Saturday, March 24, 2007

Illegal Immigrants Add 18 Billion to Texas Revenue

Are undocumented workers good or bad for the economy of Texas? Are we better off if we arrest them and deport them?

There are a lot of people at the grass roots level who feel that they are a burden on the system here. They feel that they get free healthcare, free education, free police protection, fire protection, etc. and pay no taxes. They don't necessarily have precise concrete numbers to support that theory, but it seems logical.... ..... ......doesn't it?

This is a popular idea because there are politicians who promote such concepts for their own political purposes. They play upon the xenophobia of the average American. They make them feel like they are being inundated by a foreign force that is coming to take away their jobs, their lifestyle, their safety, their way of life. And since they feel threatened, they vote for someone to take steps to protect them from the perceived threat.

Bingo. There's the motivation.

Well, here is the truth. The numbers are in. The Texas State Comptroller's office has had a detailed look at the net effects of undocumented workers on the Texas economy and discovered that they actually CREATE 18 billion dollars of net revenue per year in the Texas economy. If they were all put on a bus and shipped back to Mexico, then the state would immediately suffer a loss of 18 billion dollars per year.

This was just released in a new report that is touted as the first of it's kind that has looked at the effects of undocumented workers on the budget of a state. No doubt, bringing these facts to light will cause some controversy.

These undocumented workers, primarily from Mexico, represent 6.3% of the workforce in the state. By removing them, we would cause labor shortages which would result in a rise in payroll costs. On some levels, higher salaries can be a boost to the economy - but only if the raises are due to increases in productivity. If the raises are caused by labor shortages, as would be the case here, then this has a negative effect on the economic competitiveness. The value of Texas exports would decline slightly as a result, thus negatively affecting us all.

Economists argue that one of the main factors that contributed to the economic success of America was the slave labor that we had hundreds of years ago. To have a large unpaid labor force to build infrastructure and produce saleable goods, either agriculture or manufactured, is a huge advantage to the economy of a country, especially when competing against other countries that do not have a free labor force.

Some might say that the undocumented workers of today represent the modern day equivalent of that slave-worker force. In those days, the workers were not paid anything, but they were housed, clothed, and fed, and given the basics of medical treatment to keep them healthy and productive. Now, the employers don't provide all those services to illegal immigrants, but they pay them a wage that equates to the cost of that most basic level of existence. Minimum wage in many cases. And less on occasion. But the net effect is the same. The economy advances. The middle and upper class citizens benefit from the profits of using the lower class to do the dirty jobs for the bare subsistence wages. In Texas, for example, housing is about 30% to 50% of similar homes in similar areas in the north where there are fewer illegal immigrants to fill construction jobs for low salaries.

Why do they come here to work so hard for such low wages? Well, many are happy just to be away from the staggering poverty of some countries south of here. The dangers of organized crime down there and other risks make life untenable for many people. There are many stories of the dangers of the trip from central America through Mexico to the US border. There was a horrifying account told on NPR radio recently about the gangs on the trains that throw people under the wheels if they don't hand over whatever money they have.

Most undocumented workers are content to live quietly here in the shadows of Americans. They are working at jobs most Americans won't do for wages that American's won't take and living in modest homes that most Americans would not live in. They cause no trouble. In fact, the LAST thing they want to do is to attract any attention to themselves. They are afraid of being deported. They are, after all, here illegally. And so they don't want anything as much as even a traffic ticket to attract the attention of the police or other authorities their way. So they try to live quietly and within the law.
Yet typically, undocumented workers are the scapegoats blamed for high crime rates, or overcrowded schools or just about every other social problem you can think of.
And yet in a recent UC Irvine study led by sociology Professor Ruben Rumbaut, it was found that 3.5% of American-born men ages 18 to 39 wound up incarcerated, while only 0.7% of foreign-born men of the same ages did. So, statistically, Americans are 5 times more likely to commit crimes than immigrants.

As for paying taxes, not all the undocumented workers have no papers. Most of them do in fact have papers. These are usually fake credentials that allow them to be employed. But since there is paperwork for employment, then the income taxes are subtracted at source just like they do for anyone else that earns money through employment. Also, since they live here, everything they buy here to live is taxable through sales taxes, and if they own a house, they pay property taxes as well, or if they rent, then the rent they pay has the property taxes factored into it. So, counter to what many people may think, they DO in fact pay taxes.

Without the benefits of a detailed analysis as was done by the Texas Comptroller's office, still, national economists have estimated that total national economic growth would be a half a point to two full points lower without immigrant workers.

Bernard Baumohl, executive director of the Economic Outlook Group, a research group in Princeton Junction, N.J. says "Immigration is actually critical, it allows the U.S. economy to grow more rapidly without higher inflation pressures."

Besides the restaurant, hospitality, and agricultural industries, another major industry that benefits from the lower cost labor of these undocumented immigrants is the construction industry. And this time, it was the construction industry and the housing boom that comprised 70% of the recovery from the most recent economic recession.

According to the Bureau of Labor Statistics, 22 percent of construction workers are foreign born, with 2.4 million immigrants working in the sector, the largest source of jobs for immigrant labor. Jerry Howard, CEO of the National Association of Home Builders, estimates that 25 to 30 percent of those working in resident construction are immigrants. Of these however, it is difficult to know exactly how many are here legally since many of them do show paperwork, but they may not be legal papers.

