Step One: Illegal Immigration

Seeing the Forest Beyond the Trees in Front of Us

One of our very first posts (written at the request of one of our Vinoveritati) was an explanation of the term wicked problem. Lacking much imagination, we titled that early post “Wicked Problems” and explained why wicked problems are tough to confront.

Among their trickiest characteristics: wicked problems usually have lose-lose outcomes, sometimes efforts to solve them can actually make the issue worse, and it is possible that the issue can only be mitigated and never fully resolved.

Resolution of wicked problems (or mitigation) ultimately means sacrifice on all sides. -another characteristic of a wicked problem is that there may be several different competitors involved in the issue-

To gain the necessary sacrifice to confront wicked problems from the various groups involved, leaders must first thoroughly understand the problem and then be able to communicate the issue and factors at play to those they lead effectively. Understanding is the key, which is why step one of the problem-solving process is to define the problem.¹

Only when the problem has been properly defined can leaders share their understanding with constituents and advocate for the compromise necessary to effect change. It doesn’t take a rocket scientist to deduce that failing to understand a problem reduces our chances of solving it to zero.

Defining the problem sounds like a pretty simple concept. It helps us see the bigger picture: the proverbial forest beyond the trees. Unfortunately, people often skip this first step on their way to identifying solutions. 

Folks skip step one in the problem-solving process for several reasons. Most are lazy and find it much easier to squawk about a problem than start the hard work required to confront it. Others, having realized that the only workable solutions will be unpopular, ignore problems or kick the can down the road. However, the worst offenders (in our view) are leaders who are uninterested in solving the problem. Instead, they reframe the problem in a way that benefits them personally. Then, they draw maximum attention to the issue and to themselves instead of proposing solid solutions to the problem. In effect, they never intended to resolve the issue.

Our goal in the series of “Step One” posts will be to address problems by first defining the issue outside of politics, spin, bias, lies, and misconceptions in order to see the root causes. We may make a few wrong turns on the way, but our goal is to follow the truth wherever it takes us.

Sometimes it’s hard to see the forest, for the trees…

The crisis at our southern border allows us to exercise step one and, at the same time, work towards defining that wicked problem.

Is illegal immigration the disease or simply a symptom of a greater sickness? Let’s follow the facts down the rabbit hole and see where they lead.

At the risk of offending some, we must start with a discussion of terminology. A person who violates US immigration laws by illegally crossing the border to work and live in the US is an illegal immigrant.

That certainly doesn’t make those folks murderers, rapists, or terrorists, and we should never use the term as a way of “othering.”  However, if we’re going to push for facts, let’s acknowledge the violation of the law and move on. There are bigger fish to fry here…

Let’s start with the largely uncontested fact that the vast majority of illegal immigrants are crossing the southern border to find a better life. In most cases, that is represented by employment opportunity. The majority of illegal immigrants are coming for jobs to provide for themselves and their families.

That largely uncontested fact is critical to defining the problem because it illustrates the pull factor involved.

The pull factor is that US companies are hiring illegal immigrants in large numbers. If US companies did not have jobs for, and hire illegal immigrants as undocumented laborers, they would not cross the border and those already here would return to their countries. People looking for jobs go where the jobs are.

US companies hire illegal immigrants to fill positions because they provide the lowest possible labor costs. Businesses squeeze the maximum amount of product out of the smallest amount of resources (labor, material) and then charge the highest price for that product that the market will bear.

The push to get the lowest possible resource cost drives the demand for immigrant labor. It is solely about increasing profits.

That is capitalism, and we should not be mad at corporations for doing so. If we allow it, they will do it. They are conditioned to act based on the environment that the government creates. That is simply a fact that we must acknowledge.

Continuing down the rabbit hole… immigrants, citizen-consumers, businesses, and politicians (on both sides of the aisle) benefit from illegal immigration.

Immigrants: The most obvious beneficiaries of illegal immigration are the immigrants and their families. The point of their immigration is to gain employment and opportunity.

