The Effect Undocumented Labor Has on Wages in the Construction Industry

Undocumented labor refers to work done by individuals who have not provided an employer with identification that show their authority to work or their legal status in the United States (Legal Aid SocietyEmployment Law Center, 2016). Illegal immigrants are mainly the source of undocumented labor in the US. These workers come from both neighboring and distant low-income countries. Undocumented workers provide labor mainly in industries that require low skills such as construction, manufacturing, agriculture, and hospitality and leisure. The US government has over the years tried to curb undocumented labor, however, its efforts have not been successful due to the ever-increasing number of these workers who provide cheap labor in low-skill sectors. Studies have shown that increased immigration of undocumented workers to the US affects many sectors of the economy in different ways (Bratsberg et al. 2015). Undocumented labor has been stated to have significant effects on wages in the construction industry due to the illegal status of the undocumented labor and the laborers.

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To start with, undocumented labor leads to a decline in wages in the construction industry. The wages of the natives are more likely to be influenced by the immigrant supply of labor. Undocumented workers usually earn lower wages compared to the documented as they are ready to accept lower wages compared to their productivity. Since some of the undocumented workers are living temporarily in the US, they are ready to work for even lesser wages to be able to reach certain goals due to their inability to access documented labor. Their readiness to provide cheap labor affects the wages of the natives in the industry. For the natives to be equally competitive, they are left with no options than to also agree to work for lower wages or risk losing their employment thus affecting the wages in the labor market. In addition, undocumented labor leads to fall in wages due to reduced benefits offered to these workers. Corporations that employ undocumented workers do not give them some benefits that are enjoyed by others such as health. By reducing benefits provided to the employee, the employer gains more financial benefits. Most employers thus tend to favor these workers due to the cheap labor that they provide as they are after maximizing their profits. Moreover, the influx of undocumented workers saturates the market with cheap labor. The supply of labor in the construction industry thus becomes higher than the demand. When the supply is higher than the demand, wages decline in the construction industry. The reduced benefits, increased supply, and cheap labor provided by the undocumented workers in the construction industry thus translate to lower wages in the construction industry (Bratsberg et al., 2015).

Besides, undocumented labor leads to wage disparities in the construction industry. Studies have shown that undocumented workers are more vulnerable to exploitation and discrimination by the employers. Undocumented laborers received different treatment from those of the natives, as employers tend to disregard laws that regulate the labor marker such as overtime pay and minimum wages. Additionally, the natives tend to discriminate against undocumented laborers in the industry thus giving them lower wages than their counterparts who possess similar skills. This inequality in pay originates from lower evaluation given to experience and training that is attained outside the United States, little knowledge about the labor market, and lack of English language skills. Moreover, the lower level of educational training that is characterized by immigrant workers also contributes to their lower wages. Additionally, these workers are likely to receive lower wages as a result of a weakened bargaining power due to the lack of documentation of these workers. Furthermore, undocumented workers are always willing to accept lower wages due to institutional and legal barriers. Due to factors such as harsh municipal policies, animosity from natives, and their ineligibility to benefit from government programs, lower wages received by this group of workers causes wage disparity in the construction industry. ( Hall, Greenman, & Farkas, 2010).

Despite the negative effects on wages associated with undocumented labor in the construction industry, studies have also indicated that undocumented labor in the construction industry can lead to an increase in wages. An increase in wages emanates from increased productivity and specialization that is provided by such workers. Scholars argue that when there is an increase in the number of an undocumented workers in the industry, task specialization is likely to emerge in the industry. The documented workers are more likely to be assigned new roles that require specialization as the undocumented perform tasks that were previously performed by the latter. For instance, documented laborers may be given roles that require language skills which many undocumented workers lack. These new roles are likely to provide better wages than their previous roles thus leading to improved wages in the industry (Hotchkiss, Quispe-Agnoli, & Rios-Avila, 2015).

From the above discussion, it is evident that undocumented labor has significant impacts on wages. This labor leads to decline in wages, wage disparity, and in some instances increase the wages of laborers in the construction industry. The positive effect of this labor thus shows that undocumented labor does not always have detrimental effects on wages. Besides, this labor has been associated with the growth of the economy due to increased productivity and lower cost of production.

References

Undocumented workers: Employment rights. (2016). Legal Aid Society Employment Law Center. Retrieved from https://las-elc.org/fact-sheets/undocumented-workers-employment-rights

Bratsberg, B., Raaum, O., Roed, M., and Schone, P. (2015). Immigration wage effects by origin. Scandinavian Journal of Economics 116(2), 356393, 2014 DOI: 10.1111/sjoe.12053

Hall, M., Greenman, E., and Farkas, G. (2010). Legal status and wage disparities for Mexican immigrants. Social forces, 89(2), 494-513. Retrieved from http://eds.b.ebscohost.com/ehost/pdfviewer/pdfviewer?vid=9&sid=1da94500-7a0b-4200-ac14-27104bf06d62%40sessionmgr107&hid=120

Hotchkiss, J., Quispe-Agnoli, M., and Rios-Avila, F. (2015). The wage impact of undocumented workers: Evidence from administrative data. Southern Economic Journal, 81(4), 874906. DOI: 10.1002/soej.12020