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The Basics
What if we threw out all the illegal immigrants?
Overnight, some industries would become desperate for workers. The biggest beneficiaries would be low-skilled American workers. The big losers might surprise you.
By Shirley Skeel
This is one in an occasional series on financial what-ifs.
At least 12 million illegal immigrants live in the U.S. Most pick crops, wash dishes, build houses, cut lawns and do other jobs for between $6 and $15 an hour. They make up about 5% of the total U.S. work force. But …
What if we threw them all out?
Lettuce and strawberries would rot in the fields. Dirty dishes would pile up in restaurants. Thousands of farmers and builders would go bust. Predator aircraft drones would prowl the Mexican border. And chunks of Los Angeles and Houston would look like ghost towns.
The biggest losers would be middle-class families with two working parents, living in high-immigrant states such as California, Texas, Florida or New York. Why? They would pay more for food, housing, entertainment and child care as a shortage of low-skilled workers drove up some wages, and therefore, some prices. Meantime, their own pay would remain the same. What's more, the ripple effect of thousands of businesses shrinking or closing for lack of staff might put one of the parents out of a job. Not to mention the garbage collection going to pot and no one to polish the missus' nails.
The winners, for a change, would be the low-skilled unemployed, living just about anywhere -- if they were willing to move. Of the 12 million illegal immigrants, about 8 million are employed, mostly in low-skill jobs. The U.S., meantime, has about 22 million less-educated jobless adults, many of them blacks and legalized Hispanics, according to a 2008 report from the Center for Immigration Studies, a research group based in Washington, D.C. Economists say if these people agreed to bone meat or install insulation, they could earn 6% to 10% more than the deported workers, as wages rose to lure new workers. That could mean $18,000 to $30,000 in pay a year.
And the economy? Short term, the effect of lost manpower and spending by illegal immigrants would be "devastating" or cause "some temporary dislocation," depending on whom you ask.
Are Americans willing to do these jobs?
Ray Perryman, the president of The Perryman Group, an economic analysis firm in Waco, Texas, calculates our $14 trillion economy would suffer $652 billion in lost output -- a dramatic 4.6% slice off gross domestic product. He predicts tens of thousands of businesses would close. Robert Rector, a senior research fellow at The Heritage Foundation, a conservative think tank in Washington, predicts perhaps a 1% slip in GDP.
Illegal population by state
State
Estimate
State
Estimate
California
2,830,000
Georgia
490,000
Texas
1,640,000
New Jersey
430,000
Florida
980,000
North Carolina
370,000
Illinois
550,000
Washington
280,000
New York
540,000
All other states
2,950,000
Arizona
500,000
Total
11,560,000
Source: Department of Homeland Security
Why the big difference in opinion? Because people are hard to predict.
Just how quickly would Americans fill the vacated jobs? And at what pay rate? Perryman points to Texas, where he says there are more than 1 million illegal workers, but only 450,000 unemployed residents. "If you do the math, it just doesn't work," he says. He doubts that many needy Virginians would move to Texas for often-grueling, low-paying jobs.
Rector disagrees. He says it would take time for "Cousin Fred" in Texas to phone up his jobless mates in Virginia, but, "There are a lot of people who work for less than $20,000 a year." And they would move for a job.
Video on MSN Money
Lunch © Sean Justice/Getty Images
Apples and immigrants
The immigration debate is raging around apples, with CNBCs Jane Wells.
Still, until the unemployed did jump in their Hyundais to head south, several industries in high-immigrant states would have a terrible time. Some are listed below. The figures in parentheses show the percentage of illegal workers in each industry's work force, as calculated by the Pew Hispanic Center in Washington. The figures are nationwide; in some localities, they would be far higher.
* Home help (21 : Los Angeles would still have its sunshine, but there'd be far fewer helping hands to clean floors, cook dinner and shush the kids. Not to mention in New York, Chicago, Houston, Phoenix and Miami. Some working parents might have to quit their jobs to care for the kids or break the family piggy bank to attract a housekeeper from a neighbor.
