With his executive actions shielding millions of undocumented immigrants from deportation, President Obama just gave a whole lot of workers — largely the kind who pass you your burger, mow your lawn, clean your hotel room, bus your table, and pave your driveway — a raise. The biggest beneficiaries, of course, are the undocumented immigrants themselves. But there are a whole lot of low-wage Americans who should be happy about what Obama just did, too.
Obama’s policy has inevitably generated hand-wringing about the White House helping foreigners at the expense of poor Americans, and undocumented workers stealing jobs from citizens. One Republican civil-rights commissioner warned: “Such an increase in lawful workers would have a deleterious effect on low-skilled American workers, particularly black workers.” Rick Santorum, potential 2016 candidate, said much the same: “At a time when millions of Americans are struggling to find work and coping with stagnant wages, the president has decided to allow an additional 5 million individuals to legally compete with the existing American labor pool — diluting wages and opportunities for American workers further. This decision flies in the face of basic principles of supply-and-demand and any interest in the welfare of the American worker.”
But the labor economics are much more complicated than that, and there’s plenty of evidence that the lowest-wage, hardest-stressed American workers will benefit from Obama’s order. Even accounting for the fact that some American workers might get squeezed, overall the country should be bigger and richer for it.
To step back, the White House action primarily affects Mexican and Central-American parents and guardians who have been in the United States for at least five years. According to an analysis by the Pew Research Center, that means large proportions of the undocumented immigrants in fly-over states: Arizona, Arkansas, Colorado, Idaho, Illinois, Kansas, Nebraska, and so on.
Many of those parents and guardians are already working. (They aren’t new competition for American workers, in other words.) But without legal status, their bargaining power is radically diminished, and they often toil in a kind of shadow economy, earning less and working harder than labor laws require. A report from the National Employment Law Project, for instance, found that one in four undocumented individuals working in a low-wage industry made less than the minimum wage. Three in four were not paid proper overtime. Businesses also shorted workers on tips, failed to pay them for work outside of their regular shifts, and declined to give them proper documentation of their income.
Obama’s policy should help to bring those workers out of that gray economy, bolstering their earnings. “Workers previously consigned to an underground life of exploitation, wage theft, workplace injuries, and retaliation will no longer be threatened with deportation for speaking up against abuse,” said the National Employment Law Project, commending Obama’s actions. “With immigration status come opportunities for better jobs and higher wages, not just for those granted protection but for all workers.”
And the benefits of Obama’s immigration action should help all workers by leveling the employment playing field. Low-wage employers will no longer be able to stiff undocumented workers as easily as they do now, which means the difference in cost between hiring an undocumented worker and a documented worker should narrow, or even disappear. As a result, the younger and relatively unskilled Americans competing for those low-wage jobs should see higher employment levels and improved working conditions, too. That means teenagers looking for a part-time gig or single parents with high-school diplomas. It means the workers who have struggled the most through the recession and the sluggish recovery, squeezed by stagnant earnings, high rates of unemployment, and rising prices.
For some evidence of the immediacy of the impact that Obama’s actions might have, wonks point to his Deferred Action for Childhood Arrivals policy. In a survey, its young beneficiaries reported feeling more secure and civically engaged. They got bank accounts and driver’s licenses. There were big economic benefits, too: 70 percent have gotten their first job or started a new job in the two years since the policy came into place, with 45 percent making higher wages.
The immigration order will also make it easier for currently undocumented workers to move up into better positions at work or higher-wage industries altogether, from construction to manufacturing, for instance, or from food service into an office job, given that they won’t be living with the threat of deportation. That is what happened when President Reagan took a similar, if much larger, immigration action back in the 1980s:
Federal data showed that immigrants in farming and sales jobs were the most likely to move to higher-paying work in different industries. By the time they became naturalized in the early 1990s, just 4 percent of farm workers were in the same industry, while roughly a quarter of those workers had shifted over to construction and other laborer jobs with better pay, according to a study published in 2002 by the federal agency that handled immigration policy.
But that leads to the downside of the policy: Workers in those somewhat higher-wage industries will see more competition from currently undocumented workers. That means depressed earnings and lower employment levels. There are winners, and there are losers.
Up in the higher reaches of the income scale, where the engineers and architects and lawyers live, Obama’s actions should have little to no effect — much to the chagrin of the Silicon Valley and Fortune 500 businesses that have been pushing for immigration reform for years, in part to allow a flood of highly educated and skilled workers into the country. The White House action does make it easier for some of those workers to stay in the country. But it would take an act of Congress to expand the H1-B visa program, for instance, or to make other big changes.
So don’t worry about the most fragile, lowest-wage American workers. They’re going to benefit from this action, even as some of their higher-income peers get squeezed. And ultimately, the upsides outweigh the downsides for the country writ large. According to one set of estimates, the order could boost income by $7 billion, tax revenues by $2.5 billion, and employment by 160,000. That’s not much in the context of the multi-trillion-dollar economy. But it’s not nothing, either.