But Howard warns, "You take 30 percent of the labor out of any sector and you're going to have serious impact. The costs would go up and it would suppress demand to some extent because of the higher costs."

Howard points out that in northern regions of the country, such as Buffalo, N.Y., very few construction workers are foreign born, however in California, Texas and other places, immigrants may be as much as half of the workers on the average construction sites. And he added that it would be hard to replace certain skills such as stone masonry for example.

Then we also have to take into account the fact that not only are these workers building the homes, but they are also helping to sustain the market by buying them. Granted, they may be buying the lower-priced homes, because most of them cannot afford to buy the homes they work on, but it all helps the economy. And when they eat they buy their food from American grocery stores and American restaurants. They are consumers themselves in this economy, and so although some of them might try to send a few dollars home to help support their families back in the old country, most of their meager wages are taken up just trying to survive here and so it filters right back into the local economies where they live.

So don't be fooled by the rhetoric of those who are prejudiced, or simply misinformed. The undocumented workers provide a valuable service for a very modest cost. Granted, they represent a social factor that needs work. We need to provide adequate medical care to them so that they don't bring untreated disease here, and poverty creates economic necessity that does drive some crimes of need, and so we need law enforcement, and also, we do need to provide education to their children so that they have other options to support themselves besides joining a gang. So we have to share a little of the existing infrastructure of this society. But overall, our country would be a much less comfortable place to live if they were all to suddenly disappear tomorrow. If they suddenly left, we would have no one to cook the meals, make the beds, pick the crops, build the houses, AND in Texas alone, we'd be 18 billion dollars poorer every year.

Of course, that's just my opinion - I could be wrong. What do YOU think about it?

Here are some articles on the subject:


At 3/29/2007 9:47 AM, Anonymous Igor said...

Eh? I believe some time ago you explained why there should be no wages below minimum one and that minimal must provide the worker with a decent living standard.

Do I understand you correctly that now you changed your mind and it's ok with you if a large part of population have to live on subsistence income provided they deliver "a valuable service for a very modest cost" to upper classes and there are some calculation that prove (?) net positive $$$ effect ("18 billion")?

At 3/29/2007 3:04 PM, Anonymous Val said...

Actually, what I said a while back was that minimum wage should be raised to provide a basic living.

Here I am acknowledging that illegal workers are working for about minimum wage, and I am acknowledging that, as a group, they do contribute to the economy, but let's also keep in mind that they ARE here illegally.
They have made the choice to go a live in a place where they know they will have no rights or protections.
Looked at another way, if they DO go through legal channels to immigrate into the US, then they WOULD be entitled to the protections of the social systems.

By bringing the points of the percentage growth to the country's economy, I am merely showing that their presence offers some advantages, and that anyone who wants to simply arrest them, load them up on a bus, and ship them back to Mexico, should think twice.


At 3/29/2007 9:22 PM, Anonymous igor said...

I understand that: yes, as a group they DO provide valuable contribution, with the positive net $$$ effect on the economy.

The question is: do we allow undocumented immigration in North America or we don't.

If we don't - then the issue of their economic contribution is irrelevant! What's the point of discussing economy if we already decided to get rid of it?!

If, otherwise, we do allow the undocumented immigration - then the question would be why? Just because of claimed positive $$$ net effect? Does the calculation factored in effects of resulting general wages decrease? what about importing alien cultures with bribes, gangs, etc - and as a result - deterioration of North American culture? Is "more money" reason enough to forget about everything else?

And how are we going to live with it? Back to masters/slaves, whites/blacks, etc? If not - How?

At 3/30/2007 8:54 AM, Blogger Val Serrie said...

The question of whether we want to allow illegal immigration or not is rendered academic by the fact that we do not have the ability to stop it.

We have no real choice - they will come anyway - as long as it is better to live here than wherever they came from.

If we put up walls between the US and Mexico and Canada, then they simply tunnel under the walls, or they get in a boat and go around the wall. They come up on the shore somewhere - like the Cubans have done in Florida for decades.

Unless there is a plan to build an impenetrable wall all along the east, west, and gulf/south coasts as well.

Of course, that would be the biggest project in human history and would make the Great wall of China look like a weekend project. It would also bankrupt the country. Then also, the amount of police it would take to ferret out all the illegal ones already here would create a police state. That and the impenetrable walls all around would effectively turn the country into a prison.

No - that cannot work, and therefore people WILL sneak in and they WILL be here illegally. It is unavoidable.
Those who don't like it will simply have to get over it.

But that doesn't mean we automatically offer illegal aliens all the rights and privileges of those who are here legally through birth or proper processing.

If they want to be criminals, they have to take what they can get. They get to decide if the trade-off is worthwhile. It is NOT actually slavery, because it is not forced and there is no violence involved. In the days of slavery, they were captured in Africa and brought here to work as slaves and held against their will under penalty of death.

These people come here and stay here willingly. In fact, they risk much and sacrifice much in order to come here.

They simply leave a life of terrible poverty in Guatemala or Mexico or some other Central American country for something better here. The fact that it is not quite as good as if they came here legally, should be an incentive to come here legally.

