Business Update with Mark Lacter

How immigration reform could affect the Southern California economy

KPCC's business analyst Mark Lacter explains how pending immigration legislation in Washington might affect the Southern California economy.

Steve Julian: Mark, what do you think could happen if immigration laws are changed?

Mark Lacter: Don't expect too many changes in the short run, Steve, and that might be just as well, given the dynamics of Southern California.  Look, it's well established that having such a large population of undocumented immigrants helps the L.A.-area economy big time, in that it provides a large labor pool willing to accept low-paying jobs that most other workers just don't want to do.

Julian: Picking fruits and vegetables, working in restaurant kitchens -

Lacter: - or as construction workers who get hired by the day.  You know, there's that new USC study you reported that estimates 2.6 million people are in California illegally - about 900,000 of those folks live in L.A. County.  Many of these people have been in the country for at least 10 years, and they represent some of the biggest economic success stories - even without an easy path to citizenship.  (By the way, six out of 10 undocumented immigrants in L.A. County have full-time jobs, which is only slightly lower than the percentage of U.S.-born workers.)  The reality is that without this workforce, the economy would be upended - low-paid jobs would go begging, and wage levels would increase, perhaps by a lot.  The more relevant question is how the reform proposals might affect future migration patterns.

Julian: Naturally, most people entering the U.S. (whether legally or illegally) are looking to make better money and enjoy a better quality of than wherever it is they're coming from.

Lacter: And a few years ago during the recession, the number of immigrants coming in from Mexico and other parts of Latin America nose-dived because there were so few jobs here.  Recently, the pattern began to shift because more work is becoming available.  No amount of border security is going to totally end that back-and-forth pattern - and even though there are plenty of reasons for wanting to become a U.S. citizen, it only makes a difference if the economic opportunities open up.  And. we're not just talking about an opportunity to be a dish washer.  We're talking about the chance to buy a house, to have your kids go to college - opportunities that only happen if the job market is a lot more robust than it is right now.

Julian: If immigration laws won't affect economy, what about living wages?

Lacter: Well, here's a piece of the economy that's getting caught up in politics.  A few of the labor groups supporting Wendy Greuel are making it sound as if all workers in L.A. would be receiving a minimum wage of $15 an hour if she were elected mayor.  That would certainly beat the current minimum wage of $8 an hour.  The problem is, it's not remotely true.  No mayor, no city council is about to raise the minimum anywhere near that much - the city with the highest minimum wage is San Francisco at $10.55.  What the $15 refers to, as you reported yesterday, is an effort to raise the wage of unionized hotel workers near LAX...

Julian: The current wage for those workers is close to $12 an hour.

Lacter: Yes, that's without health care benefits.  Greuel has been unclear on whether she'll push for $15; her opponent Eric Garcetti hasn't taken a position.  But, we do know absolutely that the overall minimum wage is staying at $8.

Julian: What do you take away from this?

Lacter: Two things: first, you shouldn't believe everything you hear in a campaign. The second more important lesson is that the low-wage world is really a world of haves and have-nots.  Here in L.A., some employers are obligated to pay what's described as a "living wage," and that's different than what we know as the overall minimum wage.  A living wage is higher, and usually agreed to on a case-by-case basis.  Besides hotel workers, the living wage is paid by airport operators, building contractors, and other businesses that have some working relationship with the city of L.A.  Can other businesses afford to pay $12 instead of $8?  On a yearly basis, the difference is around $8,000, which for many families is serious money.

Mark Lacter is a contributing writer for Los Angeles Magazine and writes the business blog at LA Observed.com.


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