Dying to Work in America’s Black Market

The recent deaths of ten illegal immigrants in San Antonio, Texas are a gruesome example of the human costs of severe immigration restrictions. The immigrants wanted to be smuggled into the United States and, presumably, paid somebody for that service. They had no way to enter lawfully because the United States government allows in few temporary migrants to work in a handful of occupations and there is essentially no green card category for low skilled workers. Many of these people face the choice of continued poverty in their home countries or taking a risk at a better life working in the American black market. Attempting to work in the United States is risky and sometimes leads to deaths because of immigration enforcement and more enforcement will result in more deaths. 

These immigrants did make the choice to break American immigration laws but it does not follow that they are the ones to blame for their own deaths, despite what some restrictionists think. Immigration laws are primarily designed to stop Americans from voluntarily hiring, contracting, or selling to willing foreigners. If the immigration laws were concerned primarily with protecting the rights of Americans and those illegal immigrants who died in the Texas heat intended to do harm, had serious criminal records, or there was another excellent reason to think they would have hurt people here, then their deaths could be a defensible cost of a rational system that does more good than harm. At the very minimum, one could claim that the law that incentivized them to enter the black market at great risk was intended to protect people. But nobody familiar with our immigration laws or the net-positive effect of immigrants on Americans can make that argument with a straight face. These illegal immigrants died because of an international labor market regulation.    

Those who die from the heat in shipping containers are only a fraction of all deaths crossing the border. From 1998 through the end of 2016, 6,915 people died crossing the Southwest border. The number of deaths is somewhat up over that time even though the number of apprehensions is way down meaning that the inflow of illegal immigrants does not primarily drive the number of deaths (Figure 1). 

Immigration Enforcement Aids Smugglers – Unaccompanied Children Edition

The increase of human smugglers transporting unauthorized immigrants to the United States is likely a consequence of more effective border enforcement.  Although the Obama administration has de-emphasized internal immigration enforcement after 2011, his administration has ramped up enforcement along the border – focusing on increasing the legal and economic costs imposed on unlawful immigrants apprehended while trying to enter the United States.  Since border and internal enforcement are substitutes, the shift in resources and increase in penalties for unlawful crossers does not represent a decrease in total enforcement.  Matt Graham from the Bipartisan Policy Center wrote an excellent breakdown of the reprioritization of immigration enforcement, the increase in penalties, and how it has deterred unauthorized immigration.

The price of smuggling is an indication of the effectiveness of immigration enforcement along the border.  The first effect of increased enforcement is to decrease the supply of human smugglers.  As the supply of human smugglers decreases, the price that remaining human smugglers can charge increases.  Before border enforcement tightened in the early 1990s, migrants typically paid about $725 (2014 dollars).  Currently, unauthorized migrants from Central America are paying around $7500.  

Why Are There So Few Unlawful Immigrants?

Labor markets are heavily distorted by immigration restrictions, producing wide and persistent wage differences for observably identical workers in developed and developing nations. Income for low skilled American workers is 16 times as high as Haitians in Haiti, about 7 times as high as Indians in India, and about 4 times as high as Mexicans in Mexico—all adjusted for purchasing power parity. Just by moving here immigrants can largely close that wage gap. 

There are very limited avenues for low skilled immigrants to immigrate legally, which raises an important question: if the economic benefits of immigrating are so high, why are there only 11 to 12 million unlawful immigrants here?  

Below are the two broad reasons: 

First, the benefits of immigrating are not as high as they seem. The probability of being employed in the destination country is a vital variable because unemployment does not confer any benefits on the immigrant. The skill level of prospective unlawful immigrants restricts job opportunities to certain occupations. If the sectors where low skilled immigrants work have high unemployment rates, as many do now, the chances of earning higher wages here is lower so the economic benefits of immigration are lower. Downward wage bargaining by immigrants is limited but unlawful immigrants do take a wage cut, all else being equal, of about 20 percent to compensate their employers for the legal risk of hiring them and other reasons. Growing economies in places like Mexico, China, and elsewhere might partially offset the benefits of immigrating by promising higher incomes in the near future.   

Second, the cost of unlawfully immigrating is very high. Opportunity costs, search costs (including language barriers), transportation costs, legal costs, the probability of dying en route, the probability of being sold into slavery, and the probability of not making it to the United States despite paying the smuggling fee are all high and increase risk. Immigration enforcement is very effective at deterring most would-be unlawful immigrants. High smuggling fees are a high up front cost. 

Immigration can be understood as an investment over a period of years.  The length of time the immigrant spends here employed at higher wages increases the economic benefits of immigrating. The costs of immigrating, like paying for a smuggler, are fixed while there seems to be a low marginal cost for staying here to avoid immigration enforcement. The psychic costs could shift with time.

Here is an example:

The Dangerous Trade in Black-Market Cigarettes

NPR reports:

Black-market cigarettes are costing many states hundreds of millions of dollars a year in lost tax revenue. And the lucrative, illicit trade is attracting violent criminal gangs that can be lethally ruthless.

The rewards, and the risks, of dealing in contraband cigarettes became quite clear recently in northern Virginia, says Capt. Dennis Wilson of the Fairfax County Police Department.

The Laffer Curve Strikes Again

In the private sector, no business owner would be dumb enough to assume that higher prices automatically translate into proportionately higher revenues. If McDonald’s boosted hamburger prices by 30 percent, for instance, the experts at the company would fully expect that sales would decline. Depending on the magnitude of the drop, total revenue might still climb, but by far less than 30 percent. And it’s quite possible that the company would lose revenue. In the public sector, however, there is very little understanding of how the real world works.

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