So that is the trade-off for them. They don't get the education or build the needed skill sets or come in through legal channels, so they come as illegal aliens. Thr cost of those choices is that they don't get all the provisions or protections of the society here. They don't earn a higher salary and live in a nicer house or drive a nicer car, etc.
This is life. These are the kinds of choices we all have and the decisions we all make. It is not up to us as a society to provide the identical lifestyle for all people regardless of contribution, initiative, or legal/illegal behavior. There has to remain solid incentives for people to do things the proper and legal way.

In the meantime, the country benefits from the lower-pay workforce. These people usually make minimum wage or therabouts. The ones in construction usually make higher. Some are in the $10-$12/hr range, which is actually not bad for the type of work. If there are not as many skilled construction workers, then the laws of supply and demand force the salaries higher, as you would expect.

Actually, the system works in that sense.
The government goes through the motions of pretending to address the illegal immigration issue in order to appease voters who are racists or xenophobes and don't like Mexicans. Or to appease those who feel that the Mexicans come here and take jobs away frpom Americans.

But meanwhile they get a decent growth rate in the economy, and everybody gets their labor work done.

The illegals have work at rates that they are willing to work for. If they want more, then they must gain the education, etc. and come in the front door - not the back door. Then they are as welcome as anyone and deserve the salaries and lifestyles that their skills warrant - just like you and me.


At 3/30/2007 11:38 PM, Anonymous igor said...

... illegal immigration ... we do not have the ability to stop it. ... [i]f we put up walls ... then they simply tunnel under the walls ...

sorry, Val, you are absolutely wrong here. yes, no wall would help. but no wall is needed - the key to controlling (or cancelling) illegal migration has nothing to do with any walls.

illegals come here only because you don't need a legal status to find work, get driving license, etc...

the answer is: "national ID card". Once you need one to live here (provided the employers who don't require one pay the price) - the illegal immigration would disappear.


another angle - if you care to look at other "first world" countries, you'd notice that for example Japan has none of undocumented people. Do, say, chinese not go to Japan because life is worse there than in China? Nope. Japanese don't want illegals and no japanese employer or landlord would employ or let an undocumented alien.

Germany. Practically no undocumented migration. Yes, they have a lot of problems with turks, but they are 99% legal. As all eastern europeans there. Ordung, see?

so... no, the solution is easy, and it's no wall, ok?

the problem is that americans are ready to sell their soul (ie, the soul of their country) if they get to pay half price for some service... wal-mart rules! And all that bs talk about "un-practicality" of building some ridiculous walls is just self-comforting: "oh, i am for illegals not because I like to be served by slaves, oh, no! it's just un-practical, you know, to build the wall, you see..."

At 3/31/2007 8:45 AM, Blogger Val Serrie said...

On the face of it, the National ID card seems like a good method for disallowing illegals from working. But people have always found a way around the ID issue before.

Employers do require documentation, but the illegals get fake ID's.
There are people who manufacture them and sell them on the black market.
Also they steal real ones from other people. Also, they steal them from people who have died, etc. Or they could rob someone, steal their ID and then kill them.

Some people will always find a way around the system. Also, you do need to show some other ID - like a passport, social security card, etc. to get a driver's license. They don't just hand out driver's licenses to anyone for the asking.

Also, you are not correct about illegal immigration in other countries.
Germany has an estimated 1 million illegal immigrants. Here is a story about what they are trying to do about that.,2144,1513837,00.html

In the case of Japan, they are extremely xenophobic. They like a uniform culture and do NOT like foreigners at all, so foreign-born people there only comprise 1% of the population. They stick out like a sore thumb. They have very tight immigration laws to limit people from moving there.
However, even in Japan, they have 250,000 illegal immigrants.

In fact though, Japan is currently considering changing that policy to allow more immigration of other people into their society because they have an aging workforce now and they need people to fill in the lower-level jobs, and care for the elderly, etc.
Here is an article on that:

And, to be clear here, I am not saying I like to be served by slaves. Don't twist my words.
I do NOT advocate slavery. I don't want to make other people slaves, nor would I want to become one myself. It is a horrible thing.

My comment about slavery was about the economic effects of it on the economy only. The human effects are devastating, but the economic effects are good for the country's growth and competitiveness.

If it takes lumber and labor to make furniture, and the manufacturer gets the lumber for free, suddenly he can sell the furniture for less than his competitors. The exact same thing happens if he could get his labor for free. If the manufacturers can sell their goods for less money that makes their goods more competitive on world markets and therefore the trade balance moves to the positive direction.
This is why China has risen to thye point it has. They have the largest "slave labor" force in the world. They may not be actual "slaves", but they are extremely low-paid workers, which economically-speaking is the same thing. At least it has the same economic effect.

Well, slave labor is not free, but it is very cheap compared to fully unionized labor that has a middle-class income, and a nice comfortable lifestyle.

Illegal immigrants are also not "slaves". No one captured them in Mexico and brought them here and forced them to work and beat them if they didn't. But, from a purely economic perspective, the fact that they are willing to work for a low salary becomes somewhat similar to slave labor in terms of the economic impact.
As far as I am concerned personally, I consider the current minimum wage to be that kind of wage. It is too low to have a middle-class lifestyle. I don;t know how anyone can survive on that, but somehow people do.

