Illegal Immigration Reform: The Underground Economy

Mike Shedlock discusses the underground economy and why neither Republicans nor Democrats are serious about Illegal Immigration Reform.

The Detroit News is reporting the underground economy is growing as illegal immigrants head to new states:

“Each morning, Israel Gonzalez rises before dawn and heads to the sidewalks around the city’s plant nurseries to wait for a job. There, alongside other men, he watches for pickup trucks that slow down, hoping today he will be chosen for work.

“It’s a morning ritual played out regularly in cities and towns as day laborers, mostly illegal immigrants, scramble for work in a country that comfortably accepts their work while disavowing their right to be here.

“The work is steady, the money is good, and when Gonzalez gets picked up for a job, no one asks for documents or identification.

“‘The bosses don’t care if the papers are real or not,’ he said, wearing a navy hat with an American flag on it.

“Gonzalez, 31, lives with his three brothers in an apartment; none of them is legal. They are among millions of illegal immigrants who work in obscurity, in the shadows of the American economy, quietly bringing home wages from people and companies more than willing to hire them.

“On paper, many don’t exist. Fake Social Security numbers and birth certificates make sure of that. They are nannies, housekeepers, landscapers, construction, farm and food service workers. Cash is paid under the table, or fake documents are accepted without question.

“Illegal immigrants may number as high as 20 million, and they are gaining a larger share of the job market, according to Bear Stearns in New York.

“More and more, they are spreading beyond traditional immigrant states like California and Texas. They are spreading through the West and South, where there is tremendous growth, affordable housing and family networks. They are increasingly found in states like Utah, Washington, Pennsylvania, Tennessee, Georgia, and the Dakotas. And they’re heading to suburbia.

“This is America’s underground economy, and it generates billions of dollars worth of labor each year. Illegal workers come for the jobs, and always find companies eager to hire them.

“‘The toleration of illegal immigration undermines all of our labor,’ said Vernon Briggs, a Cornell University labor economics professor.

“‘It rips at the social fabric. It’s a race to the bottom. The one who plays by the rules is penalized. It becomes a system that feeds on itself. It just goes on and on and on.’

“For years, the immigrant population mainly stuck to six destination states — California, Texas, New York, Florida, Illinois and New Jersey. But in the past five years, the most rapid growth has taken place in states once of little interest to immigrants — Tennessee, Mississippi, the Dakotas, Ohio, and Pennsylvania, said Bill Frey, demographer at the Brookings Institution in Washington, D.C.

“They are following rapid growth, going where the jobs are and where the cost of living is low. Suburbs now attract more new immigrants than cities.

“In the West, the immigrant population in the Mountain states is growing faster than the rest of the region. In the South, the interior Southeast has higher immigrant growth than the more glamorous coastal states, Frey said.

“The way Bob Justich sees it, America is hooked on cheap, illegal workers. As a senior managing director for Bear Stearns, he has spent the last two years meeting with immigrants, business owners, police and real estate agents to determine the size of the underground economy and its effect on the real economy.

“This he knows for sure: There are way more illegal immigrants in the country than the government estimates. The government puts the number at around 8.5 million; Justich says it is more than double that — closer to 20 million, mainly because illegal immigrants don’t bother to respond to Census Bureau forms.

“‘If everybody was deported tomorrow, it would be like emptying the equivalent of New York state,’ he said. ‘And this source of labor has become vital to many businesses.’

“Illegal immigrants hold about 12 million to 15 million jobs in the United States, or about 8 percent, according to Justich. That may seem a small percentage, but the pressure of its presence helps keep wages for unskilled jobs low. And many of the jobs are off the books, meaning the government may be foregoing $35 billion a year in income tax collections, he said.

“A Government Accountability Office report in August found worksite arrests were down from 2,849 in 1999 to 445 in 2003. In 1999, 417 civil notices of intent to fine employers for hiring illegal workers were issued, not counting civil settlements; in 2003, there were just four. Part of that may be due to employees using false documents, making it harder for employers to be held accountable.”

Illegal Immigration Reform: Tension Is High and Growing

The underground economy may indeed be growing, but tension is high on the question of immigration.

Headlines like “Bush Seeks To Bridge GOP Divide On Immigration” prove it:

“President Bush was set Tuesday to deliver the second of two speeches this week designed to defuse tensions among congressional Republicans over how to redesign the nation’s immigration laws.

“Bush, in a speech Monday in Tucson, Ariz., defended his plan to grant temporary legal status to millions of foreign workers, but also called for hardening the Mexican border and strengthening enforcement of immigration laws.

