A Proposal for an Alternative Immigration Policy

by Bill McGaughey

The question of illegal immigration has tended to focus on the fact that certain persons, often from Latin America, have entered the United States without permission to take advantage of better job opportunities north of the border.  In the past, immigration enforcement has been lax.  As many as 13 million illegal immigrants (or “undocumented workers”) may reside in the United States.  By law, their children are legal residents.

Congress has wrestled with this problem in recent years.  Legislation has been passed to tighten border security including the construction of a fence.  A more contentious issue has to do with the millions already in the country.  Some think the proper remedy is to deport many of those immigrants, especially those who have committed crimes.  They knowingly broke the law, after all.  
Others view the situation in terms of human-rights violations.  Deportation would be a humanly cruel punishment.  These people think the problem can be solved by legalizing the immigrants’ status.  There should be a “path to amnesty” - forgiveness of their illegal border crossing followed by granting of citizenship.  Or perhaps amnesty could come after paying a fine or returning to the immigrant’s country of origin to apply for citizenship in a legal way. That’s how Congress in the spirit of compromise decided the question.

Both major parties have a dog in this fight.  Republican administrations wink at immigration infractions to please certain business constituents who want cheap labor.  Democrats curry favor with Hispanic voters as a new and growing voting bloc that can deliver an electoral majority. The residual groups of voters, with lower birth rates and politically divided, are left out in the cold.  A group of Republican Congressmen, led by Colorado’s Tom Tancredo, gave voice to their concerns several years ago but immigration reform seems now to have reached an impasse.

The result has been a politics of suspicion and hate. Discussion has tended to focus on the immigrant himself.  By and large, Mexican and other immigrants have come to the United States seeking economic opportunity, same as immigrants in past generations. Most are honest and hard-working and have a strong family orientation. 

On the other hand, these people did enter the country illegally.  They did break the law. To grant amnesty to a particular group of lawbreakers just because they are politically powerful would be unfair to all those other Americans who can expect punishment when they run afoul of the law.  It would show that in America politics trumps justice - a terrible object lesson.  As a result, tempers flare on both sides.  You are either an advocate for a  shameless “lawbreaker” or a racist “bigot” depending on which side of the question you find yourself.

Slipping away undetected is another player:  the businessman who hires illegal immigrants and, through his political influence, allows the situation to continue.  This person benefits from illegal immigration in his ability to hire workers willing to work for extremely low wages. The immigrant’s wage, low as it is, still beats what would be paid in Mexico.  Moreover, the immigrant workers are unusually docile, knowing that if they should demand higher wages or complain to the authorities they could be deported at any time.  As “illegals”, they have few rights.

One of the more egregious examples of abuse came to light recently in a newspaper story about Agriprocessors, which manufactures kosher meat.  Its main plant is located in Postville, Iowa.  In May 2008, immigration agents stormed the factory and apprehended 400 of the 900 persons who worked there. About 300 were charged with identity theft and stolen Social Security cards. The raid came in response to a tip from an informant inside the plant who “reported witnessing plant managers hire and help workers with fake identity papers.  Up to 76 percent of workers did not have correct Social Security numbers ... The informant also reported seeing managers abuse workers, including hitting one with a meat hook.  One manager also ran a scam in which illegal workers were coerced into buying cars from him ... Some female employees also have alleged they were sexually coerced.”

In tears, a female worker told strangers “that she came from California based on promises by Agriprocessors of free rent, food and a good job.  Instead, she claims, she found a filthy, expensive apartment and mandatory 14-hour days.”  While apologists for the company claimed that it “followed the law in verifying paperwork” and “most of the workers were happy to have the jobs and were paid and treated fairly”, workers told “story after story of long hours, unsafe conditions, and wages as low as $5 an hour.” A Catholic priest who worked with immigrants in Postville reported that “workers openly say they were advised by the plant on how to get false documents.”    Public records show that Agriprocessors was cited by Iowa authorities for “pollution violations, fights with labor unions trying to organize, OSHA violations and charges of animal abuse.”

The obvious response to an abuse of that magnitude would have been to put pressure on the company to clean up its act.  There was some pressure of that sort, but the main response was to use the disclosure of abuse at the Agriprocessors plant as an occasion to exhibit support for illegal immigrants.  A month later, a group of 1,200 persons demonstrating solidarity with the immigrant workers marched down Main Street in Postville carrying signs in support of comprehensive immigration reform. To a cheering audience in a Roman Catholic church, the head of a Jewish social-action group from St. Paul, Minnesota, said: “We will settle for nothing less than a path for legalization, family unification, free migration of workers and immigrants, and equal protection for all workers.”  Getzel Rubashkin, son of the company’s former CEO, was also available for comment.  He said:  “The people who come here talk about justice.  No one disagrees with that.  We are on the same side of the issue.  We don’t have a dog in this fight.”

This was a remarkable piece of spin, illustrative of how the immigration question has been handled politically.  Jewish groups, eager to deflect blame from a kosher-meat processing company, were diffusing the blame to America’s entire immigration system.  The march through Postville was reminiscent of a Civil Rights demonstration led by Dr. Martin Luther King in which “good” people of various faiths were standing up to bigotry and oppression.  “Bigots”, too, attended this event.  A group of counter-demonstrators, presumably from the local community, were demanding that the immigrants “go home” and “take your kids with you.”  One yelled at a girl carrying a Mexican flag “Bring me that flag - I’ll burn the garbage.”

