Employers suffer a distinct economic disadvantage if they choose not to employ undocumented workers, especially when their competitors continue to do so, according to researchers at the Atlanta Federal Reserve.Examining a sample of Georgia-based firms, they found that the ones initially employing undocumented workers in their first years of existence showed greater initial volatility.
But the move pays off in the long-run if the firm survives, they found, as it cuts its “exit hazard” — the likelihood it fails — by half.
Overall, these firms were 1.5 times more likely to survive than firms that did not employ undocumented workers.
The underlying reason the researchers found for this phenomenon is fairly obvious: undocumented workers keep wages low and allow firms to be more competitive.
As the researchers put it in delicate, federal employee-speak: “Firms may inherently wish to obey the law. But if breaking the law can give firms a competitive advantage, some may be tempted to do so.”
In the past decade, construction, manufacturing and leisure and hospitality industries have employed the most undocumented workers.
Not surprisingly, these industries have been some of the strongest proponents of paths to citizenship, according to the Federation for Immigration Reform.