The High Cost Of Cheap Labor
by Richard D. Lamm
March 30, 2005

It is easy to see why illegal immigrants are attractive to employers. These are generally good, hard working people who will quietly accept minimum wage (or less), who don't generally get health or other benefits, and if they complain, they can be easily fired. For some employers it is an abused form of labor. Even minimum wage is attractive to workers from countries whose standard of living is a fraction of ours.

But it is not "cheap labor." It may be "cheap" to those who pay the wages, but for the rest of us it is clearly "subsidized" labor, as we taxpayers pick up the costs of education, health, and other municipal costs imposed by this workforce. That has become a substantial and growing cost as the nature of illegal immigration patterns has changed.

For decades, illegal immigrants were single men who would come up from Mexico or Central America alone, pick crops or perform other low paid physical labor and then go home. They were indeed "cheap labor." But starting in the 1960s, these workers either brought their families or smuggled them into the country later. They become a permanent or semi-permanent population living in the shadows but imposing immense municipal costs.

Illegal immigration today isn't "cheap" labor, except to the employer. To the rest of us it is "subsidized labor," where a few get the benefit and the rest of us pay. These costs ought to be obvious to all, but the myth of "cheap labor" and "jobs Americans won't do" persists.

It is hard to get an exact profile of the people who live in the underground economy, but the average family of illegal immigrants has 2 to 4 school-age kids. It costs U.S. taxpayers more than $7000 a child just to educate them in our public schools. Now no minimum wage workers, or even low wage workers, pay anywhere near enough in taxes to pay for even one child in school. Even if their parents were paying all federal and state taxes, Colorado's estimated 30,000 school-age children of workers illegally in the U.S. impose gargantuan costs on other taxpayers.

The dilemma is compounded by the fact that approximately 50 percent of illegal workers are paid in cash, off the books. Go to any construction site almost anywhere in America, and you will find workers paid cash wages. Virtually every city in America has an area where illegals gather and people come by to get "cheap" cash-wage labor.

The health care cost of this "cheap" workforce is also significant and subsidized by U.S. taxpayers. The total cost of this "subsidized" labor is impossible to ascertain and difficult to even estimate, but it is immense and growing as our population of these workers grows. A few benefit, many pay.

Americans pay in more ways than taxes. Cheap labor drives down wages as low income Americans are forced to compete against these admittedly hard working people. Even employers, who don't want to wink at false documents, are forced to lower wages just to be competitive. In many ways it is a "race to the bottom," fueled by poor people often recruited from evermore-distant countries by middlemen who profit handsomely.

Professor George Borjas of Harvard, an immigrant himself, estimates that American workers lose $190 billion annually in depressed wages caused by the constant flooding of the labor market from newcomers.

Let me suggest that correctly analyzed, the fight against illegal immigration is both a liberal and conservative cause. There is no moral or legal justification for this abused form of labor.

Richard D. Lamm is Co-Director of the Institute for Public Policy Studies and a professor at the University of Denver. He is a member of the Board of the Federation for American Immigration Reform. He served three-terms as governor of Colorado, and is the past president of Zero Population Growth.
Email Dick Lamm at

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