Sting of New Immigration Law Felt in a Labor-Short County

When he opened his sewing shop two years ago, the Fountain Valley employer said, seasonal slumps, transient laborers and existing government regulations were difficult enough for a small businessman to endure.

But that was before the Immigration Reform and Control Act of 1986 was passed, and back then he didn’t know what bad could be.

In 1985, he employed 30 seamstresses to piece together sportswear. Today, just 20 people sew in his cramped shop, and soon that number may dwindle to zero, as his patience wears thin, his profits taper off and workers become harder to replace because of a shrinking labor pool.

“Most of the people we had to let go ‘cause they weren’t legal,” he said, while pleading: “Don’t use my name. Don’t use my company’s name.

“But I gotta tell you, this situation is hitting us hard. We want to sell the business,” he said. “It doesn’t seem to be worth all the effort. . . . Small business is not what it’s cracked up to be.”

By putting his sewing company up for sale, this Fountain Valley contractor could become one of the first business casualties of immigration reform in Orange County.

While enforcement of the immigration law has not brought the wholesale firings, raids and unfilled job openings feared by Orange County workers and business owners, several local industries are already feeling the sting of the new regulations.

Some analysts contend that enforcement of the immigration law will worsen Orange County’s existing labor shortage. Several local industries, including hotels, restaurants, construction, apparel and landscaping, surveyed since enforcement began, are already beginning to suffer from shrinking labor pools.

At least one economist believes that in the long term, immigration reform could deal an even greater blow to the county’s economy, hastening the exodus of manufacturing firms and turning the region into what one demographer called “a white-collar county.”

“We already have high living costs, but we are going to see a shrinking in the labor force that’s going to push up the costs for manufacturing and hasten this whole process of manufacturing leaving the county,” said Mark Baldassare, a UC Irvine social ecologist. “It’s going to be harder for us to compete with other regions that have low housing and living costs--the Inland Empire (San Bernardino and Riverside counties), Arizona, Texas, parts of Florida and areas outside of Atlanta.”

Under the new law, aliens who have been living in the United States since Jan. 1, 1982, can apply for legal residence as part of a 12-month amnesty program that ends May 4, 1988. The applications can eventually lead to permanent legal status for the applicants.

On Sept. 1, a rule permitting illegal aliens to work in the United States without proof of legal status expired. The rule, in effect since March, gave aliens a six-month grace period, during which they had only to tell their employers that they were eligible for legalization to retain the right to work.

The immigration reform law cracks down on employers who knowingly hire illegal aliens. So far, the Immigration and Naturalization Service has conducted about 15 raids in Orange County alone, including an Oct. 6 bust at a Santa Ana furniture factory, in which 107 workers were arrested.

Compounding the impact of the new law on Orange County employers is a problem that the county faced even before Congress passed the act--an unusually tight labor market.

The county’s jobless rate is among the lowest of any county in the state and is significantly lower than the rate statewide. And, it has continued to decline in recent years. In June 1986, 4% of Orange County’s available workers were unemployed; by June, 1987, the rate had dropped to 3.2%.

The state unemployment rate, in comparison, declined from 6.6% in June, 1986, to 5.5% 12 months later, providing employers outside the county with a proportionally larger pool of potential workers.

From July, 1986, through July, 1987, the number of unfilled Orange County job openings rose from 4,703 to 5,403, according to statistics from the state Employment Development Department. In addition, the number of employed county residents rose from 1.2 million to 1.3 million, and the number of unemployed workers dropped from 49,700 to 42,300.

All these statistics are indications of a tight labor market, UC Irvine’s Baldassare said, and immigration reform will “exacerbate the labor crunch. We’re going to feel the pinch.”

The state Employment Development Department has been monitoring the labor pool statewide, particularly in the agricultural and garment industries, but officials said they have seen few problems so far.

“I don’t think there’s anything you can point to and say, here’s something that’s having trouble because of the immigration reform law,” said Suzanne Schroeder, EDD spokeswoman.

State officials were expecting to see signs of shortages in the agricultural labor pool, Schroeder said, “but we really never could find any serious labor shortage in agriculture.”

Officials from the Immigration and Naturalization Service also contend that widespread worker shortages are a figment of industry’s imagination.

“You hear a lot of rhetoric about worker shortages (nationally), but in reality we haven’t evidenced any substantial shortages,” said John Belluardo, INS director of congressional and public affairs for the western region of the United States, which includes California.

To date, 820,000 undocumented workers nationally have applied for amnesty under the law, a number expected to rise to one million by early November. So far, 500,000 such immigrants living in Southern California have applied for amnesty.

Business owners and trade association spokesmen representing 11 Orange County industries have been interviewed by the Times since enforcement of the immigration law began.

Four industries--construction, apparel, hotels and restaurants--have found it difficult to hire enough workers, and they are taking steps to alleviate the problem. Those steps range from increasing wages all the way to shutting their doors.

Of a dozen locally based restaurant chains contacted by the Times, virtually all acknowledged that they have seen some decrease in applications within the last several months. Anaheim-based Carl Karcher Enterprises, which operates 436 restaurants, two months ago began “testing” raising pay in labor-short areas--including some spots in Orange County--to see whether more money would bring more workers.

John Kubas, vice president of human resources for the chain, said: “We want to see what the bottom-line impact is, whether we get better employees (and whether turnover slows).” Hourly pay may be raised companywide if the pilot program shows results.

Within the building industry, the new immigration law is having its greatest impact on residential construction--the industry segment that in the last decade has increasingly taken on a non-union, predominately Mexican profile.

