May 18, 2007 — -- With the announcement from Washington on Thursday of a possible compromise bill that would allow millions of illegal immigrants in the United States to become legal and start the process to become citizens, ABC News spoke with several economists about the potential economic impact of this plan.
For the most part, the consensus was that "most of the impact is already there" as Giovanni Peri, a economics professor at the University of California in Davis, described it.
The perception that millions of undocumented immigrants working as busboys, maids and day laborers at construction sites earn substandard wages is largely inaccurate.
In the United States "labor markets are competitive enough that it's difficult to find evidence that illegal immigrants have been getting paid less than minimum wage," Pia Orrenius, a senior economist at the Federal Reserve Bank of Dallas who studies labor and immigration, told ABC News.
David Card, a labor economics professor at the University of California in Berkeley, agreed. Immigrants from Mexico and other Latin American countries are not crossing the border for minimum wage jobs, but search for high wages -- $10 an hour for example -- working in construction or in the agricultural industry.
"Relatively few employers are paying below the minimum wage," he said. "For most, there is some 'don't ask don't tell.' They have some sort of document [from the immigrant] and they are hiring on the presumption the document is valid."
And while some believe these undocumented workers are taking away jobs from legal citizens, economists disagree. They say the demand for low wages workers is strong in this country and that the debate among economists focuses on whether or not these illegal workers depress the wages for these sorts of jobs.
"Being legal or illegal doesn't make a big difference in wages," concluded Peri. He said there have been a few studies examining the issue and that "the most important determinate of wages are skills, occupation, time in the job, experience in the country, level of English."
"If experience is any guide," said Gordon Hanson, director of the Center on Pacific Economies at the University of California in San Diego, "you saw some bump up in wages for workers who were legalized. But the evidence doesn't suggest these workers have more bargaining power, that suddenly legalization treats you better. It means you are more mobile and you can take advantage of new opportunities that come along that you would be reluctant to with illegal status."
One impact that could be felt years from now will be to the nation's social service programs such as education, Medicare and welfare.
"Looking 10 years down the line," said Hanson, "this is what I view as big flaw in immigration reform. It doesn't address the fiscal costs."
Others believe this impact could be balanced by an increase in taxes that would be paid by these now legalized workers.
So while the legalization would be a huge change in the lives of the millions of undocumented immigrants currently in this country, economists believe the short-term economic impact will be limited.
"You can legalize, but the fundamentals of their employment won't change," said Orrenius. "They will be in same job."