07.22.2013 Policy Points

Legal Status And Poverty

An opinion piece in The New York Times explains why having legal immigration status “doesn’t end poverty.”

“We see employers in a number of industries act as if there is a third-class labor market that is paid below the minimum wage and are made to suffer all manner of violations of labor law,” said Nik Theodore, an associate professor in urban planning and policy at the University of Illinois, Chicago. “For many employers it is a calculated risk that they are willing to take. They trust that their employees aren’t going to report them and that nobody from the government is actually going to come check. When you have workers in desperate need of work, they are going to be willing to do a lot of things.”

Over all, unreported income amounts to roughly $2 trillion annually, but cash wages make up only a portion of that estimate, according to Edgar L. Feige, an emeritus professor of economics at the University of Wisconsin, Madison, who has spent decades examining underground and cash economies, in part by using information on how much cash is in circulation at any given time. There is no way of knowing how many workers are earning their salaries in cash, Professor Feige said.

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