Chapter 5* Employer Sanctions Legislation Introduction As a result of current economic and employment conditions within the United States, increasing national attention has been focused on the presence of undocumented workers in this country. Many studies have been undertaken in the public and private sectors to ascertain the number of undocumented workers residing in the United States and their effect upon the American labor market and economy.1 Although those studies indicate that accurate or precise statistics are not available,' they generally agree that there is a significant undocumented worker population in the United States.3 Commissioners Stephen Horn and Frankie M. Freeman have dissented from some of the recommendations accompanying this chapter. For their comments, see "Additional Statement by Vice Chairman Stephen Horn" and "Separate Statement of Commissioner Frankie M. Freeman." Although this is by no means an exhaustive list, some of the studies which have been conducted on the issue include: U.S., Departments of Justice, Labor, and State, Interagency Task Force on Immigration Policy, Staff Report Companion Papers (1979); Charles B. Keely (of the Population Council), U.S. Immigration: A Policy Analysis (1979); Paul R. Erhlich, Loy Bilderback, and Anne H. Erhlich, The Golden Door: International Migration, Mexico, and the United States (1979); Latin American Institute of the University of New Mexico, The Problem of the Undocumented Worker (1979); National Commission for Manpower Policy, Manpower and Immigration Policies in the United States (1978); Wayne A. Cornelius, Illegal Migration to the United States: Recent Research Findings, Policy Implications, and Research Priorities (1977); U.S., General Accounting Office, Immigration-Need to Reassess U.S. Policy (1976); U.S., Domestic Council Committee on Illegal Aliens, Preliminary Report (1976); David S. North and Marion There is less unanimity, however, on the labor market impact of undocumented workers. The studies do agree on several preliminary assumptions. None of the studies questions the assertion that nationals of foreign countries have entered this country without proper documents or that some foreign nationals have remained in this country beyond the expiration date and/or terms of their visas. Similarly, there is no question that a number of these undocumented aliens obtain employment. The unresolved question is what degree of economic impact undocumented workers have on American workers. F. Houstoun, The Characteristics and Role of Illegal Aliens in the U.S. Labor Market: An Exploratory Study (1976). 2 See, for example: Erhlich, Bilderback, and Erhlich, The Golden Door, pp. 182-90; Domestic Council, Preliminary Report, pp. 124-31; Keely, U.S. Immigration, p. 47; Vernon M. Briggs, Jr., "The Impact of the Undocumented Worker on the Labor Market," in The Problem of the Undocumented Worker, P. 33. For an excellent review of previous studies regarding the count of the undocumented worker population and the problems which affect the accuracy of the estimates of that population made by researchers, see U.S., Department of Commerce, Bureau of the Census, Preliminary Review of Existing Studies of the Number of Illegal Residents in the United States (January 1980) (hereafter cited as Bureau of the Census, Preliminary Review). * See Bureau of the Census, Preliminary Review, for a good compilation of the various estimates made by researchers. 4 Those who have examined and researched the issue can be divided into two groups. One group of researchers has reached the conclusion that, because some nationals of foreign countries enter the United States and secure employment, they contribute to the severe economic displacement of American workers (i.e., United States citizens and lawful resident aliens), particularly minority-group job • Prof. Michael J. Greenwood of the University of Arizona, in a companion paper to the Staff Report of the Interagency Task Force on Immigration Policy, termed these two distinct views as "the replacement hypothesis" and "the segmentation hypothesis." In examining the studies of various writers on the issue of the impact of undocumented workers on the domestic labor force, he noted that, irrespective of the theory they supported, concrete evidence was lacking. As he stated in his paper: [A]mong observers of the [undocumented worker] problem widespread disagreement exists concerning the effects of th[e] job-seeking behavior [of undocumented workers] on domestic workers. Vernon Briggs [in "Mexican Workers in the United States Labour Market: A Contemporary Dilemma," International Labour Review, November 1975, and in "Illegal Aliens: The Need for a More Restrictive Boarder Policy," Social Science Quarterly, December 1975], for example, has articulated what might be termed "The Replacement Hypothesis." He asserts that [undocumented] aliens depress local wage levels and take jobs that would otherwise be held by domestic workers. William Hartley [in "United States Immigration Policy: The Case of the Western Hemisphere," World Affairs, Summer 1972] supports this view in arguing that [undocumented] aliens work: .as farm laborers and in factory "sweatshops." They displace low income American workers, hampering unionizing efforts, encourage employers to disregard wage, hour, and working conditions statutes and generally depress the labor market. Furthermore, Michael Piore [in "Comment on 'Primary and Secondary Labor Markets,"" by