Replacing the Undocumented Work Force

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Also see: Immigration Archive

Perhaps no aspect of the debate over immigration policy is more hotly contested than the impact illegal immigrants have on the U.S. economy. With more than 7.5 million undocumented immigrants currently employed in rapidly growing sectors of the economy, understanding the effect of immigration on the labor market is critically important for policymakers grappling with immigration reform.

Attention to this issue has centered largely on establishing legal channels for the undocumented to become “regularized,” most likely through an earned adjustment program that would grant undocumented immigrants a work visa for some period of time. While reform proposals differ on the specifics, leaders of both parties, including President Bush, support immigration reform based on the simple premise that the labor market needs a sufficient number of foreign-born workers to meet the demands of the economy.

Despite the widespread agreement that our economy needs an earned adjustment program, many policymakers and advocates continue to argue that the U.S. does not need the labor provided by the undocumented. They take particular aim at the notion that there are some jobs “Americans just won’t do,” arguing that American workers are willing to work in jobs currently held by the undocumented as long as proper compensation (wages and benefits) is provided by the employer.

Based on an analysis of the federal government’s data regarding the number of employed workers and the number of potentially employed workers, we find that if the undocumented were removed from the labor force, there would be a shortfall of nearly 2.5 million low-skill workers. This would be a major shock to the economy and the industries that employ large numbers of undocumented workers would potentially face shortages of workers.

While we find that, overall, there are enough out-of-work natives to replace undocumented workers, there is a severe mismatch between the skills of undocumented workers and the natives who would potentially replace them. Moreover, our analysis assumes that all out-of-work natives would not otherwise find work. Clearly, a certain share of natives are unemployed due to the normal functioning of the labor market (so-called “frictional” unemployment) and will find work regardless of what happens with undocumented workers.

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