Illegal -- but Essential

Shortly after dawn, the day laborers began gathering beneath a San Diego Freeway overpass in West Los Angeles.

A house painter pulled up in a pickup, looking for an assistant. He offered $12 an hour. A worker jumped in.

Next to arrive was a white-haired woman driving a Honda. Her garden needed a makeover. She’d pay $11 an hour. She departed with a second worker.

On the freeway above, commuters were heading to offices in Century City and El Segundo. Down here, at the West L.A. Community Job Center, arrangements were being made to remodel their living rooms, landscape their yards, rebuild their decks.

The work is undertaken by men from Mexico and Central America. Most are in this country illegally. The jobs, which last only a day or two and pay cash, are all but invisible to the state and federal governments. No one has to fill out paperwork, follow safety regulations or pay taxes.

Yet what happens here is far from marginal. The jobs that flow out of this day-laborer hiring spot -- and from thousands of others around the state, some as informal as a street corner -- are a pillar of California’s economic strength.

To see why, check out Adrian Lopez, 20, who is kicking around a soccer ball as he waits. Lopez, who came here from the Mexican state of Oaxaca, is carrying in his Everest backpack a Sony Walkman from the Best Buy across the street.

It’s got a CD by the Argentine group Los Enanitos Verdes inside, bought at a Ritmo Latino store. He has a bottle of Kirkland Premium Drinking Water, purchased at Costco, and a spare Old Navy shirt. He likes the grilled steak at Baja Bud’s. He wasn’t impressed by “Monster House.”

“Immigrants buy everything here,” Lopez said in Spanish.

The presence in the United States of Lopez and 12 million other illegal immigrants is one of the most contentious issues of the era. Hundreds of thousands of immigrants have repeatedly demonstrated this year for legal recognition, sparking a backlash from many native-born Americans. Congress has been stalemated between legalization advocates and those pushing punitive measures.

Economists are less divided. In the main, they say the American engines of industry and commerce have always been fueled by a steady supply of new arrivals. Immigrants, they contend, contribute to consumer spending and, instead of replacing native workers, create jobs.

“Overall, immigration has been a net gain for American citizens, though a modest one in proportion to the size of our $13-trillion economy,” 500 economists wrote in an open letter to Congress on June 19.

Measuring the contributions of illegal workers is a difficult task, however. Many numbers are vague or open to dispute. A few experts contend that the gains are not clear-cut and that any benefits are far from being universally shared.

Special interests that benefit from immigrant labor -- including agribusiness, restaurant operators and unions courting new members -- tout their gains as gains for all, said Michael Teitelbaum, who was vice chairman of the bipartisan U.S. Commission on Immigration Reform in the 1990s.

“It all comes down to where you sit,” said Teitelbaum, a demographer at the Alfred P. Sloan Foundation. “The upper tiers benefit from immigration, and the lower tiers lose.”

The 500 economists concede that a “small percentage” of native-born Americans may be hurt by competition from illegal immigrants who are willing to work cheaply. But any harm, they say, is outweighed by the benefits to the overall economy.

Lopez is a case in point. Start with his willingness to work for little. Add his eagerness to spend. Multiply that by the more than 2 million illegal workers in the state.

One result: Restaurant prices are pushed down by illegal labor in the kitchen, fruit and vegetable prices by illegal field hands, new-home prices by illegal drywallers.

Immigrants aren’t just a weapon against inflation. The tens of thousands of illegal nannies in the Los Angeles area, for example, lower the cost of child care, freeing mothers to return to work. This in turn increases families’ incomes, which encourages spending and fuels the economy.

Many immigrants send a portion of their earnings home to their families, but their influence here remains potent. The Economic Roundtable, a Los Angeles think tank, estimates that the 400,000 illegal workers in L.A. County spend $5.7 billion annually on food, rent, transportation and other necessities.

The sales taxes they pay on all those consumer purchases boost the state treasury. The growing number of immigrants who use false papers to get payroll jobs are contributing to Social Security without the right to receive payments from the fund.

That props up the beleaguered system by at least $5 billion a year, analysts say.

Other benefits may be less obvious, such as the gains in property values enjoyed by homeowners.

Prices surged for a number of reasons over the last few years, including very low interest rates, but experts say immigrants made a big difference in California. Their apartments and houses may be shabby, but their sheer numbers exert a profound effect. In a state that never has enough housing, the hundreds of thousands of units rented to immigrant families put upward pressure on all prices.

