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CHICAGO’S UNDOCUMENTED IMMIGRANTS: AN ANALYSIS OF WAGES, WORKING CONDITIONS, AND ECONOMIC CONTRIBUTIONS

February 2002
Chirag Mehta, Nik Theodore, Iliana Mora, Jennifer Wade
PDF Paper (266KB)

Executive Summary

Undocumented immigrants are strongly committed to working in the United States and they make significant contributions to the economy. Undocumented workers account for approximately 5% of the Chicago metro area labor market and represent a growing segment of the low-wage workforce. Undocumented immigrants earn low wages, work in unsafe conditions, and have low rates of health insurance. Juxtaposed against these harsh realities is the fact that the undocumented workforce supports thousands of other workers in the local economy, pays taxes, and demonstrates little reliance on government benefits. This study reports the findings of a survey of 1,653 documented and undocumented immigrants living in the Chicago metro area. Using a standardized questionnaire, immigrants were asked a series of questions regarding their employment status, wages and working conditions, access to health care, utilization of government safety-net programs, demographic characteristics, and legal status. The key questions that guided this analysis include:

· To what extent does working without legal status increase the likelihood of
unemployment and depress workers’ wages?

· To what extent do undocumented immigrants more often work in unsafe working
conditions?

· To what extent do undocumented immigrants utilize government safety-net programs?

· What economic contributions do undocumented immigrants make to the local
economy?

Key Findings

1. Labor force participation and unemployment

Undocumented immigrants seek work at extremely high rates (91%), and most do
not experience unemployment at rates that are significantly different than the Chicago metro area average. However, undocumented Latin-American women experience unemployment rates that approach 20%, five times as high as the average unemployment rate for the remainder of the undocumented workforce. Factors that significantly increase the likelihood of unemployment include:

· the combined effect of undocumented status, being female, and being of Latin-American
origin;

· the lack of dependent care; and

· obtaining work through temporary staffing agencies.

2. Wages

Most undocumented immigrants are employed in low-wage service and laborer
occupations. Approximately, 30% of undocumented immigrants work in restaurant-related,
hand-packing and assembly, and janitorial and cleaning jobs. The average (median) hourly wage earned by undocumented workers is $7 .00.

All else being equal, working without legal status, in combination with the effects of
national origin and gender, induces significant wage penalties for Latin Americans:

· Undocumented Latin-American men and women experience statistically significant
wage penalties—22% and 36%, respectively—after controlling for length of U.S. work
experience, education, English proficiency, and occupation.

· Eastern-European women experience wage penalties as a result of their national origin
and gender, but they do not experience penalties associated with their legal status.

· Eastern-European men, documented Latin-American men, and immigrants from Asia,
the Middle East, and Western Europe do not experience wage penalties associated with
their national origin, gender, or legal status.

Factors including English proficiency, unionization, and obtaining employment in
higher-paying occupations help undocumented Latin Americans earn higher wages.
Educational attainment, however, does not have significant positive wage effects for
undocumented Latin Americans. Importantly, attaining additional levels of education,
having English proficiency, and accumulating additional years of U.S. residency do not
neutralize the negative wage effect of working without legal status.

All else being equal, securing work in higher-wage occupational categories induces significant wage advantages to undocumented workers and neutralizes the negative wage effect of working without legal status. However, undocumented status limits Latin Americans’ access to higher-wage white-collar jobs.


3. Working conditions

Undocumented immigrants report working in unsafe conditions at considerably
higher rates relative to immigrants with legal status. Moreover, immigrants without legal status also report alleged wage and hour violations at considerably higher rates relative to documented workers.

Lack of access to health insurance is a significant problem for undocumented
workers. Only 25% of undocumented workers currently employed are covered by health insurance. The most commonly reported reason for not having health insurance among immigrants who are currently employed is that their employer did not offer health insurance or the employer-sponsored plan was too expensive to access.


4. Use of government benefits and economic contributions

The vast majority of undocumented immigrants reported that they, and adults in their household, do not receive benefits under government safety-net programs, despite their low earnings. Benefit utilization is comparably low among immigrants with legal status.

The consumer expenditures of undocumented immigrants in the Chicago metro area generate more 31,000 jobs in the local economy and add $5.45 billion annually to the gross regional product. While exact tax contributions were not calculated, the survey data indicates that approximately 70% of undocumented workers pay taxes.

The results of this study strongly suggest that attaining legal status would improve the wages and working conditions of undocumented immigrants. Estimating the size of any wage increase and subsequent wage effects as a result of any changes to federal immigration policy, such as legalization or guest-worker programs, is beyond the scope of this study.

The survey was carried out during the 3 rd quarter 2001 through 38 community-based organizations, community colleges, social service providers, and churches. This study was made possible by a grant from the Woods Fund of Chicago.

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