The Economics of Amnesty: A “Wink Wink” for the (Unacceptable) Status Quo

June 6th, 2006 by

The U.S. House and Senate have each passed a bill relating to immigration. The Bills are so far apart, it’s hard to imagine the conferees finding much common ground, other than tightening up border security. The House wants to criminalize all illegals and those who support them; the Senate wants a worker amnesty program that gradually offers illegals who have been in the country for a few years the opportunity to become citizens. As House conferee James Sensenbrenner (R- Wisconsin) says,”This is the toughest thing that I have ever been asked to do in 27 1/2 years in Congress and 10 years prior to that in the Wisconsin Legislature.”
Section 202 of the House bill may be at the center of the debate. It criminalizes a number of activities that are routinely performed by religious leaders, social service workers, health workers, and community activists. It makes criminal any act that “assists…encourages…directs or induces a person to reside in or remain in the United States…knowing or in reckless disregard of the fact that such person is an alien.”
While I have little use for the hard-headed, rigid standards embodied in this House bill, I was surpised to find that Sensenbrenner seems to understand the economic implications of any change in the status quo. He is among the first public figures to address what ultimately is a fundamental problem with the Senate’s solution. It’s going to cost a lot of money.
Sensenbrenner is quoted as saying: I do not support anything that is an amnesty. The real problem with the Senate bill is that the people who would apply for amnesty would end up pricing themselves out of the market in many of the jobs that they currently hold. Amnesty is not going to be as successful as its supporters think because if someone legalizes themselves and then they end up paying Social Security taxes and state and federal securities, and increase their cost to their employer. If there are more illegal immigrants out there, they are simply going to fire the person who has been legalized and hire the illegal immigrant.
Sensenbrenner is correct. A worker in a certified amnesty program becomes a more expensive worker. Not just in the taxes paid, but more importantly in the health benefits, safety programs and workers comp insurance that provide the standard (and expensive) safety net for most workers in this country. Amnesty will drive up the cost of labor. And Sensenbrenner points out that the many illegal who are not eligible for amnesty will continue to operate as the second class workers who provide needed services for less-than-market rates.
Sensenbrenner does not envision a mass deportation of illegal immigrants. He thinks they will deport themselves: If we shut off the jobs by enforcing employer sanctions, many of the illegal immigrants will simply decide to go home because they cannot make money in the United States. And you will see an attrition. This sounds intentionally naive. Perhaps more likely, a punitive law will drive illegal workers deeper into the underground economy, where working conditions will become even worse than they are now.
Bush Speaks
Contrary to many of his policies, which shift hard to the right, President Bush has outlined a position on the immigration bill which adheres to the middle ground. Here’s a quote from a recent speech:
Some members of Congress argue that no one who came to this country illegally should be allowed to continue living and working in our country, and that any plan that allows them to stay equals amnesty, no matter how many conditions we impose. Listen, I appreciate the members are acting on deeply felt principles. I understand that. Yet I also believe that the approach they suggest is wrong and unrealistic. There’s a rational middle ground between granting an automatic path to citizenship for every illegal immigrant and a program that requires every illegal immigrant to leave. The middle ground recognizes there are differences between an illegal immigrant who crossed the border recently, and someone who has worked here for many years who’s got a home, a family, and a clean record. [Bush’s conservative critics are likely to find the time frame differential a “distinction without a difference.”]
My position is clear: I believe that illegal immigrants who have roots in our country and who want to stay should have to pay a meaningful penalty for breaking the law, to pay their taxes, to learn English, and to work in a job for a number of years. People who meet these conditions should be eventually permitted to apply for citizenship like other foreign workers. But approval would not be automatic. They would have to wait in line behind those who played by the rules and followed the law. This isn’t amnesty. It is a practical and reasonable way for those who have broken the law to pay their debt to society and demonstrate the character that makes a good citizen.
Slavery, Revisited
The fault lines on this issue are very deep and enormously divisive. There are no easy answers. The Chamber of Commerce, which supports most of the Senate bill, wants some form of guest worker program, but they will not be happy with any increases in the cost of labor. The sentiments for shutting the borders and tossing out the illegals will continue to percolate. What’s likely to happen? We’re betting on a continuation of the “wink wink” status quo. Despite the increasing carnage among illegal workers in our most dangerous industries, despite the rampant abuse of vulnerable workers, doing nothing may prove more practical than changing the nation’s laws.
We are facing a paradox similar to that of our slave-owning founding fathers. They were enlightenment thinkers of the highest order. They saw clearly the problems and paradoxes inherent in slavery, the blatant contradiction to the values embodied in new nation’s brilliant constitution. Nonetheless, they were unable to end the abominable institution themselves. They left that task to future generations. They were hopelessly addicted to cheap labor.
Well, folks, so are we. That’s why it’s so hard to envision any comprehensive solution that addresses the disparities of our second class, immigrant workforce. It’s the right thing to do, but it will hurt where we as a nation are most sensitive: in our wallets and purses.