employer Problem

Illegal Workers: The Cons' Secret Weapon

(excerpt by Thom Hartmann)

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 1980's 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, 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.