Illegal Workers and the Cost of Doing Business

We all know the drill. Or think we do.

Contractors hire undocumented Mexicans who will work for peanuts and won’t complain if they’re exploited. And as long as employers keep hiring them, the seemingly relentless migration from south of the border will continue. Oh, and one other thing -- the employers don’t give a rip about the Mexican workers.

It’s a convenient scenario that rings true. It would be ridiculous to say that it never happens.

But after spending some time last week on the phone with the owner of a roofing company -- who had called specifically to talk about illegal immigration -- I was persuaded all over again how complex the issue is.


He talked about how he has grappled with the immigration issue, about losing sleep over breaking the law and about his admiration for the Mexican laborers. He talked about the make-or-break decisions that he and other business owners have had to make between earning a living and violating the law.

And he points to the workers’ compensation requirements that he says have drained business owners and contributed mightily to the continuing flow of illegal workers into California.

I agreed not to identify him, because he readily admits that he and others have broken the law by not paying as much as they should into workers’ comp and by hiring illegal workers. “Talking to you scares me to death,” he says. “I would hate to have the IRS knock on my door and pound me down.”

He insists he’s calling because he wants lawmakers to solve the illegal immigration problem and says that any “honest” discussion must include the burdens imposed by workers’ comp. When employers had to pay $10 to $20 to workers’ comp for every $100 in wages earned, the burden was bearable, he says. But as the rate steadily rose over the years and neared dollar for dollar, it became crushing.

“You’ve got to look at a $4,000 payroll for a week and then sending $4,000 to the state fund” in workers’ comp, the owner says. “You’ve got to imagine what it’s like to write checks like that. If you hire illegal aliens, you’re not taking out taxes on him. You’re paying him cash. The reason you do that is so you don’t have to pay workmen’s comp. So we’d carry workmen’s comp and say we only had one employee, and we carried, maybe, four employees.”

He isn’t gloating about it. “Nobody wanted to break the law,” he says, “but we knew we’d go out of business [if we didn’t], and other people were doing it too.”

Sounds like an athlete’s excuse for using steroids, I suggest.

“It is an excuse,” he says, “but we were faced with pretty hard decisions. It’s a rough trade, a rough business. A friend of mine said he saved about $200,000 in three years in workmen’s comp, and all it did was keep him in business.

“The point is,” he says, “if we don’t start dealing with the problem head on and understand the underlying causes and why workmen’s comp is such a problem in California and what people have done to get around it and really deal with the problem in an honest way -- between the lawyers and the doctors and everyone involved -- we’re never going to solve the [illegal immigration] problem.”

I’m giving the business owner space because he sounds earnest in stating his case and because, if he were merely a cynical businessman, he could continue flying beneath the radar and not have made the call to me in the first place.

I ran the owner’s comments past labor union executive Richard Slawson. In so many words, he says the laments are a crock.

Rather than being victimized by the system, Slawson says, the owner is a felon for violating workers’ comp laws and represents one of the major contributors to the illegal immigration problem -- namely, employers who depress wages by hiring illegal workers and not contributing fairly to the system.

The workers’ comp complaints are nothing more than rationalizations for seeking unfair competitive advantages, says Slawson, executive secretary of the Los Angeles and Orange Counties Building and Construction Trades Council.

The owner admits to being a lawbreaker but disputes that he’s paying depressed wages. He also says that any worker injured on the job gets the necessary medical care, because he then would add the employee to the workforce.

Brent Beasley, an official with an Orange County roofers and related trades union, says the owner is “fudging the issue” by linking workers’ comp to illegal immigration. While not discounting the burden of workers’ comp payments, Beasley says the owner’s action represents the troubling issue of “cash pay versus immigration.”

Once an employer opts not to pay workers’ comp and hires illegal workers, Beasley says, it’s a short hop to not paying other employer taxes.

The owner who called me doesn’t dispute that.

But I detected nothing in his tone that suggested he was crowing about beating the system.

“It’s a tough call,” he says. “That’s why I’m dumping on you. It’s the whole moral dilemma of wanting to do the right thing, but people got forced into making decisions [not to pay] or closing it up.”

Dana Parsons’ column appears Wednesdays, Fridays and Sundays. He can be reached at (714) 966-7821 or at dana. An archive of his recent columns is at