* Farming (13: "Agriculture would come to a screeching halt," says Nicole Rothfleisch, executive director of the Imperial County Farm Bureau in Southern California. She says El Centro, the county seat, has the highest unemployment in the state (18. But farmers can never find enough local help. Pay is $9 an hour, and the summer temperatures can hit 110 degrees. The locals, she says, "want cushy jobs with air conditioning." Economists say many farmers would go broke as billions of dollars' worth of crops lay unpicked. Farms would merge and switch to crops that can be picked mechanically, like round lettuce or oranges used solely for juice.
Continued: Food manufacturing
* Food manufacturing (14: The big meatpacking and poultry-processing plants would slash production, increase wages (now $12 an hour in Texas) and send managers in helicopters to scour the countryside for workers. In 2006, when six plants of meatpacker Swift & Co. were raided for illegal workers, the company began offering $1,500 bonuses to Burmese refugees in Texas for each friend or relative they could recruit.
* Construction (12: If it looks bad now, imagine an economy where homebuilding is really crushed, says Rick Montelongo, owner of a building and remodeling company in San Antonio. "It would be a huge blow," he says. Workers' wages, which make up 30% of the cost of building a home, would have to rise "substantially," he says. That would make it more expensive to build new homes, resulting in even fewer sales for an industry already experiencing a sharp downturn.
* Hotels and restaurants (11: There'd be a triple whammy here. Latino staff and customers would both be lost, while the price of fresh food would be driven up by shortages. Distraught restaurant owners would pin up job ads at colleges, when they weren't up to their elbows in dish soap. The billions of dollars spent annually by illegal immigrants would disappear, bad news for small restaurateurs and fast-food joints. But over time, the industry would adapt. Self-service cafés would pop up. And more restaurants would serve chicken parmesan prepared in a factory and warmed up in a microwave. Yum.
As for the middle-class family in California or Texas, there would be some upside. Getting Johnny into the emergency room when he broke his arm would be easier with fewer uninsured Hispanics crowding the lobby.
Some schools might even offer smaller classes. Steven Camarota, the research director at the Center for Immigration Studies, calculates that 3.3 million children, or 6% of school kids, have at least one undocumented parent. It costs about $10,000 per year to educate a child. So if all these kids left the U.S., too, it'd save $33 billion, Camarota says. "It could take a lot of pressure off the school system," he adds. Of course, some near-empty schools would have to close.
What about taxes? Would the average American family get any relief? That's hotly debated. Camarota reckoned in 2004 that the federal government would save $10 billion net a year if all illegal immigrants were expelled. That's the difference between what the illegal workers pay in income and payroll tax and what they and their kids collect in federal benefits. However, some economists insist that just the opposite is true.At the state level, there's more agreement. Places such as Arizona, Texas, California and Nevada, which fork out billions for education and health care, would probably be ahead -- though not by a lot overall. So, American family tax relief? Maybe a little.
And then there's the neighborhood. Critics of lax immigration policies say that drug running, traffic accidents and crime would go down with the illegal immigrants gone. But The Immigration Policy Center, a Washington research group, argues that studies show that immigrants in general are less likely to commit crimes or to end up behind bars than native-born Americans. The debate goes on.
How likely is it that this will happen?
Politically, it's highly unlikely. Logistically, it would be a nightmare.
Although polls show that most Americans want stronger border enforcement, deporting the illegal immigrants already here is not popular. A CBS News poll found 33% of Americans favored deportation, while 62% preferred offering legal status. In a Gallup poll, 13% favored deportation and 78% favored offering citizenship. Neither John McCain nor Barack Obama leans toward deportation.
Video on MSN Money
Lunch © Sean Justice/Getty Images
Apples and immigrants
The immigration debate is raging around apples, with CNBCs Jane Wells.
Emphasis now is on deterrence, which is proving costly. Estimates for the construction of a 15-foot-high double fence between the U.S. and Mexico range from $1 million to as much as $70 million per mile. The border is 2,000 miles long.
Published July 2, 2008
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