MiMegasite, May 22, 2006, Monday

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MiMegasite

May 22, 2006

HEADLINE: Immigration Angst

BYLINE: Marshall Krantz

BODY:
Federal immigration reform, currently being weighed in Congress, could have many implications. Here's one: It could drive meeting prices higher as hotels pay more in worker wages and then pass those costs along to meetings buyers.
A House bill could curtail the flood of illegal immigrant workers into the U.S. labor market, thereby tightening the labor supply and driving up wages. Meanwhile, the Senate, taking a different tack, is considering proposals that could confer legal status on the vast majority of illegal immigrants, thus empowering workers to demand higher wages and better working conditions..
As of March 2005, nearly 5 percent of the civilian workforce, or about 7.2 million people, consisted of illegal immigrants, according to the Pew Hispanic Center. The percentage in the hospitality industry was twice that, amounting to 1.2 million people, second only to construction in the concentration of illegal immigrant workers, according to Pew.
The most widely accepted number of illegal immigrants residing in the United States also comes from the Pew Hispanic Center: 11.5 million to 12 million people as of March this year, with a net increase of about 500,000 annually.
Recent immigrants of all kinds, and especially illegals, are concentrated in low-skill, low-wage jobs such as those the hospitality industry requires in large numbers: housekeepers, porters, waiters and dishwashers, for example. Pew estimated that illegal immigrants make up 17 percent of cleaners and 12 percent of food service workers throughout the country.
A bill that the House passed last year, HR 4437, would make it a felony for people to be in the country illegally, with imprisonment prior to deportation for those convicted. Under current law, illegal immigrants are simply deported if caught. The bill also would require employers to verify the legal status of people they hire, with stiff fines for those who fail to comply.
The House legislation, should it become law, certainly would decrease illegal immigration, but critics question how workable the bill is. Just to ensure employer compliance, they say the federal government must set up a huge and expensive enforcement apparatus it does not now have.
About 800 inspectors at the U.S. Labor Department enforce employer compliance throughout the country at present -- approximately the same number as Belgian inspectors policing employers in the city of Brussels alone, according to Muzaffar Chishti, director of the Migration Policy Institute at New York University School of Law.
"To believe that you're going to control illegal immigration just by passing a law is fantasy," said Chishti. "It's not going to happen on the cheap."
The House bill requires that employers check prospective employees' Social Security numbers against a central federal database, but Chishti said the database is notoriously unreliable. Under current federal law, employers must ask prospective employees for some form of official identification such as a Social Security or residency card, but the law prohibits employers from verifying the document's authenticity.
A law based on the House bill but without adequate enforcement will probably maintain the status quo -- rampant violation of immigration laws -- which depresses wages for all low-skill workers, according to Vernon Briggs, a professor of labor economics at Cornell University.
"One of the reasons why wages at the low end of the U.S. income distribution have been going nowhere is because of the increased supply of unskilled workers, of which illegal immigrants are a part," said Briggs.
Approximately 34 million workers in the United States earn low wages, defined as up to $8.75 an hour, or $16,000 annually for a family of four, according to Briggs. He estimated that 95 percent of illegal immigrants work in low-wage jobs, thereby accounting for about 20 percent of low-wage workers.
Proposals in the Senate essentially legalize the status quo. With some minor variations, the proposals lay out a path to permanent residency or citizenship for many of those now here illegally and set up a guest-worker program that allows approximately 400,000 more people to enter the country each year.
The proposed guest-worker program differs from past such programs in two key respects: It provides a procedure for guest workers to obtain permanent residency instead of having to return home after a set amount of time; and workers can change jobs andstill maintain their eligibility under the program instead of having to work only for the employer who invited them into the country.
This second provision effectively gives workers much more power vis-à-vis their employers to push for better wages and benefits and to complain to authorities about possibly illegal working conditions. Before, guest workers typically accepted low pay and substandard conditions out of fear that employers would send them home.
A law that confers legal status on now-illegal immigrants would also embolden the newly legal workers, many of whom would either ask their employers for raises or seek better-paying jobs.
The mean hourly earnings of legalized workers rose about 15 percent over the four to five years following passage of the last major federal law related to immigration, according to Chishti. That law, the Immigration Reform and Control Act of 1986, granted amnesty to about 2.7 million illegal immigrants.
If immigration reform results in higher wages and more benefits for workers, it seems likely that hoteliers will pass along the extra costs to guests, including groups, rather than absorb those costs through decreased profits.
It's also questionable whether the congressional proposals will increase hotel staffing levels, which have been headed downward despite rising hotel profits over the past couple of years.
The number of hotel workers per 100 guestrooms has steadily decreased from 67.8 in 2001 to an estimated 61.8 last year, according to PricewaterhouseCoopers, the New York-based professional services firm.
Meanwhile, Marriott International reported a 31 percent increase in net earnings in the first quarter over the same quarter last year, totaling $167 million; and Hilton Hotels reported a 63 percent increase, or $152 million, helped in part by its acquisition of Hilton International.
Hoteliers say they would hire more workers if they could, but jobs go begging because many American-born workers will not accept hard, low-status jobs, such as housekeeper and dishwasher, no matter the wage.
"Clearly if you improve wages and conditions for some jobs, U.S. workers would be interested," said Chishti. "But for other jobs, U.S. workers would not be interested no matter what. The U.S.-born think they're entitled to more than dead-end jobs."
Melissa Dallas, director of the hospitality and tourism management program at Florida Atlantic University, in Boca Raton, said the unemployment rate in Florida was 3.1 percent in March, lower than the 4.7 percent national average. In other words, Florida, a major meetings destination with a high concentration of illegal immigrants, has a very tight labor market.
"My best guess is that our industry experiences an even lower unemployment rate than the state average," said Dallas, "particularly in light of the constant inquiries on the part of hospitality businesses for managers and employees."
Said Shawn McBurney, vice president of government affairs for the American Hotel & Lodging Association (AH&LA), "We need a guest-worker program; we want to get more labor here."
While the Senate proposals don't provide for more workers than those already entering the country -- they simply legitimize them -- the increase in legal immigrants could provide a greater supply of workers to hotels that require documentation.
However, a sizable number of illegal immigrants may already work at hotels that require documentation, including the major chain hotels despite the claim that they screen out illegals through a more rigorous hiring process than small independent hotels.
A Pew study estimates that 57 percent of illegal workers pay Social Security taxes, indicating the workers submitted forged cards to employers.
"Anyone who thinks there are not undocumented workers in major hotel chains is kidding themselves; you can go into any city and buy forged papers," said Thomas Snyder, political director of Unite Here, the primary union representing hotel and restaurant workers.
Like AH&LA and other major business groups, including the U.S. Chamber of Commerce, Unite Here supports some version of the Senate proposals. Where the business groups see a more reliable supply of low-skill workers, the union sees a healthier environment for workers -- and a better opportunity to win more recruits.
"The McCain-Kennedy compromise would make it easier to organize immigrant workers into unions, no question," said Snyder, referring to the proposal offered by Senators John McCain, Republican of Arizona, and Edward Kennedy, Democrat of Massachusetts.
McBurney agreed that some version of the Senate proposals could help the union, but AH&LA favors the Senate proposals over the House bill nonetheless.
"There is the potential for new recruits for the union, but our primary concern is the national economic interest," said McBurney. "If there are new union folks, we'll deal with that later."