Hiring Undocumented Workers To Gain A Competitive Advantage?

Hiring undocumented workers to grow your business: unfair or business as usual?
President, Proximo, LLC
April 23, 2013

As the debate over immigration reform intensifies, it looks more likely that small business owners will play a key role in the final outcome. Much of the focus is on undocumented immigrants who are not authorized to work in the U.S. But if they are working, that means someone is hiring them and it's usually a small-business owner.

Accurate statistics are difficult to come by, but a relatively recent study by the Pew Research Hispanic Center estimates that there are over 8 million people working in the U.S. without authorization. Companies that hire them pay lower wages than the prevailing rate in many cases. This allows the hiring company to either under price their services relative to competitors or enjoy a healthier profit margin. According to another study by Small Business Majority, nearly 7 out of 10 small business owners feel that too many businesses are gaining an unfair advantage by hiring undocumented workers. The cost savings also reduce the risk of failure, by freeing up more cash. The Federal Reserve Bank of Atlanta found that businesses in Georgia that hire undocumented workers have a lower failure rate than those that do not.

This is a complex problem with many perspectives and the recent attack in Boston have just made matters infinitely more difficult. Even though the perpetrators have little in common with the typical undocumented immigrant, the issue of security will likely take precedence over economic and social considerations.

Should the government have so much say over who a private employer can hire? Will a temporary worker program alleviate the problem? Given the tremendous reduction in illegal immigration over the past few years, is this still a major issue? Should small businesses struggling to make it in the wake of the Great Recession risk shutting down by not resorting to hiring undocumented workers? All of these questions will likely be answered this year. It's up to you to play an active role in the debate. What do you think?                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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