Illegal immigrants tend to take jobs that pay cash. Those jobs are lower-paying because the employers owners don't necessarily claim them on their taxes as an expense. If the employers wants to claim the cost of labor as a business expense, then they gain that advantage because it reduces their taxable income and therefore the taxes they pay - BUT - it means they have to have all the paperwork in place for having legal legitimate employees and they pay FICA for them, witholding taxes, etc. To be eligible for that, they then require legal documented workers.
So illegals can't do that work, unless they have documents somehow (this is why they buy fake SS cards, fake Green cards, fake drivers licences, etc.
But it also has to match the government records, or else it doesn't work.
This is why so many illegals work for such low wages. Without proper documentation, the employers cannot pay them any more because they cannot claim them as employees on their taxes.

But still, most of them get minimum wage - which is all citizens are guaranteed in the first place.


At 3/31/2007 1:28 PM, Anonymous igor said...

... but the illegals get fake ID's ...

Val, please, this is not 18th century anymore. In the days of total Internet, designing fake-proof national ID system is a no-brainer. The central database keeps personal data and the ID card just gives access for the card bearer to prove s/he is the one s/he claims to be - by comparing biometrics... the only way around such a system is to get insider access to the database - which could be rendered prohibitively expensive.... Anyway, you claimed to have worked in IT business - why do I have to explain these IT basics to you ?!


so you gives explanation why japanese don't want illegals.... yes! repeat: my point is - if "we/they, the people" don't want illegals (no matter why) - there would be no illegals. And the other way around: if there are (a lot of) illegals - it's only because the hosts want/allow it to be this way. In case of US - probably because of americans' all-consuming lust for half-price.


ok, I have more than passing interest in all things german and the one you quoted goes against what I know about Germany. I cannot counter it right out of hand, but I don't accept that particular item as representative of the truth, sorry. Alas, to find a quote in the Internet is not enough to prove your point.


... The human effects are devastating, but the economic effects are good for the country's growth and competitiveness ...

do you think that if you don't use the word "slave" - then it's not the slavery? A word is only a label. A person who, while working full time, gets only a subsistence income - that person is a slave, whether you use the s- word or not.

Whether that person was forced to do it by force or found himself in situation where it's his only option.

as time goes by, what constitutes a "subsistence income" changes. 200 years ago it was one thing, today it's a so-called "minimal wage".


As I see, this whole question is based on one's attitude. One asks himself: "Am I ok if a lot of people around me live on subsistence income while I, belonging to upper classes, reap the economic benefits?"

My answer: "No, I am absolutely not ok with it". You seem to be ok with it. Just different attitudes, no biggy.

At 3/31/2007 4:04 PM, Anonymous Val said...

You argue but you do not make a point. What is your point?

Fake IDs:
It doesn't matter how good the cards are, if someone steals an ID and uses it, it is considered a fake ID - but technically it is a real ID. It works in the system and it verifies against the central database.

They DIDN'T want foreigners, BUT they still have a quarter of a million of them. It is very difficult and very expensive to have a perfect border that lets no unwanted people through.

I found that number on several places on the web. The fact that I used the internet to find the number does not make it wrong. Find me a better number and prove it's right or else accept the one million number.

Are you ok with it?
Your last point sounds like a communist ideal perspective (as opposed to the communist actual). I would say that the communist ideal is that everyone is the same and has the same. They share the work of their nation, their share the risks, and they share the wealth of their nation equally.
The reality is of course quite different. Everyone has the same - they all have very little.

Their are a few fundamental problems with that approach:
1) There is never enough to make everyone wealthy. There is not even enough to make everyone very comfortable. We all remember the shortages and long lines for simple food supplies and third-rate consumer goods - that was the old life we saw with the old communist system, right? Poor quality products, poor quality construction on buildings, etc. You were there, Igor. I'm sure you remember.

2) There is little incentive to excel. To perform better. To rise above. Communism does not reward the entrepreneur, the innovator.

Capitalism is not a terrific system, it is only just better than the others that have been tried.
At least in this system, there are rewards for those who work harder, try harder, take risks, innovate, and excel.
Here, a person who does these things owns his company and becomes wealthy.
Overall, the system rewards those who perform well.
And that is how wealth is distributed. Weath is the reward for providing those things - hard work, initiative, intelligent risk-taking, refinements, quality focus, etc.
Those who don't do these things earn less money.
Those who don't participate at all, don't get the education, don't work hard, don't take the straight and legal path - they don't become wealthy. They don't earn a lot.
So some people have more and some people have less, and ideally, it is in proportion to their constributions.

But just like the communism ideal has a much lesser really, so does capitalism. In capitalism, the lesser reality is that you might have the children of the wealthy man who earned his place, inheriting their wealth and not earning it. Now you have wealth and privilege based on birth, rather than effort or contribution.

Like I said, it's not a perfect system, it's just better than the others used so far. (Paraphrasing Winston Churchill there)


At 3/31/2007 7:51 PM, Anonymous igor said...

... Fake IDs:
It doesn't matter how good the cards are, if someone steals an ID and uses it, it is considered a fake ID - but technically it is a real ID. It works in the system and it verifies against the central database ...

Okaaaay.... sorry, Val, I must have explained that clearly the first time I mentioned it.

