How Free Trade Builds Jobs

ALEJANDRO PORTES

February 03, 1993|By ALEJANDRO PORTES

Fears that the United States had ''lost control of its borders'' and was being overrun by waves of migrants from the Third World led to the Immigration Reform and Control Act of 1986, which aimed at stopping the ''silent invasion'' by granting amnesty to unauthorized immigrants already in the country and by penalizing employers who hired new ones.

The theory was that jobs and higher wages attracted Third-World immigrants and that American employers had every incentive to hire them since there was no law against the practice. Declaring the employment of illegals a felony would change all that.

These rosy predictions were wrong. The amnesty program legalized the situation of more than 3 million immigrants, but it did not stop the inflow of new ones. Indeed, the program may have encouraged additional migration by signaling to newcomers that, given enough time, they too would be amnestied. Pro-immigrant groups in New York and Chicago began to instruct newly arrived illegals to save their rent and electricity receipts so that they would have proof of extended U.S. residence when the ''next'' amnesty program came around.

More important, employers did not behave in the law-abiding manner expected by sponsors of the law. The 1986 act forbade hiring illegals knowingly. This qualifier opened a giant loophole.

Employers were required to fill out a form verifying that they had seen documents proving the legal status of the worker. The requirement promptly gave rise to a new industry, centered in Los Angeles, that produced good-quality counterfeit papers for a reasonable fee. Field studies in Los Angeles and Chicago reported that, when illegals applied for a job without papers, employers frequently told them to go get them and return.

Before passage of the 1986 act, academic experts warned of the difficulties of stopping the influx through employer sanctions. Over 90 percent of illegal immigrants come from Mexico. Growers and small urban employers in the West and Midwest have become dependent on these migrants for reliable, low-wage labor. Barring the immigrants would mean a direct threat to the economic viability of these firms. Employers could be expected to fight to preserve their source of labor, as they have done with notable effectiveness.

On the other side of the border, thousands of villages have sent migrants to ''El Norte'' for generations. Strong social networks created by the process can be expect- ed to neutralize any government attempt to stop this well-entrenched system of labor migration. And indeed, after declining in the aftermath of the 1986 act, the flow of unauthorized Mexican immigrants resumed its upward march. By 1991 it reached 1.2 million, just about what it had been in the early 1980s.

The same experts who warned about the limitations of the new law also suggested an alternative way of reducing the inflow. This option was based not on repressing employers and immigrants in places of destination but on altering employment conditions in places of origin.

Although not conceived for this purpose, the North American Free Trade Agreement is likely to do this. In the short run, the agreement will probably encourage new outmigration by exposing greater numbers of Mexicans to North American living standards and wages. In the long term, however, incentives to migrate will dwindle. This has been the experience of the countries of Southern Europe, former sources of mass migration where the outflow all but ceased after their incorporation into the European Economic Community.

It is not necessary for labor conditions in Mexico to reach U.S. levels in order to eliminate the incentives for migration. It suffices that these conditions improve sufficiently to exceed the heavy costs of becoming an illegal alien. The economic opportunities that will flow toward Mexico in the wake of the free-trade agreement can achieve this and hence accomplish what the 1986 Immigration Act was unable to.

With Mexicans coming no more and with other migrant flow too small to replace them, employers will be forced either to upgrade wages or to mechanize their operations. Both strategies will directly benefit American workers.

Opposition to the free-trade agreement on the grounds that it will move jobs to Mexico is hence short-sighted. To the extent that low-tech industrial and agricultural jobs move to that country, they are likely to improve economic conditions there sufficiently to reduce the migrant flow and hence force former employers to create, directly or indirectly, better paid and more skilled jobs at home.

Because of its size and location, Mexico is the only Third World nation capable of generating an unauthorized labor stream of the present magnitude. If free trade succeeds in bringing the Mexican economy closer to First World levels, it will simultaneously do away with the key source of mass illegal migration.

Alejandro Portes is professor of sociology and international relations at the Johns Hopkins University.

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