Legal Status Boosts Immigrant Wages

Granting legal status to undocumented U.S. residents helps them find jobs that are better suited to their skills, and helps increase wages and economic efficiency, according to a study by economics professors at the University of California, Riverside and Pomona College, which appears in Policy Matters, a quarterly journal published by UC Riverside. 

Previous studies have shown that legalization would not depress wages or employment among U.S. citizens. Economists Fernando Lozano of Pomona College and Todd Sorensen of UC Riverside determined that granting legal status increases the average pay of undocumented immigrants by 20 percent. 

"Most of these effects can be attributed to immigrants switching into higher-paying occupations after legalization, rather than receiving higher wages in jobs they previously held," they said. 

"Given the big increase in wages and job freedoms, it is perhaps not surprising that the vast majority of Latino voters want to see immigration reform happen sooner rather than later," Sorensen said. "But it's also important to note that the U.S. economy as a whole also benefits, given increases in economic efficiency and wage returns to skills." 

"This research is an important piece of the larger picture on immigration reform," Sorensen said. "A path to legal status will help immigrants by improving their earnings, increase U.S. economic productivity by allowing immigrants to find jobs better matched to their skills, and to top it all off, will likely have only a negligible impact on the wages of native-born workers." 

Sorensen and Lozano said the population of undocumented immigrants has grown by about 250,000 per year over the last 20 years, and numbers approximately 12 million nationally. The majority of that population – between 70 and 80 percent – is Latin American and is concentrated in a small number of states. 

For these and other reasons, the report notes, "undocumented workers are unwilling or unable to use the competitive force of outside offers in the labor market to keep their wages on par with their documented counterparts." 

Undocumented immigrants may also be unable to perform the same types of jobs as native-born workers or authorized immigrants, the authors note. "Native-born workers are more likely to specialize in occupations that require more communication (taking advantage of being native speakers of English), leaving low-skilled immigrant workers to specialize in occupations that are more intensive in manual tasks." 

Source: Policy Matters, "The Labor Market Effects of Immigration Reform," March 1, 2011.