So: the following is simplified description of how modern ID systems work:

1/ an authorized official (immigration officer, etc) makes decision to grant a work permit to Mr.Juan. The officer creates a record in the central database that contains:
a) Mr.Juan "access to America" rights (in this case a work permit valid till dd/mm/yyyy, etc)
b) Mr.Juan's biometrics - physical descriptions (height, sex, eye colors, etc) and fingerprints and such taken in a controlled environment by the officer.
c) Mr.Juan ID number.

2/ The officer issues the ID card to Mr.Juan, the card may contain the copy of Juan's biometrics, but it is not really important. The real ID "card" is already with Mr.Juan - his biometrics (fingerprints, etc).

3/ Mr.Juan aaplies to work in Wal-Mart. In the Human Resource department the person who calls himself "Mr.Juan" provides his ID card which authorize the HR terminal to get access to a particular record in the central database. The computer matches the biometrics of the database record against the ones taken from the alleged "Mr.Juan" in HR right there. There is a match, so now Wal-Mart knows that this person is really one Juan who is entitled to work in America.

4/ During his employment with Wal-Mart, Mr.Juan becomes the union leader and gets a place in history books as the intrepid unionist who forced Wal-Mart management to pay the highest salaries in the industry.

I hope the above explanation was useful to you.

At 3/31/2007 8:06 PM, Anonymous igor said...

... communist ideal is that everyone is the same and has the same ... Everyone has the same - they all have very little ...

Very interesting. Again and again, whenever I insist that the minimal full-time wage must provide for a decent lifestyle, the other person (you in this case) hears something very different: everyone must have the same wage

I wonder why do you hear what I didn't say? Is it my inferior English, or your lousy ears, or what?

I have never ever been for communism - a forced equality. What I insist is just that the bottom level should be a decent one.

If you ask me what a "decent level" is, I would answer along the line that it what I would want for myself if I ever have again to start over from the "bottom" of society to climb up again: from decent to good to excellent levels, and then, hopefully, to become a millionaire and, later, a billionare.

How do you hear "the same bowl of rice for everyone" in my words - beats me!

At 4/01/2007 12:25 AM, Blogger Val Serrie said...

If the national ID card is actually done the way you say it is, then yes, that could possibly prevent illegal immigrants from working.

But that means that every employer would have to have fingerprint ID's verification and a hookup to the national database. That central system would have to handle tens of millions of queries per day. And building it would required a massive identification process for tens of millions - possibly more than a hundred million American citizens since since many of them do not have documents. They would all need certified birth certificates, passports, etc. Picture ID. The organization of that alone would be a nightmare.
Around here, most of the guys (okay ALL of the guys) who do the lawn work cutting yards, etc. are Mexicans. Somehow, I can't see me doing a fingerprint check and a Federeal database query to qualify a guy to cut my grass for $30 cash.

However, the really big problem would be this:
If we institute a solution of requiring all employers to verify citizenship and labor paper status and use that to disallow all undocumented workers from working anywhere - do you expect they would just simply say, "Ok you got us. I guess we'll all just go home now", and 12 million people will file peacefully in line and march themselves back to the border?

No. Of course not. That is ridiculous and naive to think that.

if we developed a system that would prevent them from working, then that would simply force them into a life of crime. They would hide from the law, and so they would go into the shadows. They would still need to eat, and to support their families. So, if we remove all their legal methods or practical or peaceful methods for doing so, we would create 12 million new criminals, and we would have a nightmare of a country to live in.

Besides the the fact that most businesses would go broke because they cannot afford to operate without immigrant labor, the ones left barely alive would have terrible service. Things would not get done. Manufacturing would simply grind to a halt. Most services in service industries would stop. Manufacturing would stop. Street crime would be unbelievable. We would create our own civil war just like Iraq right here in the US.

It would destroy the country utterly.

No. A National ID card that enforces that is not the answer.

At 4/01/2007 8:54 PM, Anonymous igor said...

ID system

Let's first close the technical issues: even "to handle tens of millions of queries per day" is not impractical today (have you heard of Google?). And, come on, Val, tens of millions per day ?... please...

fingerprinting today is being done by $100 pocket size deviced connected by USB to normal computers connected to normal Internet.

and, no, you won't need to ID your lawnmower guy any more than you need to ID any other person you meet or deal with.


yes, it's the biggie. It would take years to cover everyone. Starting with US visas first to cover the current flow of visitors to USA, then expanding to residents, then to new citizens, government workers, etc .... yes, it would take years. still, IMHO, it's more than doable.


as for your main objections - as I see it, your problem is that you assume that changing/reversing illegal situation is to be done literally overnight. Well, no. Getting to where we (ok, I) want to - even with the most aggressive approach - would take years and years.

same for "... most businesses would go broke ..." and "... services ... would stop. Manufacturing would stop...".

Again: this is NOT an overnight event ! .

At 4/01/2007 9:24 PM, Anonymous val said...

The simple fact is that I don't want to do it.
I don't mind the fact that there are people who came here without paperwork. Even though I spent 12 years doing it the right way.

I think these are mostly hard-working, honest people doing difficult work for little pay.

But I like the fact that they had a dream to come to America and they made it happen despite the hardships.

Their being here helps everyone else here. Their work helps us, and they help the economy.
Sure they use some services - schools, medical - but they pay taxes like everyone else to pay for those things - despite what some people say.

I think that the undocumented workers and their families deserve a break. They have life hard enough - we don't need to make it harder by hounding them and chasing them into the dark corners and chasing them into criminal life.