Then there are the bad things that aren’t happening despite the immigrants’ presence. For instance, they don’t seem to be creating an unemployment problem. Joblessness in California, with 24% of the country’s illegal immigrants, has tracked the low national rate.

All this evidence, many economists say, makes a powerful argument that immigrants’ role can be characterized as somewhere between important and irreplaceable.

“The only people to benefit from the deportation of millions of low-skill workers would be other low-skill workers, who would get an immediate increase in pay rates,” said Timothy Kane, an economist with the conservative Heritage Foundation. “However, they would also be the first to lose their jobs during a recession -- which would be inevitable if the economy were shocked in this fashion.”

Many Californians forcefully disagree with this assessment, saying immigrants have dragged down the quality of life in the state. They point to neighborhoods overflowing with poor immigrants. In some occupations, such as landscaping and construction, workers who don’t speak Spanish say they can’t get hired.

Other costs carry a more defined price tag. The California Hospital Assn. says emergency-room care for uninsured immigrants, including delivery of babies, costs taxpayers and private insurers about $650 million a year.

Whether born here or brought here, children of illegal immigrants have access to a free education. The Palo Alto-based Center for the Continuing Study of the California Economy estimates that this schooling costs as much as $6 billion annually.

Teitelbaum says the cost is even higher if you take into account how the influx has strained classrooms.

“California used to have one of the best systems of public education,” he said. “Now it has one of the worst.”

Feeling Squeezed Out

Sean Jourdan stood on the sidewalk at an Inglewood shopping center, hawking DirecTV satellite subscriptions. A natural salesman, he charmed passers-by into taking his bright yellow leaflets.

“Let me give you a flier,” he said to a woman and her grandson coming out of the Giant Dollar Store. “What do you have at home? Comcast? I’ll give you double what they’re giving you for half of what you’re paying.”

Jourdan took classes at two community colleges but dropped out before getting a degree. When he was in his early 20s, he attended the Maxine Waters Employment Preparation Center in Watts, a school started after the 1965 riots. Trained as a telecommunications technician, he was soon making $50,000 a year installing TV systems.

“It was a living wage,” said Jourdan, 32, who is African American. “There are a lot of jobs out there, but only a few pay a living wage.”

At first, many of his co-workers were black. Over time, however, his firm reduced payments for installation. Meanwhile, it hired more Latinos. Many couldn’t speak English, Jourdan said, so he assumed they were new arrivals from Mexico and Central America.

By the time Jourdan left his last installation job in June, the pay rate for each house call had shrunk so much that he was making only about $25,000 a year. The last company he worked for had two black technicians out of about 25, he said.

Jourdan was briefly in the media spotlight a few months ago after attending a rally for the Minuteman Project, which vehemently opposes illegal immigration. “They’re the same type of people who hunted us down when we escaped from the plantation,” he said. “But on this issue, I unite with them.”

Jourdan grew up near this mall, but it’s no longer the place he knew. There’s a machine that makes fresh tortillas in the Superior supermarket, signs in Spanish in the Rite Aid and a Latino construction crew redoing a vacant storefront.

“Give me a call. I’ll save you money,” he promised a young Latina. She smiled and took the flier. Jourdan may be upset by illegal immigrants, but many make good customers because they “haven’t had 25 years to run up their credit.” Every sale that survives DirecTV’s credit check nets Jourdan a $150 commission.

“Although I can make money, it’s a hustle,” he said. “I’m going to have to learn Spanish.”

Workers on the margins can be hurt by illegal immigration, economists note. A 2005 study by Harvard economist George Borjas and Lawrence F. Katz of the National Bureau of Economic Research concluded that native-born high school dropouts lost as much as 8% in wages from 1980 to 2000 because of illegal immigration.

UC Berkeley economist David Card has challenged those findings, saying cities such as Los Angeles are absorbing large numbers of laborers without wages being affected.

The plentiful supply of workers, Card speculates, has led companies to keep people at jobs that might otherwise have been automated.

Other economists wonder whether the reason for the limited effect on wages is even more basic: Instead of competing with immigrants, many native workers simply surrender, perhaps relocating to cities with better prospects.

In a new book titled “L.A. Story: Immigrant Workers and the Future of the U.S. Labor Movement,” UCLA sociologist Ruth Milkman uses census data to show how some jobs have changed over the decades.

From 1970 to 2000, Milkman calculates, the percentage of janitors in Greater Los Angeles who were black fell from 24% to 5.2%. Meanwhile, the foreign-born Latino share rose from 10.3% to 63.4%.