M. L. Wachter, Brookings Papers on Economic Activity (1974)] has recently restated this position in somewhat stronger terms. He argues that [undocumented] aliens create opportunities for an underground labor market and that: The economic incentives for such a labor market are large. In it an employer can escape minimum wage legislation, legal health and safety standards, social security taxes, unemployment insurance, working men's compensation, and income tax withholdings. He then suggests that illegal immigration has several consequences for domestic workers in secondary labor markets. In particular: .the concerns of dualists with eliminating the secondary [employment]...sector are misplaced. The battle of the next decade will be defensive...to prevent the secondary sector from reverting to the conditions of the late nineteeth and early twentieth century. Other writers have stated what might be called "The Segmentation Hypothesis." J.A.R. Nafziger [in "Undocumented Aliens" (paper presented at the regional meeting of the International Association of Law, September 1975)], for example, has taken a position virtually opposite to that of Briggs by arguing that jobs occupied by the [undocumented] aliens are, by American standards, low-wage, periodic, and relatively undesirable, and are thus typically not the type that would be of interest to domestic workers. E. Abrams and F.S. Abrams [in "Immigration Policy-Who Gets In and Why?," The Public Interest, Winter 1975] also support the segmentation hypothesis, as indicated in the following statement: As to the assertion that [undocumented] aliens take jobs away from Americans, there is a. . .lack of evidence. Certainly it is not "logical to conclude that if they are actually employed they are taking a job away from one of our American citizens"; the fact that a sizeable. number of [undocumented workers] have or could get labor certifications belies that "logic" and indicates that many [undocumented] aliens are filling shortages that even the Labor Department considers genuine. The argument presented by Nafziger and by Abrams and Abrams is that the domestic labor market is sufficiently segmented that American workers are insulated from the direct employment effects of the aliens. Whether they support the replacement hypothesis or the segmentation hypothesis, none of these writers, or the many others involved in the debate, presents concrete evidence in support of his assertions. seekers, and to the reduction in wage levels for jobs that would otherwise be attractive to American workers. On the other hand, another group of researchers, while cognizant of the high national unemployment rate, suggest that undocumented workers do not have so significant an impact on the domestic labor force." Michael J. Greenwood, "The Economic Consequences of Immigration for the United States: A Survey of the Findings" (December 1978), prepared for U.S. Departments of Justice, Labor, and State, Interagency Task Force on Immigration Policy, Staff Report Companion Papers (August 1979), pp. 49-50. * One immigration expert whose views are representative of this group is Prof. Vernon Briggs, Jr. He has stated: Actually, the precise number [of undocumented workers residing in this country] "is irrelevant" if one concedes-as everyone familiar with this issue does-that the number of people involved is substantial and that the direction of change is toward annual increases. All the research on the characteristics of [undocumented] aliens shows that the major reason they come is to find jobs. [footnote omitted] The evidence also indicates that they are largely successful in their quest. . . . In the local labor markets where [undocumented] aliens are present, all low-income workers are hurt. Anyone seriously concerned with the working poor of the nation must include an end to illegal immigration as part of any national program of improved economic opportunities. Briggs, The Impact of the Undocumented Worker on the Labor Market, pp. 33-34. According to a recent New York Times article, this point of view is reflected in a yet to be published study of the Department of Labor entitled "1979 National Longitudinal Survey of Youth Labor Market Experience," New York Times, Feb. 29, 1980, pp. A1, A14. See also the discussion of "the replacement hypothesis" in note 4. • Some immigration researchers have concluded that undocumented workers generally take those jobs that Americans do not want because they are the least desirable and offer little opportunity for advancement. See, for example, Cornelius, Illegal Migration to the United States, pp. 8-9. The authors of a more recent immigration study stated: While [former INS Commissioner] Chapman and others maintain that for every employed [undocumented alien] there is an unemployed American or legal immigrant, there are people who hold the opposite view. They argue that the availability of low-paying jobs causes the flow of [undocumented aliens]. They claim, that, if the [undocumented workers] were not economically needed in the work force, they would not be here in the numbers they are, and they would not have been here for so long. . . .Some honest and very promising work is now being done on the question of "job displacement," that is, [undocumented workers] displacing legal residents from employment. That work, though, is limited, preliminary, and exploratory. Its results do not describe the "real world" any more than did the old INS estimates, and those doing the