Will Immigration Reform Impact the US Labor Market?

New America Media, Q&A, Sandip Roy

What will be the economic impact of legalization of the undocumented? That’s become the billion-dollar question in a shaky economy. A new study from the Public Policy Institute of California looks back at immigrants who achieved legal status in 2003 to see what effect legalization had on their wages and earnings. Laura Hill is a research fellow at PPIC. She talked with NAM Editor, Sandip Roy.


You studied immigrants who became legal permanent residents in 2003. What was the economic impact on them?

Our comparison group was immigrants who have been continuously legal and who got a green card at the same time as those who were unauthorized. We found that getting a green card is not really associated with earning gains especially in the short term for the low skilled worker. If you were a high skilled worker, had a Bachelor’s degree or higher, you could see an earnings or occupational gain attributable to a green card.

How much?

For border crossers with a Bachelor’s degree the gain was about 9 percent. For people who had overstayed their visa it was about 10-10.5 percent.

For the low-skilled workers was there any mobility because of legalization?

Yes, but people continued to stay in equally low-skilled occupations at least for the short term. Someone who had come to country as a dishwasher is probably not a dishwasher any more after getting the green card. But they are not engineers. They are usually in other low-skilled jobs in the food industry.

Likewise someone who started out in childcare might have moved on to become house cleaners or maids.

So does this counter recent studies that have indicated that legalization could add $1.5 trillion to the US GDP over 10 years? Or studies that showed that almost 40 percent of Mexican men legalized during the 1986 amnesty program had moved to higher paying jobs by 1991? 

One of the facts to remember is the dataset. We were able to use a dataset that allowed us to accurately identity who was unauthorized. Many other studies have to use different estimates of who was authorized and who was unauthorized. Also these studies used a longer window period like 5 years. 

In addition 1986 was such a huge change in policy that it is much tougher to find the right comparison group because it affected everyone. 

You have to realize in labor markets wages change all the time. We have to have the right comparison group to know which part of the wage change is just because of the market and which part can be directly attributable to the green card. Also you should know there are a lot of good studies from the IRCA period (the 1986 Amnesty) that show positive gains from 6 to 38 percent.

Another fact to remember is the economy is different now [compared to] then. Maybe low skilled immigrants are not making those kinds of gains now.

People say in the current economy with 10 percent unemployment we cannot afford immigration reforms because native born Americans would lose out on jobs. Is that borne out by your study? 

No, it won’t cause competitive hardship for native born workers because there is no suddenly mobility among the people being legalized. So this is not a sudden new adverse competition for those already in the workforce.

But the theory is employers can keep wages low because they can exploit people here without papers. 

That sounds logical but our study shows that the threat of punishment is fairly minimal for employers of low-skilled workers. They just tend to pay everyone low for low-skilled jobs. And the threat of employer sanctions only really has teeth for high-skilled workers. I don’t think legalization will mean a sudden shortage of low –skilled workers either. So a head of lettuce won’t suddenly become very expensive.

What the argument that an already strained public assistance program cannot absorb more people? 

Most public assistance programs exclude legal immigrants for at least 5 years any way. People who become legalized are not going to immediately go from unauthorized to green card holder. There will be an interim period. This means it will be many years out before they can actually claim benefits.
The one area that they might be able to benefit is the Earned Income Tax Credit which they could get as a low-income worker once they get a valid Social Security number.

Should not legalization lead to more access to higher education and mastery of English and higher paying job? 

We just looked at the labor market effects. There are a lot of reasons why legalization is beneficial. It brings more stability by removing the fear of deportation. So you might be more inclined to invest in education for your children or for yourself. So those are important reasons to consider legalization.

So is the imperative of legalization more moral than economic? 

It’s not as simple as some folks would have it. Legalizing people will not end the recession. Neither will it plummet us into a depression. Legalization is not an anti-poverty program. Our study just looked at the labor market. But the system has many interconnected components which are all affected by legalization, and they should all be considered.