Similar transitions occurred among construction drywallers, truckers and garment workers.

As in satellite TV installation, wages for these jobs are a far cry from what they once were. But Milkman says that’s not because the companies replaced the natives with illegal workers.

Instead, the employers first squeezed benefits and salaries under the mantle of “competitiveness.” The lengthy decline of trade unions undermined workers’ ability to fight back.

Natives who could get out did so. The gaps were typically filled by immigrants, but in Milkman’s analysis their hiring was a consequence, rather than a cause, of the jobs’ lost allure.

The surprising development is that the immigrants, far from being pliant, have reinvigorated the union movement and in some cases won higher wages. “The people who have been demonized, the illegal immigrants, are in some ways showing the way forward for everyone,” Milkman said.

For Jourdan, precisely what happened to his installation wages is of little consequence. What matters is the constant worry about slipping behind.

“As a technician, you knew that if you went in every morning and did the work, there’d be a check at the end of the week,” he said. “Now I don’t have that security.”

He’s thinking of moving -- maybe north to Palmdale or east to Moreno Valley. That’s what some of his Inglewood friends have done.

“There are so many homes being built out there, so many potential customers for satellite systems,” he said. “Maybe I should go too.”

A Region Revitalized

When Panorama City in the San Fernando Valley boomed after World War II, the developers allowed only white people to buy houses. For four decades, General Motors made Chevrolets there, offering at peak production a solid income to more than 5,000 workers.

In 1992, the plant, the Southland’s last car factory, was closed. With unemployment in the county running at 10%, few of the assembly-line workers were able to find new jobs paying them the $17 and $18 an hour they had been earning.

Similar closures happened throughout the country. But when the plants shut down in Ohio or Pennsylvania, they tended to become permanent ruins. The surrounding streets festered with abandoned houses and empty storefronts. Pittsburgh, Detroit and Cleveland have had to grapple with massive, long-term population declines.

In Panorama City, vitality quickly reemerged in a new language and a new culture. What it had -- which the cities back East lacked -- was the proximity of Mexico.

In the 1990s, L.A. County gained 1 million immigrants, most of them from Latin America, many of them illegal. In Panorama City, the Latino population grew from a significant minority to an outright majority.

The community around the former GM plant is thriving, if not exactly upscale. The plant itself is a shopping center called, straightforwardly enough, the Plant. It is anchored by a Home Depot where illegal immigrants wait for work that will pay about half what the autoworkers got, with no benefits and no promises about tomorrow.

On the surrounding streets are clinics, cheap restaurants and music and furniture stores catering to Latinos. It’s one of many centers of the informal economy in L.A., where most transactions are in cash.

To many Californians, this is not a change for the better.

“I really don’t consider the low-income parts of California to even be California anymore,” said Kevin Waterson, an administrative employee of UC Davis, near Sacramento. “The quality of life is much more like that in Mexico.”

A year ago, the Public Policy Institute of California polled state residents on whether immigrants were “a burden to California because they use public services” or “a benefit to California because of their hard work and job skills.”

“Benefit” was picked by 56% and “burden” by 36%. Many of those in the latter camp, including Waterson, see illegal immigrants as competition. The struggle is less about jobs than scarce community resources, including affordable homes, gridlock-free roads and good schools.

Waterson grew up in Fontana in San Bernardino County, the son of a computer programmer and a billing clerk who were able to buy a three-bedroom house, own two cars and build a nest egg. That status, achieved by millions of Californians after World War II, now feels out of reach.

“There are a lot of places in Los Angeles I want to live that I can’t afford,” said Waterson, 27. “The places I can afford, I don’t want to live.”

It’s not just his perception. The Brookings Institution recently found that Los Angeles was the nation’s most polarized city by wealth. Fewer than a third of L.A. neighborhoods are middle class, according to its study. The rest are either rich or poor.

Waterson keeps looking for all those benefits the economists say immigration has brought to him. But if the informal economy benefits both the immigrants and the well off, it doesn’t seem to be helping him and his wife, Julia, very much.

They don’t use immigrants to mow the lawn or wash the car or take care of the kids. They can’t afford to eat out, so they don’t gain from the toil of illegal restaurant workers. They’re renters, so any immigrant-driven boost to real estate just puts a home of their own further out of reach.

The informal economy that much of California has embraced so enthusiastically can be criticized on other grounds.

