Mises Daily

Do We Exploit Cheap Immigrant Labor?

Capitalists have never been very popular among anti-immigration activists. It is not at all uncommon to come across anti-immigration pundits like Lou Dobbs discussing the evils of “corporate America” and its efforts to “exploit cheap labor” at the expense of the American worker.

The use of such rhetoric is time-honored among the foes of free markets. To their enemies, business owners are not persons with rights, but are instead part of a faceless entity known as “corporate America.” And their businesses do not hire people to perform productive work. Instead, they “exploit” cheap foreign labor.

Such charges are to be expected. Many within the anti-immigration movement, most famously Dobbs and Patrick Buchanan, tend to be fundamentally opposed to free markets and free trade. As a political movement, the anti-immigration lobby — whatever the merits of some of their particular arguments — largely depends on populist arguments holding up the American wage-earner as a victim of capitalist greed.The capitalists, the argument goes, systematically victimize American workers through support of both free trade and open borders. The free trade robs American wage-earners of manufacturing jobs that move overseas, while the open borders bring in immigrants who steal the few remaining jobs from the native population.

While there are indeed free market opponents of large-scale immigration, the practical results of the anti-immigration movement have been anything but friendly to free markets. In fact, recent anti-immigration legislation has evolved into some of the most crippling and heavy-handed regulation ever placed upon American businessmen and women. The impact on individual freedoms and on the health of the marketplace continues to grow in the name of stopping immigrants at all costs.

This is not to say that immigration is an unmitigated blessing. There is much that should be changed about immigration policy in the United States. Immigrants, illegal and otherwise, should be denied access to welfare benefits of all types. This includes not just traditional “welfare” like TANF and Medicaid, but also public schooling, public higher education, public housing, and other taxpayer-supported amenities. Indeed, such policies should be extended to the entire population, but failing that (as is likely to be the case), immigrants would be a good place to start.

And secondly, birthright citizenship should be abolished immediately. Since, in the modern world, the extension of citizenship is essentially an extension of the welfare state, the numbers of people to whom such status can be extended must be greatly restricted. This would also greatly diminish the numbers of immigrants eligible to vote, thus cutting off the use of immigration as a political tool. Likewise, the amount of time one must reside in the United States before full citizenship is possible should be extended substantially.

These two types of policy changes would undoubtedly do much to reduce immigration without harassing private citizens or requiring surveillance of the general population. Yet, since many within the anti-immigration movement regard these policies as politically difficult or as undesirable in other ways, they immediately turn to immigration policies that crush the liberties of native citizens and add even more to the heavy burden of government regulation and compliance. The result nationwide has been new laws designed to punish private businessmen and women for doing business with people who are not government approved.

At federal, state, and local levels, governments have been targeting property owners and employers as part of a crackdown on illegal immigration. Central to this crackdown have been efforts to force employers and landlords to track the citizenship status of employees and tenants.

The state begins with a presumption of guilt (against all parties), and then stipulates that owners of rental properties will be made to perform detective work and enforce immigration laws at their own expense. They’ll be required to spy on their residents and inform on them to government officials. Should landlords be found to be lacking in due diligence, they are liable for fines and other harassment from government authorities.

Like the landlords, employers will also be required to enforce laws at their own expense and to waste untold hours checking the validity of social security numbers (a government invention) and other documentation offered by prospective employees. Should government agents perceive a lack of enthusiasm in digging up dirt on employees, such employers will be subject to fines.

Government schemes to have people spy on neighbors, customers, and business associates are alarming for a variety of reasons, but recent efforts to make every employer and every landlord a spy for the state are particularly insidious in the way that they cripple business and drive a wedge between business owners, their customers, and their workers. While the relationships between apartment owners and residents should be one of mutual benefit between a service provider and his customer, government meddling has instead made that relationship one of distrust and suspicion.

The new bureaucratic regulations against businesses cropping up across the nation look simple enough. Businesses must follow the law or be fined. What this means in practical terms, though, is that employers and owners of rental properties will have to endure an even greater regulatory burden than they do now. Once again, peaceful, voluntary agreements between private individuals and their residents and employees have become the government’s business. And, as usual, small businesses will be punished most since small property owners and small business owners often lack the capital and legal resources that large enterprises can access.

Last month, a group of landlords in Texas sued the local municipal government over a new law that mandates fines for landlords who rent to illegal immigrants. In an Atlanta suburb, new laws have been passed requiring that landlords provide immigration records on any and all residents to county officials on demand. Landlords who do not comply may have business licenses revoked and will be prohibited from collecting any rent from immigrants who cannot provide sufficient documentation to please government officials. Guilt is always assumed.

As with all regulations, these draconian measures will not only cut into the razor-thin profit margins already endured by most in the multifamily housing industry, but property owners will inevitably have to pass on at least some of the added cost in legal fees and staff time to residents. The end result will be less affordable housing for all residents, legal or illegal.

