More than 7 million illegal immigrants work in the United States. They build houses, pick crops, slaughter cattle, stitch clothes, mow lawns, clean hotel rooms, cook restaurant meals and wash the dishes that come back.
You might assume that the plentiful supply of low-wage illegal workers would translate into significantly lower prices for the goods and services they produce. In fact, their impact on consumer prices — call it the "illegal-worker discount" — is surprisingly small.
The bag of Washington state apples you bought last weekend? Probably a few cents cheaper than it otherwise would have been, economists estimate. That steak dinner at a downtown restaurant? Maybe a buck off. Your new house in Subdivision Estates? Hard to say, but perhaps a few thousand dollars less expensive.
The underlying reason, economists say, is that for most goods the labor — whether legal or illegal, native- or foreign-born — represents only a sliver of the retail price.
Consider those apples — Washington's signature contribution to the American food basket.
At a local QFC, Red Delicious apples go for about 99 cents a pound. Of that, only about 7 cents represents the cost of labor, said Tom Schotzko, a recently retired extension economist at Washington State University. The rest represents the grower's other expenses, warehousing and shipping fees, and the retailer's markup.
And that's for one of the most labor-intensive crops in the state: It takes 150 to 190 hours of labor to grow and harvest an acre of apples, Schotzko said, compared to four hours for an acre of potatoes and 1 ½ hours for an acre of wheat.
The labor-intensive nature of many crops is a key reason agriculture continues to rely on illegal workers. A report by Jeffrey Passel, a demographer at the Pew Hispanic Center who has long studied immigration trends, estimates that 247,000 illegal immigrants were employed as "miscellaneous agricultural workers" last year — only 3.4 percent of the nation's 7.2 million illegal workers, according to Pew statistics, but 29 percent of all workers in that job category.
Eliminating illegal farmworkers, by shrinking the pool of available labor, likely would raise wages for those who remain. Philip Martin, a professor of agricultural economics at the University of California, Davis, noted that two years after the old bracero program ended in 1964, the United Farm Workers union won a 40 percent increase for grape harvesters.
A decade ago, two Iowa State University agricultural economists estimated that removing all illegal farmworkers would raise wages for seasonal farmworkers by 30 percent in the first couple of years, and 15 percent in the medium term.
But supermarket prices of summer-fall fruits and vegetables, they concluded, would rise by just 6 percent in the short run — dropping to 3 percent over time, as imports took up some of the slack and some farmers mechanized their operations or shifted out of labor-intensive crops. (Winter-spring produce would be even less affected, they found, because so much already is imported.)
If illegal workers disappeared from the apple harvest and wages for the remaining legal workers rose by 40 percent in response — and that entire wage increase were passed on to the consumer — that still would add less than 3 cents to the retail price of a pound of apples.
and allows food to be produced in the United States and even forms part of your exports, then it would actually have the same effect as a... TAX CUT!
This does no good if Americans are not making those goods.