Small cash-and-carry shops and vendors who cater to immigrants may not pay sales taxes to the state or business license fees to local government. People who hire day laborers cheat the state by not using companies that pay payroll taxes. The laborers cheat the state by not paying income taxes. All of these groups put legal workers and legal businesses at an unfair competitive disadvantage.

The most sweeping criticism: By creating a market for illegal labor, the informal economy increases the supply. If illegal laborers weren’t in such demand, they wouldn’t risk so much to come here. For better or worse, immigration would not be an issue.

But for Los Angeles County, the informal economy has been better than nothing -- and nothing, urban affairs expert and Economic Roundtable President Daniel Flaming says, is what the county would have had otherwise.

“When manufacturing collapsed, there was no effort to salvage the infrastructure for other purposes,” he said. “The formal economy here has been stagnant since the beginning of the 1990s. The only growth has been in under-the-table employment, predominantly fueled by desperate workers and in particular undocumented workers.”

Without immigrants, Flaming said, Los Angeles would be smaller and weaker and poorer -- Detroit or Pittsburgh or Cleveland with better weather.

In that L.A., Waterson would be able to find an affordable house. But because the population might be falling, his house could very well decline in value.

“We should be thankful to immigrants,” Flaming said. “Without them, things would be much worse.”

First the newcomers stabilized Panorama City. Now they are pushing it forward. The median value of a single-family home has doubled since 2000. And on the edge of the Plant mall, there’s a sign that the informal economy might be yielding to a more traditional, bigger-budget state of affairs. Starbucks, that dispenser of $4 venti tangerine frappuccinos to the middle class, has just opened a store.

History of Ambivalence

Five days a week, Lissette Rodriguez starts work at 6 a.m., preparing banquet food for a mid-priced hotel southeast of downtown. After eight hours of chopping and slicing, she goes home and takes a shower. Four days a week, she heads to Beverly Hills, where she works from 5 p.m. to 1 a.m. washing dishes at a luxury hotel.

“Not many people could make it through 16 hours like that,” she said proudly.

Rodriguez, 32, arrived from El Salvador in 2004, not to save or damage L.A.’s economy but to help herself.

“In Salvador, there’s no money, no jobs,” she said in Spanish. “It’s more expensive here, but I can make a lot more.”

That would be $9 an hour, a fortune to her and a pittance to the hotels. The fact that both sides consider it a good deal binds them together in a “don’t ask, don’t tell” policy. Rodriguez’s employers no more want to catch her than she wants to be exposed.

The history of California is full of ambivalence to immigrants.

“From 1907 to 1940, ‘the Mexican problem’ was a hardy perennial in Southern California,” historian Carey McWilliams wrote in 1946. “Every winter, the business interests of the region worked themselves into a lather of excitement over the cost of Mexican relief, hospitalization and medical care. With the return of the crop cycle in the spring, however, ‘the Mexican problem’ always somehow vanished or was succeeded by the problem of ‘an acute labor shortage.’ ”

For most employers, any ambivalence appears to be gone. Instead, the business community speaks in dire terms about the consequences of a widespread crackdown on the hiring of illegal workers.

“It would be a horrible negative,” said Jeff King, co-founder of King’s Seafood Co., which owns Ocean Avenue Seafood in Santa Monica and the Water Grill downtown. “You cannot get Americans to come in at entry-level wages. You’d have to pay a premium.”

That might be good for the workers, but King contends it would bring on economic disaster. Prices would go up. Diners would balk. Sales taxes would fall, employment tumble. (King stressed that the 2,000 King’s Seafood employees are all legal, as far as the company can tell.)

By working for less than a native citizen would, Lissette Rodriguez is helping her employers’ bottom lines.

To an extent, she’s also helping taxpayers, although unintentionally. The hotels deduct the usual taxes from her payroll checks. But she won’t see a refund or, later in life, a Social Security check.

“That money is just gone,” she said. “Most illegals are scared to do tax returns.”

Rodriguez is the admirable and problematic face of immigration in 2006. She crossed the border without permission and obtained a bogus Social Security number. She knows she is breaking the law.

Yet she wants only to do what legal immigrants have done throughout U.S. history: work hard and sacrifice mightily to get ahead. In less than two years, she has become deeply embedded in the local economy and the community.

All of these contradictions in one person. All of them in 12 million people. And more tomorrow.

“I miss my children,” Rodriguez said. She wants to bring them -- a 6-year-old girl, a 15-year-old boy -- to Los Angeles. This is her home.

david.streitfeld@latimes.com