While the anti-immigration lobby is busy bringing higher rents to America’s apartment dwellers, they are also hard at work raising the prices of a wide variety of other goods and services.

During the last harvesting season in Colorado, small farmers reported being unable to find sufficient labor to harvest crops, even at wages well above the minimum wage. The farmers, who are indeed heavily reliant on migrant labor, blame harsh new anti-immigration laws that “scare off” migrant workers, both legal and illegal. Their interpretation may or may not be totally accurate, but the new laws to which the farmers refer are notable for the alarmingly high fines imposed on employers for hiring non-government-approved labor (illegal aliens).

According to the new laws, the state may perform random audits and non-complying employers may be fined $5,000 for the first offense and $25,000 for each additional offense. As if such employers don’t already waste enough time filling out mountains of paperwork for government agencies, employers will be on the hook for verifying all social security numbers submitted by potential employees. If an error is made, or if the employer’s techniques are not sufficiently effective at uncovering fraud, the employer could find himself writing a check to the government for $25,000. The added cost in staff time, legal fees, and crop spoilage to farmers will be driving up the cost of food while making American farmers less competitive in the international marketplace.

The anti-immigration lobby would have us believe that legions of unemployed software engineers would love to pick strawberries for six dollars an hour. Yet, as experience has shown time and time again, reliable labor is actually quite difficult to come by. Finding employees who can pass drug tests and criminal background tests is a strenuous exercise in itself. Finding workers who are willing to work night and weekend shifts is still more difficult. Finding workers to bend over and pick fruit for hours in the hot sun is harrowing indeed. As one farmer noted with despair about the native local workforce: “I don’t care if you paid $40 (an hour), they’d do it about three hours and say, ‘That’s not for me.’”

The farmer in this case is surely exaggerating, but those of us who have owned businesses know that a good man or woman is truly hard to find. If an employee is willing to show up, work hard, and not cause trouble, business owners have better things to do than spend hours playing gumshoe.

To justify their drive to prop up wages via immigration laws, the anti-immigration lobby often points to a variety of real crimes (such as murder, trespassing, and fraud) that may be committed by some engaged in the non-crime of working for pay. They then suggest massive regulation that does not target real criminals, but only ensures that no one can work without government permission.

Cracking down on peaceful activity because it may decrease undesirable activity is the philosophy of the prohibitionists: Drinking might cause bar fights and wife-beating. Therefore drinking must be outlawed. Or perhaps a person who buys a gun might shoot his wife or his neighbor at some future date. Therefore, gun purchases must be watched and controlled by the state.

Of course, the only actual crimes here are the actual crimes. A twenty-year-old purchasing a beer or an individual purchasing a gun is no more a crime than is a peaceful immigrant who contracts for work without government approval. Yet, the prohibitionists would have us believe that since someone who drinks or purchases a gun might commit a crime at some point in the future, liberty must be cast aside.

To illustrate further, we might note that the same arguments are now being applied to mortgage lending. Thanks to high national foreclosure rates, governments are cracking down on mortgage brokers who are allegedly making fraudulent loans. Fraud is certainly a real crime. Yet the response of most governments has not been to prosecute those who commit fraud. No, the response has been to create a host of new “crimes” such as working as a broker without a government license.

Since some real criminals might be found among immigrants, and some frauds might be found among mortgage brokers, the unfortunate response of some is to therefore advocate monitoring, licensing, and controlling everyone who wants to refinance a loan or pick a head of lettuce. As Kerry Howley has pointed out, many opponents of immigration want nothing less than a national database to provide control over who has government permission to work and when. The only moral solution, though, is to prosecute real criminals for real crimes (deport them if necessary) and to leave the rest of us alone.

Those within the anti-immigration lobby who support these endless controls and regulations on America’s business class labor under the same faulty ideas that gave us Prohibition, the war on drugs, and an increasingly inhospitable business climate that directly produces the flight of capital that the populists think is a capitalist plot. It is no coincidence that many who oppose immigration also oppose free trade, support the war on drugs, and repeatedly suggest as remedies for every social ill more prisons, more regulations, more prosecutions, more fines, and more government.

As with Prohibition, gun control, and the war on drugs, this anti-business war against immigration will fail to achieve its stated goals. But it will certainly produce a much bigger government in the process.


All Rights Reserved ©
What is the Mises Institute?

The Mises Institute is a non-profit organization that exists to promote teaching and research in the Austrian School of economics, individual freedom, honest history, and international peace, in the tradition of Ludwig von Mises and Murray N. Rothbard. 

Non-political, non-partisan, and non-PC, we advocate a radical shift in the intellectual climate, away from statism and toward a private property order. We believe that our foundational ideas are of permanent value, and oppose all efforts at compromise, sellout, and amalgamation of these ideas with fashionable political, cultural, and social doctrines inimical to their spirit.

Become a Member
Mises Institute