Economic Effects of Illegal Immigration in Los Angeles, California

THE ECONOMIC EFFECTS OF ILLEGAL IMMIGRATION

IN LOS ANGELES, CALIFORNIA

Purpose of Study

Estimates state that over 1.2 million people immigrate to the United States each year, thereby thrusting the issue of illegal immigration to the forefront of today news headlines. From an economic standpoint, the effort to absorb illegal immigrants often negatively impacts cities as well as the entire country. This paper addresses the negative economic outcome of illegal immigration in the city of Los Angeles, California through the exploration of studies conducted and statistics available on the issue of illegal immigration. An effort will be made to determine whether there is negative fiscal impact on the labor market, the tax structure, public health systems, public schools and the criminal justice systems.

The economic effects of illegal immigration in Los Angeles Immigration is one of the critical issues currently facing the government of the United States, largely due to the fact that the combined legal and illegal migrants account for about 30 percent of the annual population growth. (Chiras, 2004) Every year there are more than 1.2 million legal and illegal immigrants who establish themselves as residents in America. From the year 1990 to present, the number of foreign-born residents that have settled in America has shown a rapid growth rate of 43%. In addition, the Latino population doubled during the period from 1980 to 2000, thus comprising 40% of the total population of the United States. Today, 1 out of 10 people that reside in America are born in another country. (The Trouble with Immigration) More than one third of the illegal immigrants live in the cities of Los Angles, New York and Chicago. (Q&A: Illegal Immigrants and the U.S. Economy)

Economic concerns facing California were summarized in a speech given by Lieutenant Governor Cruz Bustamante in August 1999, which highlights considerable challenges faced by the state with regard to the labor market, taxes, and social services. Although analysts, advocates of open borders, political groups and politicians who are not in favor of any form of immigration control and enforcement initiatives argue that the illegal immigrants who settle in Los Angeles have a net positive effect, the opposite is also considered to be true. (Illegal Immigration's Financial Impact) Quite a few studies have revealed several types of negative economic outcomes resulting from illegal immigration. According to a study conducted by the Federation for American Immigration Reform [FAIR], a group supporting a reduction of legal migration based in Washington, D.C., the cost of immigration to our society is significantly high. Taking into account the U.S. Census Bureau figures, the 'FAIR' states that: "we are admitting over one million mostly poor people into our society every year - a society that is already challenged to deal with the poverty of its natives" (Illegal Immigration's Financial Impact). This is largely the result of an increased Latino population in the state, due to the large inflow of migrants. The increasing Latino population has not only changed the social make-up of the State but this growth raises concern about the economic future of the state. (Baldassare, 2002)

The immigrants in Los Angeles have a general tendency to compete in economic terms with the very disadvantaged areas of population. (Matloff, 1995) An article written about the Latino population living near the Los Angeles International Airport published in the Los Angeles Times states, Latino residents believe that an overflow of immigrant workers has inundated the job market, which in turn decreases salaries and breeds strong competition for any type of employment despite low wages. Another study conducted by DeFreitas in 1986 revealed that the wages of women have been considerably affected by illegal migration since the mid-70s in Los Angeles. Additionally, a study of undocumented immigrant workers in the labor markets in Los Angeles revealed an overall negative impact upon wages. (Simon, 1999)

A study of the Los Angeles hotel industry performed by the General Accounting Office in 1988 revealed that immigrant workers that are willing to accept sub-standard wages now perform many jobs that were performed by U.S. citizens in the past. This study also reveals efforts by some hotel owners attempting to dissolve unions and replace those workers with immigrant workers. It should also be noted that most immigrant entrepreneurs are not willing to hire U.S. citizens, while the state and federal civil-rights agencies do not take any interest in this problem. (Matloff, 1995)

Various other studies show similar displacement of U.S. citizens within other industries. Jack Miles of the Los Angeles Times has also discovered that many jobs are being taken over by the Latinos. Since the late 1980s in spite of available labor the fast food industry employs foreign workers and may sponsor them for immigration and work visas. This is because most employers desire cheap and compliant labor. However, low wages are not the only factor; the news of job vacancies is spread by a tight social network among the immigrants thus removing the need to advertise for job openings by the employers. Richard Rothstein, a columnist for the Spanish-language 'La Opinion' states that the immigrants from the same villages in Mexico and, El Salvador or China seem to be employed in the garment districts of Los Angeles, New York, or Miami. Rothstein also states that when such enormous powerful networks are established, any policy is powerless to break them.

Immigrant supporters assert that jobs are being created via immigrant consumerism. However, in Los Angeles, the low income of the immigrants theoretically results in a lower level of consumerism. Therefore, if jobs were created via immigrant consumerism, they would likely pay sub-standard wages. From a financial point of view, this results in a net job loss for U.S. citizens and counters the claim that the immigrant consumerism increases job creation Los Angeles. (Matloff, 1995)

Advocates of immigration assert that the commercial activities of the immigrants are good for the city of Los Angeles. There are of course many immigrants in Los Angeles who run their business very successfully. But these businesses run by immigrants are not beneficial for the economy in Los Angeles as they often employ illegal immigrants, which only creates more jobs with wages that are below the state mandated minimum. Advocates of immigration also argue that the low wages from immigration are beneficial for consumers. However, as stated by Donald Huddle, an economist