Immigrate This!

Jonas Max Ferris
Allowing immigrants, illegal and legal, into America can drive down wages and increases unemployment. Unfortunately, stopping immigration and kicking out illegal immigrants can also drive down wages and increase unemployment.

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In recent years, the government has become more lax toward employing illegal immigrants. Let's imagine the government reversed course, and used Gestapo tactics to round up the ten-million-plus illegal immigrants in the workforce today — sending jack-booted government thugs to shake down employers and employees alike.

Initially, this would drive up wages for lower level jobs in America, and lower our already low unemployment rate. Right now, illegal immigrants are undercutting wages in agriculture, hospitality, construction, and other areas that rely on cheap illegal immigrant labor.

Driving through Beverly Hills or Bel Air, you'll see thousands of workers. Virtually every estate employees a couple Latin American immigrants — some legal, some illegal — inside and outside the home.

If immigrants suddenly vanished forever from the workforce, the work is still going to get done, but at a higher wage, and possibly by a less hard-working crew. Nothing personal against the American workforce, but we're done (for now) working hard for low wages.

Think about it — some of these immigrants have risked death crossing rivers, in the backs of trucks, underground, etc. just to live six to a room and land a job cleaning toilets for near-minimum wage. America had that mentality 100 years ago, not anymore. That's no dig on us, just a symptom of success.

Bottom line, if you are being undercut by lower-priced immigrant labor, you'll benefit by kicking them all out. At least in the short run.

Trouble is, some homeowners (albeit just a few…) may decide to mow their own lawn, or clean their own kitchens (say it ain't so!), rather then shell out more for less. But that's the service industry, where it is hard to outsource jobs. We already get much of our agriculture from much poorer countries because they have cheaper labor. If farmers in California had to pay twice as much to get people to pick vegetables, the entire operation would move abroad — or we'd just buy more stuff from foreign farms, further eroding our trade balance.

Without a supply of cheap labor coming in to find work, the jobs are going to go find cheap labor, rather than pay people more here.

We'd see increasing costs on everything else that couldn't outsource jobs. Hotel rooms and food prices would have to go up. Even if wages in the U.S. went up a bit, most of the benefits would be lost on higher prices for things we buy.

What about unlimited work visas with no claim on other government services, where anybody who wants to come to America and work (and pay taxes) can? No government benefits like social security, school, food stamps, healthcare, etc., and while we're at it, why even have minimum wages for those jobs? Create a permanent working class.

Employers would love it. Why outsource to China when you can bring Chinese workers to Arizona? Americans would hoot and holler about the immigrants ruining our quality of life, but if you step back, what's better for America, paying somebody a dollar an hour in China to make stuff for us, or paying them a dollar an hour in Arizona, where at least the money gets spent here?

In practice, the inflows of immigrants for these unlimited work visas would slow as soon as the jobs became scarce. Nobody would immigrate just to be unemployed; they can do that easily enough in their own country. We'd eventually get to some sort of equilibrium, with lower wages and lower prices in the U.S.

Today we can import anything we want from cheaper countries, and move jobs — even higher-skilled jobs — abroad to low-wage countries. Blame faster, cheaper transportation and near-costless and instant global communication.

It's impossible to keep cheap labor out without having restrictions on moving jobs away or creating the same barriers to trade in goods. We can make 10 million illegal immigrants go away, but we can't stop the jobs from following them.

We're heading toward a world with globally-set wages for each type of job — much like we already have for cars and TVs. Certainly a company needing a large telephone customer service operation considers the cost of running it in India. Maybe we need a wall at the border — to keep jobs from leaving, not employees from entering.

No government wage laws or unions will be able to stop this new ceiling on wages like they were able to decades past. We've already seen wage growth freeze in the U.S., starting on the low end of the labor pool, but slowly working its way up. You may not know it, but you're competing against the employees in other countries.

Perhaps the only way to stop illegal immigration is when our own dollar collapses from importing too much stuff — making earning $3 an hour less attractive than a few pesos back home.

If we tried trade restrictions in all goods, services, and labor — a complete isolationist stance — we'd eventually become the poor country on the globe, as others without such restrictions would get richer. Then we'd be the poor country trying to climb over somebody else's wall to clean their toilets.

Jonas Max Ferris is a regular contributor on "Cashin' In" (Saturdays at 11:30am ET and Mondays at 5:30am ET) and is co-founder of .