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For Low-Skilled Immigrants, Legal Status Is No Ticket to Upward Mobility

A Legalization Program Would Likely Have Little Effect on Economy

Legalizing the nation’s nearly 12 million unauthorized immigrants would be unlikely to improve their employment prospects, raise their incomes—or result in increased competition for jobs with native-born workers—at least in the short term. These are the conclusions of a report released today by the Public Policy Institute of California (PPIC).

Low-skilled immigrants—who make up the majority of unauthorized immigrants—seldom move into higher paying jobs as a result of attaining legal status, according to the report by PPIC research fellows Laura Hill and Magnus Lofstrom and PPIC research associate Joseph Hayes.

As the nation’s policymakers weigh comprehensive immigration reform, debate is focusing on the impact of legalization on the broader economy, the labor market, and the immigrants and their families. The issue is an important one for California, which is home to an estimated 2.7 million unauthorized immigrants who make up nearly 10 percent of the state’s labor force.

Using data from the New Immigrant Survey, a representative sample of immigrants who became legal permanent residents in 2003, the study examines the experience of unauthorized immigrants who attained legal status.

The work histories of low-skilled immigrants show some occupational mobility but limited upward mobility. For example, dishwashers are most likely to move into other low-paying jobs in food service or become janitors after getting a green card. Child care workers who moved to new jobs are likely to become maids or housekeepers.

“A legalization program is unlikely to lead to dramatic changes in the labor market,” Hill says. “We wouldn’t expect it to significantly affect the job prospects of low-skilled workers in the short run—whether immigrant or native-born.”

The report notes that the economic costs and benefits are not the only considerations in considering a legalization program. Legalization would have far-reaching implications. For example, it may prevent deportations that separate families, including those with U.S.-born children, and encourage immigrants to fully participate in civic life.

The report, Immigrant Legalization: Assessing the Labor Market Effects, focuses on economic effects. It concludes that legalization would be unlikely to lead to upward mobility for low-skilled workers because the threat of employer sanctions has been ineffective. Employers probably correctly assess that they are unlikely to be caught or fined for hiring unauthorized workers, and so they pay all low-skilled workers the same low rates.

Legalization does contribute to the upward mobility of some unauthorized immigrants: those with higher skills or education. Immigrants with a college degree saw their earnings grow by 9-10 percent after legalization, but this group made up just 15 percent of the unauthorized immigrant population in 2008.

In the debate over the costs and benefits of legalization, some argue that newly legalized immigrants will boost the economy by providing significant new tax revenue. The PPIC report suggests otherwise.

Unauthorized immigrants already pay sales taxes and many contribute to Social Security. The vast majority of unauthorized immigrants already file federal tax returns. In the year before acquiring legal status, 87 percent of those who had crossed the border illegally and 91 percent of those who had overstayed their visas filed federal returns. Any increase in tax revenues from a legalization program—either because of higher filing rates or higher wages—is likely to be small.

Concerns have been raised that newly legalized immigrants would rely heavily on public assistance programs. But the PPIC researchers expect that there would be little short-term change in the cost to these programs. Today, almost all newly legal immigrants are ineligible for federal assistance, and there is little or no evidence that they are finding ways to circumvent the system. Unless a legalization program changes eligibility rules, newly legal immigrants would remain ineligible for new benefits, with one exception: the Earned Income Tax Credit, which can be claimed on federal tax returns by eligible low-income workers with a valid Social Security number. Many newly legalized immigrants are likely to qualify.

ABOUT PPIC

PPIC is dedicated to informing and improving public policy in California through independent, objective, nonpartisan research on major economic, social, and political issues. The institute was established in 1994 with an endowment from William R. Hewlett. As a private operating foundation, PPIC does not take or support positions on any ballot measure or on any local, state, or federal legislation, nor does it endorse, support, or oppose any political parties or candidates for public office.

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