December 6, 2005 in Business

Illegal and thriving

Angie Wagner Associated Press
 
Associated Press photo

A group of day laborers surround a truck to get picked up for a job in Las Vegas. Illegal immigrants may number as high as 20 million, according to Bear Stearns in New York. They are spreading beyond traditional immigrant states like California and Texas. They are going West and South, where there is tremendous growth, affordable housing and family networks, to states like Utah, Washington, Colorado, Tennessee and Georgia.
(Full-size photo)

First of three parts

LAS VEGAS – 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.

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. 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.

“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.

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.

That figure, however, is partially offset by employers withholding taxes for illegal workers who never file returns or seek benefits, said Marti Dinerstein, a Center for Immigration Studies fellow.

An analysis by Barron’s estimated the size of the shadow economy at about $970 billion, or nearly 9 percent of the goods and services produced by the real economy.

The service sector employs the most illegal immigrants with 33 percent, followed by the construction industry, production and food processing and farming, according to the Pew Hispanic Center.

The hotel and restaurant businesses and construction are the big employers. More than 1 of every 4 drywall installers and landscape workers are illegal, the center estimates.

Illegal immigrants make far less than the rest of the population. Their average family income of $27,400 is more than 40 percent below the legal immigrant or native family income of about $47,700, the Pew Hispanic Center found.

That’s because illegal immigrants work cheap and don’t complain; those who do complain are easily replaced. They have little bargaining power, and employers take advantage of that.

“We’re seeing the wage bases in these industries erode simply because there is a glut of low-skill labor flooding the low-skill market,” said John Keeley, spokesman for the Center for Immigration Studies. “The business community has become addicted to it. It’s a way for them to keep their business costs down.”

Enforcement is lax, especially in a post-9/11 world. The government doesn’t have the time or resources to devote to rounding up illegal gardeners or maids; instead, it focuses on national security and critical infrastructure sites.

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. In the underground economy, there is no one to make sure workers are getting paid and are treated properly. Many workers are willing to take risks to get cash, sometimes at horrible consequences.

A 2004 Associated Press investigation found that Mexican workers are 80 percent more likely to die on the job than are native-born workers.

The hazard is not just workplace safety. Upset that he wasn’t paid for three weeks, construction worker Jesus Hernandez shot his boss to death in 2004 in Lehi, Utah, and is now serving five years to life.

“All of this brings out the worst in society,” Briggs said. “It’s just like a cancer. It just eats at the social fabric. It brings out all kinds of prejudice. They (illegal immigrants) are willing to take the chance, and as long as they’re there, there are people willing to take advantage of them.”

“It’s a problem for people who aren’t underground,” Justich said. “How do they compete? Some businesses suffer. There’d be a void because this is a trend that has been growing over 10 to 15 years and to abruptly disengage this segment of the work force would have an impact.”

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