Because the housing industry is booming, said Steve Atkinson, a lawyer whose firm represents several associations of contractors in Southern California, vigorous INS enforcement would create a significant labor shortage in residential construction.

One possible consequence, Atkinson said, is that Mexican workers may flex their increased bargaining muscle by organizing their own unions. Atkinson said some contractors worry that a brief wildcat strike begun earlier this year by mostly Mexican dry-wallers against contractors in Orange, Riverside and San Diego counties could be a prelude to future labor strife.

And Bernard Ferster, general counsel for the Clothing Manufacturers Assn. of the USA Inc., said that garment makers, too, will face difficulties as the new immigration law is enforced, because of the industry’s role as an “economic Ellis Island” that attracts many new immigrants.

The Employment Development Department has surveyed sewing contractors in Los Angeles, San Diego and San Francisco counties and found that about half have had shortages of sewing machine operators and other apparel workers, said Schroeder, the EDD’s spokeswoman. Particularly hard hit are walk-in applications, which have decreased substantially, garment manufacturers in Orange County said.

As a result, Schroeder said, garment manufacturers are asking the government to grant visas for guest workers in their industry, and “employers now are much more willing to take less experienced workers, and they are willing to train now, which is something they were not interested in doing before.”

Business owners in two Orange County industries--agriculture and horse racing--said they could be safe for up to three years because of federal laws that protect them over the short term.

Orange County farmers and nurseries are making a concerted push to get their illegal farm workers documented under the amnesty law, despite a special 15-month extension that gives farmers until December 1, 1988, before they can be held responsible for the legal status of their labor force.

Although eligibility requirements for amnesty are more lenient for agricultural labor than for workers in non-agricultural enterprises, one worker representative said that many farm workers are still ineligible for legalization.

Tony Bonilla, executive director of a group called Orange County Alien Legalization for Agriculture, predicted that when sanctions start against farmers who hire the undocumented, those employers “will be hurting for manpower.”

A legalization assistance program set up in Santa Ana by local growers and nursery owners has already processed an estimated 700 amnesty applications, of which about 85% were for farm workers and their families.

A future shortfall of farm workers could be aggravated if, as some in agriculture have predicted, farm workers who obtain legalization decide to switch to construction and other higher-paying employment sectors that are also expected to feel a labor crunch.

“I think a lot of these people will move into other industries once they get legalized,” said George Murai, president of Murai Farms in Santa Ana. “The way of life is to go up the ladder.”

Murai said he is not sure that local farmers will get sufficient replacement labor. In the past, he said, farmers have tried to hire people on Skid Row and recruit Native Americans from the Midwest. But he said those people couldn’t--or wouldn’t--do the job.

“Farm work is hard work, and most people don’t like to do stoop labor,” he said.

Los Alamitos Race Course has been running smoothly since 1986, when undocumented grooms first began working under temporary visas as part of the government’s H-2 program, and officials do not expect the track to run into staffing troubles anytime soon.

The U.S. Department of Labor started granting race track workers legal visas under the guest-worker program as a compromise after a series of raids at Southern California tracks by INS in August, 1985. At the time, scores of illegal aliens were seized and hundreds more were scattered.

But the H-2 program can only be extended for up to three years for each worker, said Paul Nelson, certifying officer in San Francisco for the Department of Labor. To bring in an H-2 worker, employers must show a shortage of legal U.S. residents for the specific job.

So the Western Standardbred Assn., a trade group, asked in August for 100 undocumented slots--positions for about 260 harness-horse grooms--to work at Los Alamitos and Pomona’s Fairplex Park. If the requests get the expected approval, the undocumented grooms will have temporary visas, which can be extended, to work at Los Alamitos through about April.

Alan Horowitz, executive secretary of the Western Standardbred Assn., said that while the the temporary visas help, “from a business standpoint, we’re not assured of any continuity. Frankly, it’s costly and time-consuming.”

Five local industries--technology, entertainment, manufacturing, custodial services and home care--either have felt little effect or said it was too soon to tell whether the immigration reform law will make it more difficult to conduct business.

Robert Valdez, a policy analyst at Santa Monica-based Rand Corp., has studied the effects of immigration reform enforcement so far and “is not finding anything” in the way of problems within the technology sector. “A lot of the high-tech firms have very little immigrant labor, but very often you’ll find a lot of the technical staff will be immigrants of other origins than Mexican,” he said. “But I’m not seeing illegal British or German or Swedish immigrants dislocated.”

Officials at Disneyland and Knott’s Berry Farm said that they are having no problems so far, and spokesmen for Wild Rivers amusement park and Anaheim Stadium’s concessionaires said that it is too soon to tell if enforcement of immigration reform will affect them at all.

The new immigration law has brought a sudden urgency to finding workers for commercial custodial firms, a growing industry dominated recent by Hispanic and Asian immigrants. Although most business owners have had few problems to date, many said they are considering increasing wages by up to $1 an hour if the pool of workers dwindles as expected.

And employers speculated that the INS won’t be quick to crack down on small-scale “caretaker” operations providing domestic services and lawn care. As a result, larger firms might split up into multiple operations employing fewer people to avoid potential raids.

Business owners also said they expect that the INS won’t go after individuals who hire illegal workers to mow the lawn, clean the house or look after children or older people.

Following are reports on how Orange County’s hardest-hit industries are faring under immigration reform:

Times staff writers Leslie Berkman, Mary Ann Galante, John Tighe, James S. Granelli and David Olmos contributed to this report.