Department of Labor - Immigration Fiscal Impact Statement

By Edwin S. Rubenstein
Volume 18, Number 2 (Winter 2007-2008)
Issue theme: "What price mass immigration?"

[All articles in this Immigration Fiscal Impact Statement series can be viewed in a single pdf document]

The Department of Labor (DOL) fosters and promotes the welfare of the job seekers, workers, and retirees by improving their working conditions, increasing employment opportunities, protecting their retirement and health care benefits, helping employers find workers, and tracking changes in employment, prices, and other national economic measurements. In carrying out this mission, DOL helps administer a variety of Federal laws—including parts of the Immigration and Nationality Act , which regulates the admission of aliens into the U.S.

Historically, DOL played a much larger role in U.S. immigration policy. From the time of its founding as an independent agency in 1913 until the outbreak of World War II, the agency was charged with administering immigration and naturalization policy as well as border security. In assigning these responsibilities to DOL, Congress in effect acknowledged that immigration was primarily an economic issue—and a potential threat to the well being of American workers. Keeping immigration and all other employment related issues within DOL was an efficient allocation of governmental resources.

In the last section we discuss the advantages of restoring responsibility for enforcing immigration policy in the workplace to DOL. Currently the Bureau of Immigration and Customs Enforcement (ICE) in the Department of Homeland Security (DHS) is responsible for blocking employers’ access to illegal alien workers.

First, we highlight units of DOL in which immigration currently plays an important role: the Office of Foreign Labor Certification and the Occupational Health and Safety Administration.

Office of Foreign Labor Certification (OFLC)

OFLC carries out DOL’s responsibilities under the Immigration and Nationality Act , which regulates the admission of aliens into the U.S. The Act allows employers to bring non-immigrant foreign workers into the country only if there are not sufficient U.S. workers who are able, willing, qualified, and available to perform the job. OFLC performs the fact finding needed to determine that the foreign workers brought into the country do not adversely affect the wages and working conditions of comparable U.S. workers.

Employers must also inform U.S. workers of the intent to hire a foreign worker by posting the completed Labor Condition Application form for the position. The posting must occur within the 30-day period preceding the date that the labor condition applications is submitted to the DOL.

DOL must certify to the Secretary of State and the Attorney General that these conditions are met before a foreign worker can be brought to the U.S. on an employment-based visa.

In particular, OFLC determines whether there are any qualified U.S. workers willing and able to work at the average, or “prevailing wage,” paid for the occupation in the intended area of employment. The prevailing wage requirement applies for most employment based visa programs involving the Department of Labor.

Additional wage regulations apply to workers brought in under the H-1b visa program. The H-1b program allows employers to temporarily employ foreign workers on a nonimmigrant basis in a specialized, high tech occupation.

Specialty occupations are defined by DOL as those requiring “the theoretical and practical application of a body of specialized knowledge and a bachelor’s degree or the equivalent in the specific specialty (e.g., sciences, medicine and health care, education, biotechnology, and business specialties, etc…)”

Employers must pay H-1b workers either the prevailing wage or the same wage they pay other employees with similar skills, whichever is higher. This provision sounds good, until you realize that: a. employers write H-1b job descriptions so as to insure that no native-born workers have comparable skills, and b: employers are allowed to conduct their own wage surveys in calculating the prevailing wage.

In his comprehensive analysis of this scam, author John Miano writes:

Through this mechanism, employers paying low wages are simply re-affirming their own low standards, rather than providing a real comparison to industry or wider labor market standards. Cite.

Miano reports that prevailing wages as calculated by computer industry employers are about $22,000 less than the median computer industry wage estimates of the Bureau of Labor Statistics. Obviously the loopholes in the H-1b law prevent OFLC from fulfilling its mission of protecting U.S.-born workers from unfair foreign competition.

Current law limits the number of H-1b visas issued annually to 65,000. The Senate bill would increase that base to 115,000 visas per year with the potential to go to 180,000.

OFLC spending in FY2007 is estimated at $177 million. The proposed FY2008 budget calls for an increase to $222 million.

Occupational Safety and Health Administration (OSHA)

OSHA’s mission is to assure the safety and health of America’s workers by setting and enforcing standards; providing training, outreach, and education; and encouraging continual improvement in workplace safety and health.