The only people who are served by getting rid of the undocumented workers are people who are racists and xenophobes, and also the people who want the jobs that these workers do. But how many people really want those jobs working in the fields,cutting grass, washing dishes in restaurants, roofing in 105F temperatures for minimum wage?

They did the only thing they could do to survive. They walked across a desert or swam the Rio Grande, they hid in the shadows, they took whatever work they could find for whatever money it would pay.

I honestly don't feel like hurting these people. I don't want to send them all back. I don't want what it would do to them. I don't want what it would do to our society, I don't want what it would do to our economy. I just don't want it.

I would prefer if people just left them alone. Let them live.

Sure, secure the borders as much as possible to prevent terrorists from coming in - but for those already here who AREN'T terrorists, lets just leave them be.

At 4/01/2007 10:02 PM, Anonymous igor said...

I think I understand you.

But I have different attitude. I hate seeing that our world is going back to traditional pyramidal society - a large basement of toiling slaves and a small top of upper classes.

It's only understandable that for a person from the top the system works just fine.

At 4/04/2007 7:28 PM, Anonymous igor said...

Here is one of the effects illegal migration has on America we loved and (probably) lost.

Did you include that in your "18 billions of revenue" calculations ?

At 4/04/2007 9:42 PM, Blogger Val Serrie said...

You are wrong here. This cutback is not due to undocumented workers. This is due to mistakes made by the management of Circuit City on the pricing of flat screen monitors during the Christmas season.
They could have fired their senior sales staff last year but they didn't. They were making a profit then. But now they are not. Retail makes most of it's years income during the Christmas season, and they blew it this year by pricing it wrong.
They weren't the only ones. Best Buy and CompUSA made the same mistake. They all competed with Wal-Mart and Target for the cheapest prices and yet those stores have cheaper labor.
Now Circuit City is laying off 3600 people. And CompUSA is shutting down 140 of their 225 stores.
Either way - they made management errors, and they are now paying the price.
This really has nothing to do with Mexicans coming across the desert at night. Do you think they are going to be selling computer systems? They can't even speak English.
They are not taking these jobs.
They will take the tougher, outside jobs.
You've been to Circuit City and CompUSA. These kinds of jobs are filled by teenagers being supported by their parents. They do this for pocket change and for money to buy a cool car and their own computer.


At 4/05/2007 4:20 AM, Anonymous igor said...


Granted, the undocumented labor is NOT the single or immediate cause of that event.

The cause is the generally falling price of productivity labor. (with the exception of industries like financial services or entertainment).

And what are the causes of those falling labor prices? The flood of undocumented job seekers is one of (the main of - imho) them. (btw, the flood of documented job-seekers is another one.)

So, as you see - yes, Val, I am right.

At 4/05/2007 7:38 AM, Blogger Val Serrie said...

I disagree.
The overall cause of falling labor rates are supply and demand related.

You could make an argument that although the illegal immigrants cannot fill the jobs selling computer systems At Circuit City directly, they could back-fill the other minimum wage jobs that are less knowledge or language intensive, and that causes more competition among the middle-class American teenagers as they vie for the inside jobs selling computers, and so THAT extra supply brings down the wages through competition for jobs.
In other words, the illegal immigrants provide a pressure from below as competition at that lowest level forces some eligible workers up into the retail space.
In other words, too many people mowing grass or washing windows means that some will move up to taking inside jobs adding competitive pressure from the levels below for those workers already at that level.

That is a true scenario perhaps, but it is weak because it is only a small part of the overall picture.

Other factors here are older workers that have retired but do not have enough income to pay for their needs in retirement. Especially medical expenses. People who once would have been resting at home are now working at Wal-Mart, and Target, and in other retail stores. They work in McDonalds and Burger King etc. The retirees are now a significant new workforce!
Also, new young people born in the baby mini-boom of the late-1980's and early 1990's are coming of age and entering the workforce. Also, the mothers of those children, now freed up from their parental duties and facing higher healthcare costs overall for the family, are also starting to work where they would not have before.

So all these groups provide pressure from the bottom as new groups of people enter the workforce.

Also, a huge factor is offshore outsourcing.

In that case, you have thousands of companies sending their manufacturing work as well as their back office work, programming and other IT services work, accounting work, customer service help desk work, etc. offshore to companies or divisions operating in India, China, Pakistan, etc.

There has been a steady trend of outsourcing manufacturing to southeast Asia for two decades now, and it has emptied the country of manufacturing jobs which used to add a substantial amount to the demand side of the labor equation at the lower levels. So this provide lateral pressure from the sides as competition for jobs in this same salary range increases as a result of lower demand since those jobs moved to Southeast Asia.

Also, now there is the downward pressure from above, as the former middle-class professional jobs dissappear through white-collar outsourcing, forcing those workers to take lower-paying, lesser jobs because of intense pressures of competition at those levels.
The people who once earned $80K might now have to take $50K or $60K. That means that those that once earned $60K might earn $30K, and those at those lower professional salary levels might now compete for retail jobs.

As for legal immigrants, they fall into all of these categories depending upon their skills, but the Labor certification process means that they have skills that are needed and are not already in oversupply and therefore do not add as much to the problem.
For instance, there is a strong need for nurses. If we have legal immigration of nurses from say, England, they are filling a need here and are therefore not adding to any potential downward pressures of forcing current nurses to take jobs in retail stores.

