The Public Policy

Fixing America’s Immigration Black Market

Overly strict government policy is creating incentives for illegal, rather than legal, immigration.

By and 4.27.10

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From Arizona to the U.S. Senate, immigration is at the forefront of the national debate. Much of the concern revolves around this fact: There is an enormous immigration black market in the United States. Millions of undocumented immigrants and temporary workers enter and leave every year. Legality is considered strictly optional. This problem will not go away until fundamental reforms become law.

Recently, the Department of Labor (DOL) has tried to solve the problem with rules, regulations, and enforcement. They raised the hourly minimum wage to $12.24 for foreign farm workers. Background checks are now mandatory for all immigrant farm workers, at the employer's expense. Employers are also on the hook for the full cost of paperwork and applications. All existing contracts have to be redrafted and refilled according to these new rules. The total cost runs to thousands of dollars per employee.

In short, DOL has put in place the perfect program for increasing the size of the black market. When compliance costs too much money, time, and hassle, few people will bother. That's how the world works.

Based on the most recent data from 2008, 100,000 to 125,000 agricultural workers are residing in the U.S. illegally. 173,103 H-2A visas were issued in that same year. DOL's new regulations won't change the number of immigrants. The change will be that fewer of them will bother with legality, and more will enter dangerous black markets.

Think about it. If H-2As were liberalized instead of covered in red tape, at least 100,000 illegal immigrants could be brought out of the black market. And that's just for that one type of visa.

For the much coveted H-1B visa, which covers highly skilled foreign workers in specialty occupations, the U.S. Customs and Immigration Service (USCIS) will schedule 25,000 surprise workplace inspections this year. That's a five-fold increase from last year!

Workplace inspections are probably the most destructive reform. When government agents inspect foreign workers, work can grind to a total halt for days. Government agents take their time to check the paperwork and compare it with what's on file in Washington. Workers are interviewed, and their complaints are registered.

When this is done on the farm, crops don't get picked, farm equipment stays dirty, and the farmer loses money. That is bad enough. But when H-1B inspections occur, entire software, engineering, or other highly productive businesses are interrupted for no good reason. Considering how dependent the high-tech sector is on skilled immigrants, this is a major problem for Silicon Valley firms like Google, which was co-founded by an immigrant.

No wonder there is such high demand for black-market immigrant workers. They are thousands of dollars more attractive compared to legal visa holders.

The problem doesn't just affect H-2A and H-1B visas. New rules are hitting the books every month increasing compliance burdens every class of immigrant and work visa. The government couldn't make the black market more appealing if it tried.

Clearly DOL is taking the wrong approach. What's the right approach to dismantling the black market? Liberalization. The immigration black market only exists is because the government has made the legal market as cumbersome as it can.

True immigration reform makes legal channels more appealing, not less. That means lightening the paperwork and the regulatory burden, and eliminating quotas. The more unattractive legality becomes, the more attractive illegality looks in comparison.

Black markets are anathema to a free society. Murder, theft, smuggling, and even slavery are part and parcel of immigrant black markets. They are also easily avoidable - just shrink the black market by making legal immigration easier.

From Plymouth Rock to the present day, people have risked everything they have to come to America in search of a better life. The government does everyone a disservice when it gets in the way of that noble quest.

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About the Author

Ryan Young is Fellow in Regulatory Studies at the Competitive Enterprise Institute.

About the Author

Alex Nowrasteh is a policy analyst at the Competitive Enterprise Institute in Washington, D.C.