The Importance of Immigrant Labor in the U.S.

Alabama’s immigration law has prompted a dramatic labor shortage in the state. Thanks to HB 56, the Alabama economy is suffering.

Alabama’s immigration law was designed to drive out undocumented immigrants and “put thousands of native Alabamians back in the work force.” It has not done so. Instead, the state’s poultry industry, which relies heavily on immigrant workers, has been hard hit by a dramatic labor shortage.

Contrary to what the backers of the bill had expected, Americans have not filled the jobs abandoned by Hispanic workers. Unlike migrant labor, Alabama residents are unqualified or uninterested in jobs in the poultry industry and other similar sectors. Faced with turnover rates as high as 90 percent, poultry companies such as Tyson Foods and Georgia-based Wayne Farms have been forced “to use alternative methods and sourcing,” according to company representatives. Most replacement workers are legal African and Haitian refugees, recruited from out of state. Finding new workers through labor brokers and training them has cost poultry companies millions thus far.

HB 56 was signed into law last year by Governor Robert Bentley after it was passed by the GOP-controlled legislature. According to Sponsor Micky Hammon, the bill would expel undocumented laborers by attacking “every aspect of an illegal alien’s life” and making “it difficult to live here so they will deport themselves.” The measure enabled police to arrest people who couldn’t prove legal status after traffic stops, required schools to check students’ citizenship, and criminalized renting property to undocumented immigrants.

HB 56 has had tremendous success in driving away Hispanic employees, both legal and undocumented. Many proponents of the law point to the state’s decreased unemployment rate—from 8.8% in October 2011 to 8.5% in August 2012—as a sign of the its efficacy. However, U.S. Bureau of Labor Statistics data show that the rate in fact fell because the labor force shrank, and that fewer people had jobs in Alabama in August than did before the law. Although no estimates exist for how many Hispanics have left Alabama, the diminished labor force and local residents’ accounts of “ghost towns” give an idea of the law’s impact.

The detrimental impact of HB 56 on Alabama’s economy demonstrates the pitfalls of penalizing immigrant labor. On the flip side, the positive impact of immigrant labor is apparent in the growth of the low-skilled service sector. According to a recent report released by the National Bureau of Economic Research (NBER), the share of U.S. labor hours in service occupations grew by 30 percent between 1980 and 2005, providing a stark contrast to declining employment in all similarly low-educated occupation groups.

The growth of the service sector is largely due to the availability of Hispanic migrant labor. According to the Bureau of Labor Statistics (BLS), foreign-born workers are more likely than native-born workers to be employed in service occupations, and 49 percent of foreign-born workers are Hispanic. Although the BLS does not ask for immigration status when conducting research, the foreign-born label likely includes not only legal but also undocumented Hispanic immigrants.

Low-skilled immigrant labor also fosters American economic growth by enabling higher-skilled workers to specialize and increase productivity.  Forbes columnist David Bier offers the example of a worker who files paperwork for a doctor, creating economic value from both his efforts and the doctor’s by enabling the doctor to see more patients.

U.S. migrant labor is important, and bolsters the economy by providing a base of low-skilled labor that would otherwise go unfilled. Attempts to encourage self-deportation through anti-immigrant legislation will hurt, not help, the American economy. The failure of Alabama’s immigration law demonstrates the danger of penalizing rather than promoting immigrant labor, a lesson that the rest of the U.S. should take to heart in order to promote universal economic growth.

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