work would not claim that it does. Erhlich, Bilderback, and Erhlich, The Golden Door, pp. 193-95. They further noted that "[t]here are three major arguments for the premise that exclusion of [undocumented] workers would not add appreciably to the number of jobs available to Americans." Ibid., p. 195. One of these major arguments is that jobs occupied by undocumented workers would disappear due to automation or mechanization. Another major argument is that businesses may relocate in other countries or areas where labor costs would be substantially less. And third, it is argued that the ouster of undocumented workers would actually increase unemployment, for many marginal businesses or businesses in declining industries that employ undocumented workers may be forced to shut down and thus place management employees in the unemployment lines. Ibid. And finally, although not discounting that some degree of displacement occurs, Charles B. Keely of the Population Council stated in a recent research study: "Finally, we should not attribute to international migration an exaggerated effect on U.S. employment. The unemployment rates in the United States are not primarily the result of illegal migration." Keely, U.S. 7 Because of methodological problems in designing studies of undocumented worker participation in the labor market, the research findings of any one particular study or set of studies have limited usefulness for reaching conclusive determinations regarding the degree of economic impact of undocumented workers. Nevertheless, the number of studies and their scope are indicative of the serious national concern over the undocumented worker issue. The Commission concludes, on balance, that it should be recognized that the presence of undocumented workers in the labor market does have an adverse impact on the opportunities for employment of a number of citizens and legal residents. A Positive Response to the The Federal Government, in the judgment of this Commission, should do everything possible to reduce significantly the number of undocumented workers in our domestic labor market, particularly in those areas where they have an adverse impact on the employment opportunities of citizens and legal residents. First, the Commission believes that there should be a vigorous enforcement of the Fair Labor Standards Act. It is alleged that some employers employ undocumented workers instead of legal resident aliens or citizens because they know that the fear of detection will deter undocumented workers from filing complaints relative to poor working conditions. An effective enforcement of the Fair Labor Standards Act can help to reduce the attractiveness of such a choice and at the same time help to ensure that neither citizens nor aliens are subject to unfair working conditions. Second, we believe that there must be a substantial increase in the resources made available to the Immigration and Naturalization Service and to other agencies that may assume responsibilities in the future for the enforcement of immigration laws. Such increased resources should be utilized not only for the purpose of expanding, for example, the Border Patrol but for conducting vigorous recruiting programs consistent with equal employment opportunity objectives, for the improvement of Immigration, pp. 59–60. See also the discussion of the "segmentation hypothesis" in note 4. For a discussion of some methodological problems which generally confront researchers studying undocumented workers, see Bureau of the Census, Preliminary Review. training programs, and for taking full advantage of technological progress in the area of law enforce ment. This Commission believes that our nation has the capacity of initiating a program of stepped-up law enforcement in the immigration area and at the same time conducting it in such a manner as to protect the civil rights of all persons who may be the targets of such a program. We recognize that this is not a good time to recommend the expansion of the resources of any governmental program. Nevertheless, a substantial investment in an expanded and improved law enforcement program by the Immigration and Naturalization Service will produce benefits in the form of increased job opportunities for both citizens and legal residents that will far outweigh the costs. Foreign Policy Can Be an Important Factor in Dealing with the Problem Third, we cannot afford-because of its seriousness-to turn our backs on the foreign policy aspects of the problem. In the 1942-47 period, for example, a U.S.-Mexican executive agreement played a major part in determining the role that Mexicans would play in the U.S. labor market. Both governments were involved in the implementation of the agree ment. It is recognized that the current situation is very different from the situation that prevailed in both countries in those years. Nevertheless, working agreements to improve the regulation of the population flow between the United States and the major source countries for undocumented workers could help to get at the root of some of our current difficulties. The complexities and difficulties involved in developing such working agreements should not be used as excuses for failing to try to work them out if we are really convinced that the number of undocumented workers continuing to come to this country is having an adverse impact on the economic well-being of many of our citizens and legal residents. Efforts to negotiate such agreements would