Back to the main issue:

So the problem is multidimensional. Lower wages are caused by a higher supply combined with a lower demand.
The pressures on supply come from three directions:
LOWER - caused by influx of undocumented workers AND new young people entering the workforce, AND a general tightening of the economy causing spouses that did not work before to work now, AND retired people to re-enter the workforce at the lower levels.)

MIDDLE - caused by the offshore outsourcing of manufacturing jobs overseas

UPPER - caused by the offshore outsourcing of white-collar jobs overseas, forcing those people to take lesser-paying jobs in order to survive, which in turn potentially propagates the effects of over-supply down through the system so that all the levels below them take a step downward.

So you can see it is far more complex and multidimensional problem than simply saying that Circuit City is cutting high salary staff because of illegal immigration.


At 4/05/2007 7:16 PM, Anonymous igor said...

True. All social processes are multi-dimensional, and nothing is as simple as TV says.

You are right that the undocumented workforce mainly is an issue at the LOWER level, and you are right - it is not the only or the main one. Still I would like it to be solved. Together with other problems, of course.

And I want it to be solved NOT because I somehow dislike poor mexicans, but as a step to achieving the main objective which is:

My central position is: ANY full-time job should provide for decent living. That IS the basic cost of human labor. All other economic/social costs/processes must adjust accordingly. Period.

At 4/06/2007 12:05 AM, Blogger Val Serrie said...

That is socialism, my friend.
But this is capitalism, and a free market economy. So as long as there are people who are willing to work for less money than it takes to survive, then the lowest wage jobs will be taken by them and the competition will keep the wages at that level.

Keep this in mind - if people refused to work for less than $10 per hour, then all jobs would have to pay a minimum of $10 per hour. But there would be fewer jobs. And fewer businesses to offer them.

These are the trade-offs. These are some of the contours of the problem.

At 4/06/2007 10:41 PM, Anonymous igor said...

That is socialism, my friend.

This is bullshit, my friend. Do you think that slapping a derisive label onto what I say somehow supports your point of view?

But this is capitalism, and a free market economy. So as long as there are people who are willing to work for less money...

You misses the main point of our discussion. The problem is not the people who are willing to work for less money. The problem are people who are willing to hire for less money.

At 4/07/2007 12:09 PM, Blogger Val Serrie said...

Derisive label? Who said socialism is a derisive label?
Go back and read my comments. I did not say Socialism is good or bad. I made no value judgement at all.

I merely pointed out that if you have centralized controls of wages like that, then that is considered one part of socialism. I can't say whether it's good or bad, (it depends on how you look at it) It's merely an observation that that is one system and we have a different system.

The system we have is a free market economy. There are few, if any, controls. This means that there are few, if any, safety limits.

"supply and demand" is the only absolute law in this kind of system.

So if you are supplying something for which there is lots of demand, then you will do well and thrive.
But if you are providing something which already has an abundant supply and a weak demand, then your price will be low, or else no one will buy it. It doesn't matter whether the thing you supply is labor, or corn, or cotton, or toaster-ovens.

In this case, we are talking about labor. No company will buy your labor at $10/hour if they can get it from someone else at $6 per hour - provided that the quality and productivity of that labor is equal.

There are some young people who are supported by their parents who want to work and yet don't need to earn enough money to support themselves.

Also, there are older, retired people who already own their own home and have accumulated all the furniture and things they need over the years, and they have pension incomes and savings, and now they just want to work, and they just need a little money to make ends meet, but not enough to support themselves completely.

Also you have housewives who want to work, and because their husbands make enough to support the family, they just need to make enough money for the little extras in life, and to have their own spending money for shopping or whatever.

If it really costs $10/hr to support yourself, but all these people are willing to work for $6 per hour, then employers will hire them for $6 per hour and keep their prices lower to be more competitive. That allows their business to compete and for them to survive.

That is the law of supply and demand, and in this kind of a system, a free market economy, that is the only real governing factor - to a point.

There IS a minimum wage, of course, and that does provide SOME limitations. But the Republicans want to get rid of that, and the Democrats want to raise that.

The Republicans want to maximize profits for the business owner because that is their constituency. That is their voter-base.

The Democrats want a more controlled scenario where the controls provide a basic human need income level.

Personally, that seems more decent and I agree with that. And THAT is why I advocate and support a higher basic wage. So that at a minimum, people can earn enough money to support themselves legally and cleanly and in good health.
I think, as you do, that if a person is prepared to give an honest day's work, then they should be compensated by an honest day's pay that is enough to support themselves with.

I think you and I are in violent agreement here, we only argue on misunderstandings due to semantics.


At 4/09/2007 10:15 PM, Anonymous igor said...

... if you have centralized controls of wages ...

The only thing I want to see is the minimum wage, imho it is NOT a "centralized wage control" or "socialism".

... system we have is a free market economy. There are few, if any, controls. ... "supply and demand" is the only absolute law in this kind of system ...

Ha! No, it is not the case. There are a LOT of limits and controls. You just don't "see" them because you accept them without questions, you don't even think of them as "limitations".

You'd ask - what limits? For example: "one shall not kill". Or: "one shall not steal". Today everybody takes those limits for granted. But it was not the case some time ago. (Very long time ago!)