If the federal raid on the plant in Postville produced any change in management attitudes and practices, it has not yet been reported.  Instead, the event has produced the usual fallout of hate.  Either one is for the poor, brown-skinned people recruited to work in the awful factories, or one is against them. If the latter, one fits the familiar profile of a bigot. The abuse at the Agriprocessors plant was a classic case of an unscrupulous employer squeezing its work force financially while throwing the related social costs on the taxpayer in communities where they operate.  The “country hicks” naturally resent what is happening to them but they are on the wrong side of the “social justice” divide.

There is an economic side to this question that is less recognized.   The low-paid immigrant workers and their families put a strain on community resources.  Their children are entitled to a public-school education.  If they become sick and lack health insurance, the county hospitals will treat them free of charge, sticking taxpayers or other patients with the bill.  Low-paid people with large families are generally eligible for food stamps and other benefits.  This is what distinguishes today’s immigrants from those in past generations:  A hundred years ago, there was no safety net.  Impoverished immigrants could expect little help from society.  Today, however, elaborate and expensive bureaucracies are in place to serve people of this sort, courtesy of the taxpayer.

We therefore have a situation where the employer of illegal immigrants, who may have brought them to town, earns unusually big profits by paying low wages to a group of hard-working employees and not providing them with health insurance or other benefits.   Government, religious charities, and other helping institutions in the community pick up the slack to provide needed services to immigrant families.  The taxpayer, who had no part in the decision to bring the immigrants into the community, is therefore stuck with the social cost of supporting families with inadequate incomes while the beneficiary of the low wages and lack of health insurance, the employer, who was the chief decision maker here, earns huge profits.  The solution seems obvious:  Make those employers pay more of the cost.  But how?

Where there’s a will, there’s a way.  I think the Social Security system could be used to shift costs back to their rightful owner.  Admittedly, this has not been done before, however the payroll tax has proved to be an efficient way for the government to raise money.  Why not require the employers of illegal immigrants to pay a surcharge on the employer’s share of the FICA tax which is calculated to recover the social cost of their underpaid employment on the front end?  Each hour that an employee works would incur revenue collected by the federal government which would later be remitted to state and local governments to cover the cost of schooling, unreimbursed health care, and welfare which illegal immigrants and their families typically need.

The FICA tax is calculated as a percentage of income up to a certain level. Half is collected from the employee and half from the employer.  The surcharge that I have in mind would be an additional percentage added to the employer’s share.  It should accurately and specifically reflect the additional cost which government incurs as a result of an employer bringing illegal immigrants into the community to work for low wages.  If normal wages were paid, the social cost would be less because the immigrant family would not be eligible for welfare.  The same would be true if the employer provided health insurance.  So these various factors should be taken into consideration in setting the rate.

I think it’s possible to set a rate for each employee.  The amount of hourly wage, the provision of health insurance, and the number of children in a worker’s family, combined with more general information about education, welfare benefits, and health-care costs in the community, could be fed into a computer and, without much difficulty, it could calculate the annual cost to community taxpayers of the various services that the immigrant families might require.  Divide this dollar amount by the number of work hours for a full-time worker in one year:  40 times 52, or 2,080 hours.  The result would be a cost per hour for the unreimbursed social services.  That cost divided by the straight-time rate of the hourly wage would give the rate of the surcharge. For flexibility, the recovery rate might be set at something less than 100% of the calculated difference.

Such a system would require that each immigrant worker register at the Social Security or other government office to receive a card or certificate giving permission to work after disclosing relevant personal information. Necessarily, this system would imply that the immigrant would not be arrested and deported because of illegal status. Being in the country illegally would not be grounds for deportation unless one had committed a crime or other significant offense. Illegal immigrants could then exercise their legal rights without fear of retaliation. The horrendous immigration raids would end, together with the atmosphere of fear hovering over the immigrant community.  

What if immigrants refused to register for work at the government office? Then they would not receive the card or certificate giving them permission to work.  I would propose making it illegal for an illegal immigrant to be employed without that slip of paper. Its authenticity could be verified by a quick telephone call to the issuing government office.  The employer would be under a penalty for hiring an illegal immigrant without the required papers or failing to pay the required hourly surcharge.  If the firm’s CEO were made personally responsible for compliance, compliance would follow.

The end result might be that the market for illegal immigrants would shrink because the cost advantage of employing such workers instead of natives would be smaller.  There still might be a market for people willing to work for low wages; but the employer’s bonus of avoiding the social costs would be gone. (To mitigate possible hardship upon illegal immigrants stuck in the United States with a drying market for their labor, the authorities would have the discretion of assessing less than the full cost of the social services upon the employer, with the community paying the difference.) Since employment opportunities are the magnet that drew foreigners into this country in the first place, one might expect that illegal immigration itself would diminish, regardless of whether a wall is constructed at the border.  

Long term, the would-be illegal immigrant could look forward to passing through a period of disadvantage with respect to employment until he or she gained legal citizenship.  Alternatively, employment opportunities might improve south of the border. The ultimate solution is that wages and living conditions improve world wide and disparities among nations be reduced. But that’s another question.

If the immigration question could be settled by an economic accommodation of this sort rather than by contentious demographic interest-group politics, Hispanics could be more smoothly integrated into the U.S. population.  Everyone would feel better about themselves as Americans.

See a more complete statement of this plan