Tara Watson
WILLIAMS COLLEGE. Professor of Economics. Areas of expertise include Health Economics, Economic Demography, Urban Economics, Labor Economics, and Public Economics.
Who Gains and Who Loses if We Turn Off the Immigrant Jobs Magnet?
Labor Markets

Who Gains and Who Loses if We Turn Off the Immigrant Jobs Magnet?

The Issue:

President Trump appears poised to push for substantial changes to immigration policy. Making it more difficult for undocumented immigrants to work in the U.S. is one area where tougher enforcement seems likely. As a candidate, Trump promised to “turn off the jobs and benefits magnet” stating that “many immigrants come to the U.S. illegally in search of jobs, even though federal law prohibits the employment of illegal immigrants”.  A successful effort to sanction employers who hire unauthorized workers would likely discourage unauthorized employment and reduce immigration. But it also would likely lead to a shift in employment to the informal sector and have significant adverse impacts on some industries.

The Facts:

  • Undocumented immigrants are estimated to make up about 5 percent of the U.S. workforce, more than their share of the population. At about 8 million, the estimated number of undocumented workers has remained stable since 2009.
  • Though efforts have increased in recent years, there are few sanctions for employers who hire unauthorized workers. To meaningfully affect the “jobs magnet,” much tougher enforcement of employers would be necessary.
  • Expanding the use of E-verify, the federal electronic employment verification system, could improve employer compliance, but it is not a silver bullet. The system cannot detect unauthorized workers who fraudulently use the documents of authorized workers, suggesting that widespread adoption would only partially prevent employment of the undocumented.
  • One unintended consequence of greater enforcement of employment laws is a shift in employment into the informal sector. For example, Arizona’s mandatory E-verify law reduced wage and salary employment among non-citizen Hispanic men by 11 percentage points — but about half of the decrease was offset by increases in self-employment, according to a study from the Public Policy Institute of California.
  • African-Americans and less-educated Americans suffer the biggest impacts from lower wages and reduced employment when they compete with immigrants. These groups could benefit from a reduction in the number of immigrants. However, most economists believe that immigration benefits the economy as a whole by allowing American-born workers to specialize. Because they are able to hire less-educated workers to perform tasks such as gardening or child care, for instance, more educated workers such as doctors or lawyers can spend more productive time working in the areas where they have special training or skills. In this view, a major reduction in the number of immigrants would harm the economy as a whole.
  • In the absence of a low-wage immigrant workforce, some employers would hire native-born workers at higher wages. But others would increase automation, relocate abroad, or go out of business.