Economists See Benefits to Bush’s Plan

In proposing an expansive guest worker program Wednesday, President Bush endorsed a view that some economists have been promoting for years: Undocumented immigrants have become an essential, perhaps inextricable, part of the U.S. labor force.

And by conveying legal status on millions of people already toiling in the background of the U.S. economy, analysts said, Bush’s plan could ease labor shortages, improve working conditions and perhaps shore up wages paid to previously illegal immigrants.

“They’re here. They’re working,” said Jared Bernstein, senior economist at the liberal-leaning Economic Policy Institute in Washington. “Let’s block the low road and get them on the high road. Let’s obey the labor laws and play by the rules.”

The longer-term impact of Bush’s proposal could cut two ways. If the plan results in a substantial increase in foreign workers flowing across U.S. borders, it could create more competition for low-end jobs, put downward pressure on wages and potentially displace some native-born workers.

At the same time, it could reduce the price of many goods and services consumed by everyone in the country.

“There will be winners and losers,” said James Smith, senior economist at the Rand Corp. think tank in Santa Monica and chairman of a 1997 National Research Council study on the impact of immigration. “The losers will be low-skilled domestic workers. The winners will be the rest of us.”

Bush’s plan, which the president outlined in general terms Wednesday, would provide temporary work permits to some of the estimated 8 million to 11 million illegal immigrants now in the U.S. The permits would be good for three years and at least one renewal would be allowed.

Although the proposal drew protests from organized labor and immigration opponents, several economists and policy analysts said it reflected the fact that undocumented immigrants were tightly woven into the fabric of the U.S. work force.

“It’s a recognition of the important role that immigrants play in the economy,” said John Gay, co-chairman of the Essential Worker Immigration Coalition, which describes itself as a network of businesses, trade associations and other groups concerned with the shortage of both skilled and lesser-skilled labor.

Although U.S. employers have shed 2.3 million jobs since Bush took office, supporters of his plan said positions still go begging in such sectors as agriculture, lodging, restaurants, health care, construction, landscaping and building services.

“It will allow industries like ours to legally find and hire workers,” said John Dunlap, president of the California Restaurant Assn. “There have been some real challenges in the restaurant industry to find workers.”

The situation varies from industry to industry and region to region, economists said. In some parts of the Northeast, illegal immigrants have helped provide services that -- in the health-care industry, for example -- otherwise would not be as readily available. In Southern California, they have plunged into an already crowded labor pool, analysts said.

In New England, “immigration has played a very important role in our ability to generate new employment opportunities,” said Paul Harrington, an economist at Northeastern University’s Center for Labor Market Studies in Boston. “In other parts of the country, such as California and Texas, the impact is to flood the bottom of the labor market.”

Philip Martin, a professor of agricultural economics at UC Davis, said his research suggested that as many as 2 million of California’s 16 million workers are illegal immigrants.

About half are restaurant workers, janitors and other service sector employees, he said.

A recent Northeastern University study showed that foreign-born workers, who represent less than one-sixth of the U.S. work force, accounted for roughly half the nation’s employment growth over the last 3 1/2 years.

A portion of that growth, Harrington said, occurred in sectors that did not show up in surveys of payroll employment.

Some foreign workers appear to be getting jobs that native-born Americans are not willing to fill, or that might not exist if not for immigration, economists said. But some are clearly competing with U.S. workers for jobs, particularly at the low end of the employment spectrum. The competition has been more cutthroat during economic downturns, such as the slump that began in 2001.

The losers tend to be younger U.S. workers with limited education and job skills, economists said. Many employers appear to prefer hiring immigrants, partly because they are perceived to have a stronger work ethic, analysts said.

Supporters of the president’s proposal say the addition of immigrants to the U.S. labor pool produces a net economic benefit for the nation by reducing the cost of goods and services. But they acknowledge that the savings are attributable to the lower wages that employers are able to pay because of competition among job seekers.

“Employers want everything,” said AFL-CIO chief international economist Thea Lee. “They want access to cheap labor. They want to pay much lower wages. Our argument is that some of these wages need to rise to make the jobs more attractive.”

Dean Baker, co-director of the liberal Center for Economic and Policy Research in Washington, said employers are wrong when they claim that immigrants are needed to fill jobs shunned by Americans.

“There are no jobs that people inherently don’t want. They just don’t want them at the pay that’s being offered,” Baker said. “It’s not as though we absolutely need people working at those wages. Restaurants might cost a little more if people weren’t willing to work at very low wages. So what? We’d go out to eat a little less often.”

Though some economists said it made sense to provide legal status and workplace protection to gainfully employed immigrants already in the country, they expressed concern about the potential effect of allowing even more foreign workers to enter the labor pool.

Although the president’s plan is supposed to provide work permits only to foreigners who already have jobs or are filling positions no Americans want, some economists said it could contribute to a net increase in immigration, both legal and illegal.

“This could have an impact on the labor market if it is seen as a signal to lots of low-skilled immigrants currently residing outside our borders to come on over,” said Bernstein of the Economic Policy Institute. “Depending on the demand for low-wage work, that could certainly dampen the growth of wages moving forward.”

During the latter half of the 1990s, that wasn’t a problem. Average wages and immigration increased concurrently in response to robust demand for new workers. But during the previous two decades, competition for jobs by illegal immigrants was believed to have contributed to a long-term decline in average wages.

“If you think there’s a benefit from immigration, and I do, you also have to think that someone’s wages got lowered,” said Smith, the Rand economist. “If some native-born American’s wages weren’t lowered, then there would be no benefit.”

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Times staff writer Karen Robinson-Jacobs in Los Angeles contributed to this report.