have to be made simultaneously with efforts to deal with other outstanding issues between the United States 29 U.S.C. §§201-219 (1976 and Supp. I 1977). For a more detailed discussion of the bracero program, see Richard B. Craig, The Bracero Program (1971). and the other nations, the resolution of which would represent gains for all parties to the negotiations. At a recent conference on the undocumented worker issue sponsored by the Community Services Administration, immigration experts who participated in the conference, although divided on other aspects of the undocumented worker issued, reached a "significant consensus" that: whatever policies are eventually formulated, they should be developed jointly with Mexico. Indeed, it would probably be even more productive and realistic to construct policies multilaterally with those nations which have evidenced significant outmigration to the United States. Finally, policies should address both the causes and the consequences of migration. Looking only at the impact of clandestine aliens once they are in the United States while failing to deal with the factors that have compelled them to migrate would do little or nothing to alleviate the problem or achieve equitable and effective solutions.10 This "consensus" points up the desirability of having working agreements designed to regulate the flow of persons from other countries which are based on policies designed to eliminate some of the causes for people desiring to come to this country. For example, a portion of that part of U.S. foreign economic policy which provides assistance to other countries could and should be targeted to help create jobs and improve living conditions for persons living in other countries who now believe that their only hope is to migrate to the United States. This objective could and should be kept in mind as the United States participates in the formulation and financing of programs sponsored by the United Nations, the World Bank, and the Inter-American Development Bank. 10 Latin American Institute of the University of New Mexico, The Problem of the Undocumented Worker, pp. 2-3. "Ehrlich, Bilderback, and Erhlich, The Golden Door, p. 330. 12 California and Connecticut are among the States that have enacted employer sanctions laws. The Connecticut statute provides: §31-51k. Employment of alien not entitled to residence. (a) No employer shall knowingly employ an alien who is not entitled to lawful residence in the United States. Conn. Gen. Stat. Ann. §31-51k (West Supp. 1976). The California statute provides: §2805. Alien employment; adverse effect on resident workers; violation. (a) No employer shall knowingly employ an alien who is not entitled to lawful residence in the United States if such employment would have an adverse effect on lawful resident workers. Cal. Labor Code §2805 (West Supp. 1979). 13 However, employers who engage in conduct or activity beyond that considered "usual and normal practices incident to employment" may be guilty of "harboring" an alien under $274 of the Immigration and Nationality Act, 8 U.S.C. §1324 (1976). See United States v. Smith, 112 The authors of a very recent study on American immigration have suggested that the formation of a North American Economic Union, whose members would include the United States, Mexico, and Canada, might serve as a vehicle for helping to solve the undocumented worker problem. The relationship between such a union and the immigration problem is described by the authors in the following manner: Mexican President Jose Lopez Portillo has said repeatedly that Mexico wishes to export goods, not workers. It is time that the United States realized that it will either import Mexican goods or it will have to accept the importation of Mexican workers.11 In brief, this Commission believes that a determination to approach the foreign policy aspect of the undocumented worker problem with a sense of urgency could result in our really getting at some of the "root" causes of the problem. The approaches outlined above can be implemented without jeopardizing our civil liberties. The Proposed Employer The undocumented worker issue has over the past few years resulted in proposed legislation designed to penalize employers who hire undocumented workers. Although several States have enacted employer sanctions laws, 12 there is no comprehensive Federal law imposing penalties on employers for hiring undocumented workers. 13 The most recent Federal proposal for employer sanctions was included in the immigration package presented to Congress by the Carter administration in 1977," recommending that employers who knowF.2d 83 (2d Cir. 1940) (involving a harboring conviction under 8 U.S.C. §144, the predecessor to 8 U.S.C. §1324). And farm labor contractors are prohibited from "recruiting, employing, or utilizing, with knowledge," undocumented workers or persons without employment authorization from the Attorney General. 7 U.S.C. §2045 (1976). 14 Alien Adjustment and Employment Act of 1977 (proposed), S.2252, 95th Cong., 1st Sess., 123 Cong. Rec. S18064 (Oct. 28, 1977). The proposed legislation provides, in pertinent part: Sec 5. (a) Section 274 of the Immigration and Nationality Act (8 (1) by inserting after subsection (b) the following new subsection: (2) Any employer who violates this subsection shall be subject to a civil penalty of not more than $1,000 for each alien in the employ of the employer on the effective date of this subsection or who has |