While often working for substandard wages and living in less-than-optimal conditions, they often still have better opportunities than in their nation of origin.

Business: Industry is another obvious beneficiary of illegal immigration. We have already discussed the foundation of their benefit. Any time a resource (labor in this case) can be obtained at less than the average fixed cost, it means more profit.

Additionally, immigrants who have no legal documents are more likely to work in “less than ideal” environments. Hard work for relatively low pay = maximum profits for industry.

What may be less evident is the taxpayer subsidy to businesses for every low-wage employee they hire.  If companies pay low wages, the employees must rely on welfare and the social safety net to make ends meet. If companies don’t provide healthcare benefits or retirement plans, the taxpayer pays for those via healthcare subsidies (or emergency room overruns), Medicare, and Social Security benefits that exceed the employee's contribution.

It's easy to say that companies should not have to provide higher wages to cover those things, but someone will pay for them. Low-wage workers can barely afford to eat… you can’t get blood from a turnip. -More on this later-

Citizen-Consumers: When businesses can keep costs low, product prices remain low. Citizen-consumers not competing with undocumented laborers for employment will benefit by maintaining buying power.

Political Leaders: This is where it starts to get complicated. Politicians on both sides of the aisle benefit from the current undocumented labor paradigm and claim ignorance about the harm that they cause for political gain.

It is difficult to get a man to understand something when his salary depends on his not understanding it.  -Upton Sinclair-

• Left-leaning Politicians openly welcome undocumented labor. At the national level, immigrants provide a needed source of labor in a tight job market. More importantly, undocumented laborers work for less than a living wage.² Those low wages have two effects.

  • For an Administration tasked with fighting inflation, those low wages lower production costs and prices, which slows inflation.

  • Far from being humanist, those politicians use cheap labor to reduce inflation and support a paradigm where the income gap is so severe that middle-class and blue-collar laborers cannot afford to live in the communities where they work. In cities where not even the police and teachers who support that community can afford to live, undocumented blue-collar labor support is irreplaceable.

  • Using undocumented workers to mitigate the lack of a middle class exacerbates the problem. It increases the taxpayers’ burden by subsidizing business payrolls with social safety net programs, Medicare, and Social Security.

• Right-leaning Politicians are as dishonest about their handling of illegal immigration as their counterparts on the left. They only pretend to oppose illegal immigration and undocumented workers.

  • The proof is in the pudding.

    • A recent Supreme Court ruling confirmed the right of States to take action that ensures businesses hire only legally documented workers. Yet, instead of fining businesses for every undocumented laborer that they hire, States turn a blind eye.

    • At the same time Politicians advocate for a law enforcement “show” at the southern border.

  • If there were no jobs in a border State for undocumented workers (because of stiff fines) illegal immigrants would bypass the State in search of jobs.

  • Instead of fining businesses for hiring undocumented workers, right-leaning politicians have involved themselves in a weird Kabuki dance to avoid doing so. Why? Because cutting off illegal immigration would drive many companies in their districts and States out of business. So instead, they turn a blind eye while voicing nativist rants against foreigners to win votes.

Both sides of the aisle are caught between a rock and a hard place, and neither of those is illegal immigration. Illegal immigration is not actually the problem. The problem is terrible economic policy. We are using illegal immigration to mitigate the negative effects of that bad policy.

Let’s examine the claim that shutting off the illegal immigrant “valve” by fining companies and making it painful to employ them would crash our economy and destroy the current corporate paradigm.