On-the-job injuries and deaths cost U.S. businesses a staggering $241 billion a year, according to a recent study. [AFL-CIO, “Death on the Job: The Toll of Neglect,” April 2002. Cite.

In recent years these costs have risen far faster than employment growth or the rise in the medical cost component of the CPI. This suggests that something else is driving up workplace related medical costs.

Immigration is a likely suspect.

OSHA has made immigrant worker safety a high priority. Spanish-language compliance assistance resources include dictionaries of OSHA and industry terms, training videos, newsletters, and public safety announcements. OSHA also offers employers and employees Spanish-language training courses to help them recognize and avoid safety and health hazards in their workplaces.

These resources are made available to legal and illegal immigrants.

Unfortunately, OSHA’s efforts on behalf of Spanish speaking workers are not evident in the statistics. In 2005, for example:

-  Hispanic workers accounted for 13.4 percent of total employment, but 19.3 percent of non-fatal workplace injuries

-  Whites accounted for 71.0 percent of employment, but 67.1 percent of non-fatal injuries

-  Blacks accounted for 10.6 percent of employment, and 12.0 percent of non-fatal workplace injuries

From 1995 to 2005:

-  On the job fatalities involving Hispanic workers increased by 51 percent

-  Fatalities involving White workers decreased by 21 percent

-  Fatalities involving Black workers decreased by 30 percent

Language may not be the only explanation for higher Hispanic injury rates. Many illegals (who have no work records) simply say they know how to do the job when in fact they have no experience and rely on on-the-job learning.

In addition, Hispanic immigrants gravitate to risky occupations—“jobs natives do not want to do.” This could also explain their above average workplace mortality rates.

This latter notion is belied by other government statistics, however.

Take the meatpacking industry, widely regarded as the province of Hispanic immigrants willing to work in conditions unacceptable to natives. Federal data show not only that whites are well represented in this industry, but also that they perform the same tasks more safely than Hispanics.

Ditto for the construction and manufacturing industries.

Over the years countless billions have been spent on teaching English to Hispanic immigrants. An increasing share  of Hispanic immigrants are “linguistically isolated,” i.e., they speak English poorly or not at all. Even simple English language instructions are incomprehensible to the linguistically
isolated. Cite.

Will OSHA succeed where the educational establishment failed? If English proficiency is the key to workplace safety, the prognosis is not good.

The FY2008 federal budget allocates $490 million to OSHA, with $80 million of this total going to compliance assistance of all types.

Fair Labor Standards Act/Seasonal Farm Workers

DOL administers the Fair Labor Standards Act that sets minimum wage levels and requires overtime pay for work over 40 hours a week. Like OSHA, it is not directly an immigration law but it does have impact since illegal immigrants are entitled to the same minimum wage and overtime protections as native workers—even if they are not legally allowed to work.

DOL also has regulatory responsibility for H-2A temporary workers in agriculture. Employers of H-2As must follow DOL’s guidelines regarding recruitment practices, wages, and housing matters. DOL also has responsibility for monitoring the practices of labor contractors who hire migratory farm workers, many of whom are illegal immigrants.

Restore Responsibility for Workplace Enforcement to DOL

Until the 1890s, responsibility for the administration and enforcement of immigration policy rested with the states. The federal role was primarily supervisory, with the Secretary of the Treasury seeing that the states were not admitting aliens in an excludable category. The list of grounds for exclusion included lunatics, idiots, and persons likely to become a public charge.

A series of congressional hearings in the 1880s revealed that federal immigration laws were being widely circumvented. On July 21, 1891 the era of joint federal-state administration ended as the Bureau of Immigration (BI) was created in the Department of the Treasury. All enforcement duties were transferred to federal officers. Inspection stations were established on the Mexican and Canadian borders.

In 1903 BI was shifted to the new Department of Commerce and Labor. In 1906 the naturalization process was overhauled, and responsibility for it was given to BI, which became the Bureau of Immigration and Naturalization (BIN).

In 1913, when Congress split the Department of Commerce and Labor into two federal agencies, BIN was placed in the new Department of Labor (DOL). In giving DOL responsibility for immigration, Congress acknowledged the impact foreign born workers had on domestic wages, employment opportunities, and working conditions.

In President Franklin Roosevelt’s first year, the federal government was reorganized. As part of the efficiency moves, the separate bureaus of immigration and naturalization were merged into the U.S. Immigration and Naturalization Service (INS). INS still remained in the Department of Labor, in recognition of the fact that that even in the Great Depression, immigration was a significant element of national employment policy.