“‘We’re going to secure the border by catching those who enter illegally, and hardening the border to prevent illegal crossings. We’re going to strengthen enforcement of our immigration laws within our country,’ Bush said. ‘And together with Congress, we’re going to create a temporary worker program that will take pressure off the border, bring workers from out of the shadows, and reject amnesty.’

“Republican conservatives are seeking significantly tougher enforcement of U.S. borders and have rejected Bush’s call for a guest worker program that they contend would attract more illegal workers to the United States. Business groups have warned against too stringent of a crackdown and have applauded the idea of a guest worker program.

“Bush’s plan would let illegal immigrants register and work in the United States for up to six years. They would then have to return to their home countries for a year. They would then be able to re-apply for a U.S. work permit.

“‘While tighter border security is an important component of any immigration reform proposal, it must not overshadow the nation’s need for workers — both today and in the future,’ said Thomas J. Donohue, president of the U.S. Chamber of Commerce.”

Illegal Immigration Reform: A “Need” for Workers?

Therein lies the problem: A “need for workers” versus a need for security, immigration reform, and angry U.S. citizens who feel their jobs are being taken by illegal aliens. Of course, it goes even deeper. Banks are only too happy to lend money to illegal aliens to buy a house, given the fact that they can pass off the loan to Fannie Mae or sanitize and collateralize into a mortgage-backed security and sell it to pension plans or hedge funds willing to take the risk. In reality, there is absolutely no real need for workers. What there is a need for, if you can call it a need, is a need for the cheapest labor possible so corporations can make more profit.

Let’s see if I have this straight.

Politicians want to do something about illegal aliens…

· Except of course as it pertains to Hispanic votes they want to woo
· Except of course for campaign contributions from banks and other lenders
· Except of course when it comes to lending money to illegal aliens to buy homes as we reported in “No Social Security Number? No Problem!”
· Except of course for farm votes by farm conglomerates that prey on illegal aliens to gather their harvest.

What kind of plan is it to let illegals stay for six years only to kick them out for a year, then let them back in for another six? That is one of the silliest ideas I have heard proposed about anything. If you are going to kick out illegal aliens, wouldn’t it make more sense to kick them out immediately, rather than after six years when many of them will have purchased a house or had children who would then be U.S. citizens?

Of course, the Democrats have not come up with any better plans, or if they have, I sure have not heard about them. Both parties want to court industry as well as Hispanic voters, while simultaneously appeasing voters with half-baked ideas like the one Bush is proposing.

In a speech on Dec. 3, it seems Bush is Pressing Congress on Immigration.

“‘Those who enter the country illegally break the law,’ Bush said Saturday in his weekly radio address.

“‘In communities near our border, illegal immigration strains the resources of schools, hospitals and law enforcement. And it involves smugglers and gangs that bring crime to our neighborhoods. Faced with this serious challenge our government’s responsibility is clear. We’re going to protect our borders.’

“The president said his administration is committed to promptly returning every illegal immigrant caught at the border with no exceptions.

“‘For illegal immigrants from Mexico, we are working to expand an innovative program called interior repatriation, in which those caught at the border are returned to their hometowns, far from the border — making it more difficult for them to attempt another crossing,’ Bush said.

“‘By creating a legal channel for willing employers to hire willing workers we will reduce the number of workers trying to sneak across the border, and that would free up law enforcement officers to focus on criminals, drug dealers, terrorists, and others who mean us harm.’

“Reassuring his conservative supporters, the president said his program would not create an automatic path to citizenship, and would not provide amnesty.

“‘I oppose amnesty,’ he said. ‘Rewarding lawbreakers would encourage others to break the law and keep pressure on our border. A temporary worker program will relieve pressure on the border and help us more effectively enforce our immigration laws.'”

If the president really wanted to do something about illegal aliens, he would have agents crack down on work sites throughout the country. It seems once they get past the border, he is not willing to do a thing. That is amnesty by default, if you ask me. As noted earlier, his six-year visa program is beyond silly.

Illegal Immigration Reform: Here Is the Crux of the Problem:

Corporations benefiting from cheap illegal labor want to keep the status quo, while ordinary U.S. taxpayers losing jobs want to keep the illegal aliens out.

The political solution, of course, is to make it look like we are doing something about the problem, hoping to offend the fewest number of people, while keeping the campaign contributions rolling in and employers benefiting from cheap labor happy. Eventually, there will be a mammoth overreaction to the current policies (possibly when an illegal alien comes in and blows something up, or possibly when housing blows up and scapegoats are sought for rising unemployment), but until then it would be wise to expect both Republicans and Democrats to speak out of both sides of their mouths at the same time, promising reform but doing nothing that will deliver any real results.

Mike Shedlock ~ “Mish”

December 7, 2005