In 2019, 53% of farm workers were undocumented. As were 15% of construction workers and 24% of maids and cleaners. “A study commissioned by the dairy industry suggested that if federal labor and immigration policies reduced the number of foreign-born workers by 50 percent, more than 3500 dairy farms would close… Total elimination of immigrant labor would increase milk prices by 90 percent.”³ Either of the two would significantly affect the dairy industry. -Can you say, wicked problem?-

At its simplest, a living wage is what one full-time worker must earn on an hourly basis to help cover the cost of their family’s minimum basic needs where they live while still being self-sufficient. -MIT Living Wage Calculator-

The issue is more significant than economic damage to a single industry. As noted, the US taxpayer subsidizes corporations that do not pay living wages. When a full-time employee needs welfare to make ends meet, needs subsidies to pay for their healthcare, and draws more from social security to retire than they paid in… the US taxpayer is subsidizing that company’s failure to pay a living wage.

That is an acceptable position for very small companies. However, it should be unacceptable for large corporations and multinational conglomerates to pay less than a living wage.

Example: Walmart reported $161,043,000,000 (yes, that’s billions) in profit for last year. The company paid $16,680,000,000 (still billions) in dividends to its shareholders. Walmart’s CEO made $27,000,000 in salary (sadly, that is reasonable for corporate CEOs). At the same time, the bottom 10% of Walmart employees were paid $19,000 per year. -that is a whole hell of a lot less zeros- Which is below the poverty level for a family of two. This means that to support a family of two, the average Walmart worker had to work 2 jobs!!

What’s the math on the taxpayer subsidy?

Walmart has approximately 2,100,000 employees. With profits of $161.043bn last year, Walmart could have given every employee a bonus of $76,687.14 (the vast majority of which would have been spent in the US economy or invested for their retirement).⁴ If Walmart had done so, none of its workers would have needed taxpayers to subsidize their pay. 

Instead, many Walmart employees get welfare and subsist on social security in retirement. US taxpayers continue to subsidize Walmart’s employee payroll.

Before we go on, we need to point out that Walmart is doing nothing illegal. Moreover, Walmart is far from the worst offender.

To some degree, we are picking on Walmart because they openly provide their data. Other companies and whole industries supported by undocumented labor are more opaque. Big agriculture, meatpacking and the construction industry (to name a few) are less open about their wages and the taxpayer subsidies to their payrolls.

But we should not be surprised by this. When the average CEO earns 400 times more than the average worker, there is little incentive to change the paradigm from the top⁵

So, what does any of this have to do with illegal immigration? Illegal immigrants make up the lion's share of the very lowest-paid employees in our economy. If illegal immigrants did not shore up the bottom of our labor/wage construct, the entire system would need to be reformed. Paying a living wage to the whole workforce would deeply cut corporate profits. The result would be higher prices and higher inflation.

Identifying a problem without proposing solutions goes against our very nature and training. But our purpose here is step one. We’re here to help identify the problem. There are folks better suited to beginning the discussion of how to solve the problem.

Is illegal immigration the disease or simply a symptom of a greater sickness?

Illegal immigration is a symptom of failed economic policy (by both sides of the aisle over numerous administrations). Our economic policy is bad and illegal immigration is one of the patches that are keeping the sinking boat afloat.

If you don’t believe that, look around to see if Wall Street, major industries, or multinational conglomerates are demanding that we shut the borders to keep out illegal immigrants. No investor who cares about his stock dividends is concerned about undocumented labor (nor about a dwindling middle-class).

We have chosen capitalism as our economic system because it benefits our nation the most. However, if aspects have become perverted and are detrimental to our country, we need economic reform. There are ways to address this problem in ways that benefit our country and can help “guest workers.” To get there we need to be honest about what the problem really is.

Now you know why most political leaders skip step one of the problem-solving process AND why they are allergic to wicked problems.

There are no easy answers :-)

1. Basic Problem Solving Steps downloaded from Synergogy

2. https://livingwage.mit.edu/

3. These U.S. industries can't work without illegal immigrants - CBS News

4. https://www.macrotrends.net/stocks/charts/WMT/walmart/gross-profit#:~:text=Walmart%20gross%20profit%20for%20the%20twelve%20months%20ending%20April%2030,a%202.65%25%20increase%20from%202022.

5. CEO vs. Employee Salaries at America’s Top Companies | Business.org