On Thursday night, President Barack Obama announced that he will take executive action to allow four million undocumented immigrants to live in the United States without fear of deportation. That will make their lives significantly better. Even more importantly, the Department of Homeland Security will also grant work authorizations to the affected immigrants. That won’t only benefit undocumented immigrants, but all Americans.
Undocumented immigrants often work in an underground economy where employers can ignore labor laws and avoid paying workers them fair wages. A 2009 study of more than 4,000 undocumented immigrants by the National Employment Law Project found that 26 percent of workers were paid less than the legally required minimum wage in the previous work week. They weren’t just slightly underpaid: 60 percent said their pay was more than $1 per hour below the legally required minimum wage. Of the undocumented immigrants who worked more than 40 hours in the previous week, 76 percent said they were not paid the legally required overtime rate. They found other violations, too. Workers stayed extra hours without pay, were denied a meal break and faced illegal retaliations when they complained to their employers or tried to join a union.
The problem for undocumented immigrants—and benefit for employers—is that they have no protection from U.S. labor laws. They cannot appeal to law enforcement when employers steal their wages. "If people can’t quit, wages aren’t going to go up," said Ross Eisenbrey, the vice president of the Economic Policy Institute. "These people know that they will be able to have employment authorization, will be able to get another job and it will definitely have a positive effect on wages."
We’ve already seen how deferred status has huge economic benefits for these workers. In 2012, Obama used executive authority to defer deportation of 1.2 million undocumented immigrants who were brought to the U.S. as children before 2007 and are under the age of 30. For the around 600,000 people who have been found eligible under the program—officially called Deferred Access for Childhood Arrivals (DACA)—their workplace conditions have improved significantly. One survey found that 59 percent of DACA recipients obtained a new job. Forty-five percent increased their earnings and 21 percent obtained health care coverage. Those workers also now have protection to seek reinstatement and back pay under the National Labor Relations Act if they are fired for joining a union. That had been a powerful tool employers used to keep undocumented workers from organizing. The Center for American Progress (CAP) put together a nice graphic for how DACA recipients have benefited from the program:
Through his new executive action, Obama has now allowed more than four million more undocumented immigrants to benefit as well. CAP estimated that beneficiaries of the new program could see their earnings increase by 8.5 percent.
This is important for American workers, too, because they compete with undocumented immigrants in the same labor market. An employer who can hire an undocumented worker for $6 an hour won’t consider hiring an American worker at the minimum wage of $7.25. With a work authorization, an undocumented worker can demand the full minimum wage, putting upward pressure on wages for all workers. Suddenly, the American worker making $7.25 is on the same playing field as the undocumented one.
For the most part, undocumented workers are less educated and low-skilled, meaning that bringing them out of the shadow economy will only have a positive effect on American wages. But there will be some high-skilled undocumented workers who will no longer find themselves shut out of the high-skilled labor market. "You could have somebody who is trained as an accountant or something and he’s working as a dishwasher," said Eisenbrey. "And now he’ll be able to actually apply for jobs as an accountant above the table and get such a job." That will put a slight downward pressure on wages of middle- and high-income American workers. But at the same time, it will open up low-skilled jobs for American and undocumented workers while also making the economy more efficient. That's a tradeoff but one that looks pretty good. All in all, Hispanics shouldn’t be the only ones celebrating Obama’s executive order. American workers should do so as well.