On May 20, 1940 President Roosevelt recommended that Congress shift INS from DOL to the Department of Justice. It was part of a reorganization plan for government made necessary by the onset of World War II. In later background papers, the President said “after these days of emergencies have passed” that Congress should reconsider the matter of where the administration of immigration policy should be properly housed.

When World War II ended, however, no attempt was made to undo the wartime expedient. In the mid-1960s immigration—which had been declining in significance since the 1920s as a feature of American life—was inadvertently revived. The 1965 Immigration Act was billed as presaging a very modest increase in overall immigration, which was averaging 250,000 to 300,000 a year. But the numbers increased radically.

In the late 1970s another Presidential commission was formed, this time by President Carter, to study the consequences of the return of mass immigration. The Select Commission on Immigration and Refugee Policy issued its report in 1981, concluding that immigration was “out of control,” warning that “this is not the time for a large scale expansion in legal immigration.”

Vernon Briggs, professor of Labor Relations at Cornell University, describes the perverse response to the Commission’s recommendations:

Congress, however, chose to disregard these findings. In the years that followed the issuance of the Commission’s report, Congress more than doubled the level of legal immigration suggested by the Commission; it enacted an ineffectual set of halfhearted measures to deter illegal immigration; and it has allowed the annual scale of entry of temporary foreign workers (called non-immigrant workers) and of refugees to be influenced more by the whims of special interest groups than by actual needs or circumstances. As a consequence, U.S. immigration policy in the 1990s is essentially a “hodge-podge” of politically-motivated initiatives that pays no attention to its collective economic implications. Cite.

By 1990 legal immigration reached 1,500,000. The expansion of legal immigration was due in no small part to the large number of illegal aliens amnestied by the 1986 Immigration Reform and Control Act (IRCA). IRCA was touted as a quid pro quo: amnesty for illegals in exchange for the establishment of employer sanction program that was supposed to dissuade U.S. companies from hiring illegals.

IRCA stipulated that employers would be fined up to $10,000 for every illegal alien they hired, and repeat offenders could be sent to jail. These harsh measures reflected the widespread belief that employer sanctions were the only way to stem the tide. “We need employer sanctions to reduce the attraction of jobs in the U.S.,” an INS spokesman declared as Congress debated the bill. When President Reagan signed it, he called the sanctions the “keystone” of the law. “It will remove the incentive for illegal immigration by eliminating the job opportunities which draw illegal aliens here,” he said. 1

But companies had little to fear. Neither Reagan nor subsequent Presidents or Congresses were eager to enforce the law. A single statistic attests to this. In 2002 the former Immigration and Naturalization Service (INS) issued orders levying fines on only 13 employers for hiring illegal aliens, a minuscule portion of the thousands of offenders. Non-enforcement of employer sanctions has been called the equivalent of hanging out a help wanted sign for illegals.

In 2003, responding to another national emergency, Congress established the Department of Homeland Security (DHS). INS was moved from the Department of Justice to DHS, rechristened U.S. Citizenship and Immigration Services. (CIS), and given responsibility for border security and interior enforcement.

Not surprisingly, border security garnered an even larger share of immigration control spending after this post 9/11 administrative realignment. Less than 10 percent of ICE investigative resources are devoted to fraud, workplace violations, and visa overstayers. ICE could double non-criminal removals at a cost of just $120 million, according to a recent CIS analysis. Cite.

The lion’s share of new DHS spending goes to border security. The agency’s FY2008 budget contains a $2.4 billion rise in border protection outlays from FY2007, but only $300 million more for interior enforcement.  Cite.

The Secure Border Initiative (SBI) is projected to cost $2.5 billion. While SBI addresses a number of grave border security shortcomings such as Border Patrol staffing levels, detention capacity, and physical infrastructure, and will undoubtedly reduce the number illegal border crossers, it will have no noticeable effect for communities across the country that already are hosting illegal populations. The SBI makes almost no effort to reduce the size of the existing illegal alien population; nor does it address the problem of visa overstayers, who make up perhaps as much as 40 percent of the illegal immigrant flow.

