Thursday, June 14, 2007

Are tougher immigration laws good or bad for wages?

A discussion with a colleague today led to my reflecting about this issue.

I thought of a recent insight offered by none other than Gary Sheffield of the Detroit Tigers, who expressed his views about Latin Americans, African Americans, and representation in Major League Baseball.

His take on why African American representation in the MLB has fallen so much is that teams and coaches can "tell [them] what to do -- being able to control them." His point was that a Dominican player probably felt less able to speak his mind around his employers, since he probably isn't a U.S. citizen, may have come from a more impoverished background, and fears losing his job that much more.

Why is this relevant for the immigration debate?

Suppose you are an undocumented worker. Do you command a higher or lower wage than you would if you were legal?

On the one hand, you might say that the risk of deportation is costly, so you should demand a higher wage than you otherwise would in order to bear that risk and work in the U.S. Relative to wages earned in the home country, this story is probably true.

But if employers knew their employees were illegal, and if those employees were aware of their knowledge, employers might offer lower wages to illegals. In this situation, illegals are like the Latin American baseball players Sheffield is describing, while domestic low-wage workers are like the African American ballplayers he describes.

Could new "Z" visas for guest workers raise wages, for guest workers and for domestic workers who must compete with them for jobs?