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How Immigration Reform Will Boost Wages

David Callahan

Immigration reform is likely to mean higher wages for workers at the bottom of the economic ladder—both foreign and native born. 

The reason is that the large number of undocumented workers in the U.S. exerts a downward drag on wages because employers routinely exploit such workers by paying them below the minimum wage and flouting other labor laws. 

These abuses have been documented by a number of studies over the years, including a 2009 report by the National Employment Law Project of nearly 5,000 workers. Shockingly, that study found that "26 percent of workers in our sample were paid less than the legally required minimum wage in the previous work week" and that "76 percent were not paid the legally required overtime rate by their employers." Undocumented workers were most likely to not be paid what they deserved, although the study found that all kinds of workers were routinely cheated.

In effect, the existence of 11 million undocumented workers in the U.S.—along with lax enforcement of labor laws—has created a vast pool of sub-minimum wage labor for employers. Common sense suggests that this should pull wages down for all workers at the low end, although it's hard to show that empirically and this subject is controversial. 

Still, if 11 million immigrants are, in fact, able to come "out of the shadows," they won't be so easy to exploit—depending, of course, on exactly what protections are afforded under the new law. As NELP said in its 2009 report:

The best inoculation against  workplace violations is ensuring that workers know their rights, have full status under the law to assert them, have access to sufficient legal resources, and do not fear retaliation. But for unauthorized immigrant workers today, this can be a near impossibility.

Immigration reform is only half of the solution to a grey labor market in which worker protections can be ignored. The other half is bolstering the enforcement capacity of government—both federal, state, and local—to enforce labor rules. If both these things can happen, along with a higher minimum wage, that will be very good news for low-wage workers.