And there are more recent limits, like, for example, the prohibition of slavery. Even more recent - prohibition of drug business, SEC, anti-monopoly laws, etc.

Take for example slavery. Today you won't even think of it as a "limit". But were you living 200 years ago, you'd probably would argue that this prohibition is against freedom, against "supply and demand", etc - the same arguments you use today against my suggestion of a decent minimal wage.

I admit I don't understand whether you support my idea of "full-time minimal wage must provide for a decent living" or not?

If you don't - well, we must have different ethical bases. If you do - what's that talk about "supply and demand"?

Sure, supply and demand rule - but within the set limits: no kill, no steal, no drugs, SEC, no slavery, and decent minimal wage - which I want to see among these limits.

At 4/09/2007 10:22 PM, Blogger Val Serrie said...

Wasn't I clear? Sorry -
Yes of course - I want to see a minimum wage raised to a decent living.
Actually I thought you put it quite well when you said it before.

The basic cost of labor is the basic cost of living decently. Period.
Anything ABOVE that is dictated by the laws of supply and demand for that skillset.

We are in agreement.

At 4/10/2007 7:52 PM, Anonymous igor said...

I think it was an interesting and useful (for me, at least) discussion. I am glad we saw it thru. See ya'

At 4/12/2007 10:34 PM, Anonymous Anonymous said...

Hello my name is jon and I am a 3rd generation drywall finisher with a wife and 3 kids. For the past 10years I've watche as the illegals come in and work for peanuts driving down prices in the construction feilds to the point that it is impossible to make a descent living. My father ad gandfather made a enough money to retire comfortably before the age of 55. but with todays wages being beat down by "slave labor" I can barely afford to feed my family from check to check. Just for once in your greedy life think about the mid class AMERICAN. If these immagrants are being treated unfairly in their country, than why doesn't the U.S. step in and help? Isn't there ol in Mexico?

At 4/13/2007 11:35 AM, Anonymous Val said...

Hello Jon,
My father has told me about the way it was several decades ago when a man with a pickup truck could make enough money to support a family, just by going out and finding work hauling stuff for various work sites, etc.
Now you tell me that your father and grandfather used to make a decent living doing drywalling, and even retired at 55!
Well, that's great!
But I'm afraid those days are gone. The world has changed and things are not the way they used to be anymore. We can moan about it and we can miss the old days, but we can't bring them back.
The simple fact is that basic labor jobs do not pay enough to allow a man to support his family completely and retire at age 55 anymore.
It hasn't worked like that in other countries for many many years, and now it doesn't work like that here in America either.

I have almost 30 years of high end skills in the IT field in both technical areas, and in management, and I haven't got a hope in hell of retiring at 55. In fact, I'm struggling just to keep paying the bills. I've already had to sell my last house and downgrade once. And now, frankly it's looking like I might have to do it again. My employer keeps reducing my salary. I now make about half what I earned 5 years ago.
So I'm about to start selling a lot of things. Whatever I'm not using and might be able to get a little money for.
Welcome to reality, Jon.
It's not pleasant for any of us.

The fact is that the goal of businesses is to make money for their owners. And they can do that better if they outsource most of the labor to other countries where labor is cheaper - and there is nothing the government can do to prevent that. If the punish them by raising taxes on them or fine them or push them in any way, then they simply leave the country and base their operations out of another country. It's easy for them to do that - especially for multi-national companies that already have branches in various countries.
How does that affect you? Well, it's simple. At the pure labor end of the workforce where you work, your potential employers used to have to compete with manufacturers for labor. In other words, if construction companies didn't want to pay enough for you, you could easily go get a factory job and make more. But if all the manufacturing jobs are now moved to China, or India, Indopnesia, Malaysia, etc. then they don't have the competition. So they don't have to pay as much, because you have fewer options.
The undocumented workers are just part of the equation. But you're right - they do contribute to your problem.
But the simple hard, cold, harsh reality of the situation is that you as a laborer, can simply no longer expect to make a good middle class living doing drywalling. It's harsh but simple. That job just doesn't pay that much anymore, like it used to.
Just like programmer's jobs don't pay as much as they used to. The guys that made $80K per year now make $50-$60K -MAYBE. The guys that used to make $50K now make $30K. They guys who made $30K now work at retail stores at the sales counter. and they are getting $5 to $12 per hour.
In the little company I work at, we have a person who takes care of all the computers and networks and software for everyone in the company. She does the network security, maintains all the servers, software testing, everything. She is like our one-person IT department. She used to teach networks and operating systems courses at University.

We looked at hiring someone else to do her job recently, and that job now pays $12 per hour. That's for 6 years of college education, and 25 years of experience, and countless other courses through the years. That job takes a lot of knowledge.

So it's not just you that is affected - it's everybody. And it's not just because of the Mexicans coming in illegally. It's also because of offshore outsourcing of jobs, of companies, of work in general. It's because of a lot of things.
Globalization affects everything. It's great for some and terrible for others. For India and China it's fantastic. The US, it's not so good. In order to raise the standard of living in all those other developing countries around the world, our standard of living has to drop. It's unavoidable. We couldn't keep it where we were the only rich country in the world forever.
Looked at in the big picture - now the world is starting to balance itself a little more - even though it's painful and uncomfortable for us, because we're the ones that have something to lose while others stand to gain.


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