Ongoing research by leading immigration scholars strongly suggests that when border control is the sole focus of immigration enforcement policy, illegal immigrants tend to stay put, rather than risk re-entry. According to Princeton researcher Douglas S. Massey

Enforcement has driven up the cost of crossing the border illegally, but that has had the unintended consequence of encouraging illegal immigrants to stay longer in the United States to recoup the cost of entry. The result is that illegal immigrants are less likely to return to their home country, causing an increase in the number of illegal immigrants remaining in the United States. Cite.

If the goal of immigration policy is to relieve the fiscal and social burden of illegal immigration, some effort must be made to reduce the existing population of illegal immigrants as well as to slow the flow of new illegal arrivals.

Vigorous enforcement of immigration laws within the U.S. would do that. Elements of such a policy would include requiring that employers verify Social Security numbers and the immigration status of workers, increasing non-criminal removals of illegal immigrants, and passing state and local laws to discourage hiring of illegal aliens and to make it more difficult for illegal aliens to conceal themselves.

The mere announcement of such steps would induce many illegals to return home prior to their being apprehended by federal authorities.

Interior enforcement efforts would reduce the illegal population from its current 11.5 million to 5.6 million, or by 51 percent, over a five year period, according to a recent CIS analysis. This would cost $2 billion—or only $400 million per year, according to government estimates. Cite.

SBI will cost more and produce more modest results—a 10 percent reduction in illegals after five years.

Unfortunately, DHS is not inclined to fight for such a reallocation. The Department of Labor is the natural constituency for interior enforcement.

The criticism Professor Briggs leveled against the Department of Justice and INS in the 1990s can be applied to DHS today:

Moreover, the Justice Department is the most politicized and politically sensitive of all federal agencies. It often chooses to pursue short-run, expedient solutions to controversial policy issues. Seldom has it manifested any interest in the economic consequences of immigration, nor has it ever seen fit to establish any ongoing research program to monitor the influences of immigration on the labor market or the economy. Moreover, the statistical data on immigration that it generates are primarily designed to meet administrative purposes rather than to serve policy-development needs. Cite.

It would be a major step toward the achievement of an immigration policy that is accountable for its economic effects if the INS were returned to its previous home in the Department of Labor, which is far better equipped to understand labor market issues and to be able to design and administer an immigration policy targeted to meet specific labor force needs. Being an employment-oriented agency, it could best identify the appropriate level of immigration that is needed each year and the specific occupational needs that immigration might be able to address. The Labor Department is better qualified to explain how prevailing employment levels could adjust to the specific numbers of immigrants and refugees that are annually admitted. Moreover, because it already has enforcement responsibilities for wage and hour violations, child labor laws, occupational health and safety laws, and migrant farm workers protections, it could easily add enforcement of employer sanctions and anti-discrimination protections for resident aliens to its present duties.

Changing the administrative structure that is responsible for the nation’s immigration policy is no panacea. But a ‘re-invention’ of the contributory role that government agencies can have in better serving the national interest is long overdue in the area of immigration matters. Cite.

A modest proposal: Move interior enforcement responsibilities out of DHS to the Department of Labor. Labor would fight for interior enforcement dollars more zealously than DHS, and probably would be more efficient at it given its expertise. ■

End Note

1. Donald L. Barlett and James B. Steele, “Who Left the Door Open?,” Time, September 2004.


About the author

Edwin S. Rubenstein, president of ESR Research, economic consultants, has 25 years of experience as a business researcher, financial analyst, and economics journalist.  Mr. Rubenstein joined the Hudson Institute, a public policy think tank headquartered in Indianapolis, as director of research in November 1997.  While at Hudson he wrote proposals and conducted research on a wide array of topics, including workforce development, the impact of AIDS on South Africa's labor force, Boston's "Big Dig" the economic impact of transportation infrastructure, and the future of the private water industry in the United States.

As a journalist, Mr. Rubenstein was a contributing editor at Forbes Magazine and economics editor at National Review, where his "Right Data" column was featured for more than a decade. His televised appearances include Firing Line, Bill Moyers, McNeil-Lehrer, CNBC, and Debates-Debates.  In The Right Data (National Review Press, 1994), Rubenstein debunks many widely held beliefs surrounding the distribution of income, government spending, and the nature of economic growth.

Mr. Rubenstein is also an adjunct fellow at the Manhattan Institute where he is principal investigator in the institute's ongoing analysis of New  York state's budget and tax structure.  He also published a newsletter devoted to economic statistics and contributed regularly to The City Journal, the Manhattan Institute