Immigration and Job Displacement

June 2010

One of the overlooked ways in which immigration harms the American workforce is displacement, that is, when natives lose their jobs to recent immigrants who will work for substandard wages.

Sometimes the employer intentionally replaces natives with immigrants to have a cheaper, more easily exploited workforce. Sometimes the displacement comes through an intermediary. In these cases, work may be delegated out to subcontractors. The firms that use immigrants — and pay them low wages — underbid other subcontractors that use natives. In some cases, the ultimate employer may not even be aware that native workers have been displaced. Regardless, the effects on Americans are real. As the Immigration and Naturalization Service put it: “The critical potential negative impacts of immigrants are displacement of incumbent worker groups from their jobs and wage depression for those who remain in the affected sectors.”¹

The web of complex interactions among factory openings and closings, choice of production methods, ethnic networking in hiring, and labor subcontracting make it difficult to prove iron-clad cases of displacement. Yet such evidence does exist.

Andrew Sum, director of the Center for Labor Market Studies at Northeastern University in Boston, says 56 percent of the rise in U.S. employment from 2000 to 2005 can be attributed to undocumented immigrants. In the same period, he says jobs disappeared for U.S.-born adults aged 16 to 24 and African-Americans without college degrees. “The greater the influx of illegal immigrants into any state, the greater the employment loss among people under the age of 35, particularly men without college degrees.” ² The overabundance of unskilled labor in the U.S. has led to a 14.6 percent unemployment rate among high school dropouts in 2009. ³

One well-documented case of displacement happened in the tomato industry in the 1980s. A group of unionized legal border crossers picked the tomato crop for many years in San Diego County and were making $4.00 an hour in 1980. In the 1980s, growers switched to a crew of illegal aliens and lowered the wage to $3.35. Almost all the veteran workers who were unwilling to work at the reduced rate disappeared from the tomato fields.⁴

Sometimes, recent immigrants themselves are the victims of displacement. In the raisin grape industry of California, Mestizos (the Spanish-speaking population of Mexico) were laid off and replaced with lower cost Mixtecs (the indigenous people of Mexico). According to a study of the industry, the Mixtecs “have driven the Mestizos out of the market.”⁵

Agriculture has many other instances of employers’ switching to immigrant workers (legal and illegal) to increase their profits. For example, Hispanic migrants have displaced native black workers in the Georgia peach industry,⁶ and migrants have replaced natives and previous immigrants in the cucumber and apple industries in Michigan.⁷ The melon industry slashed its mechanized packing houses in favor of manual packing in the field, eliminating unionized crews of mostly native workers and assigning their work to lower paid Mexican field crews.⁸

In the furniture industry, competition from immigrant-laden plants in Southern California closed all the unionized plants in the San Francisco area and removed natives from the workforce in favor of underpaid aliens.⁹

Unions fall before the weight of imported labor. In the Mission Foods tortilla factory strike, management lowered wages by 40 percent, and when the native labor went on strike, the Mexican managers intentionally brought in newly immigrated strikebreakers to replaced them. Some of the natives returned to work at the reduced wages but most left.¹⁰

In the last 30 years, the meatpacking industry has completely reorganized around the use of immigrant rather than native labor. IBP, the nation’s leading meatpacking company, now recruits workers from Mexico and directly along the border. As a result, the proportion of the labor force protected by union contracts and the share of natives in meat processing has dropped dramatically.¹¹ After a 2007 raid on the Smithfied plant in Tar Heel, North Carolina, unskilled natives soon filled vacancies left by illegal immigrants, a shift that contributed to workers’ successful unionization the following year. ¹²

Similar phenomena have swept over the hotel industry as well, with immigrant workers displacing native black workers en masse.¹³ In Los Angeles, unionized black janitors had been earning $12 an hour, with benefits. But with the advent of subcontractors who compose roaming crews of Mexican and El Salvadoran laborers, the pay dropped to the then minimum wage of $3.35 an hour. Within two years, the unionized crews had all been displaced by the foreign ones, and without any other skills, most of the native workforce did not find new work.¹⁴

Many politicians and some citizens do not concern themselves with such displacement since it affects primarily low-skilled Americans, who tend to lack political clout. As a result, immigration has been responsible for 40 to 50 percent of the wage depression for workers without a high school degree in recent decades.¹⁵ In an article on the effects of illegal immigration in North Carolina that claimed that it is not proven that illegal workers hurt job opportunities for American workers, data from the state’s Employment Security Commission were reported that show lagging wage increases in industries known to hire many illegal workers, i.e., construction, cleaning and maintenance, and food preparation. “While the average hourly wage increased 97 cents for all triad workers, from $15.69 to $16.66 during the past 30 months, it rose in high-immigrant occupations as little as 3 cents in food preparation to as much as 83 cents in cleaning and maintenance.”¹⁶ Some estimates indicate that nearly two million Americans a year are displaced by immigration.¹⁷

Americans deserve decent jobs at decent wages, not unfair competition from imported foreign workers who are exploited to the point of indentured servitude. We need immigration reform to stop the massive influx of foreign workers from harming the living standard of our most vulnerable citizens.