Mixed economic results seen from reforming immigration.

Experts predict short-term pains and long-term gains

A flurry of immigration reform measures streaming out of Washington, D.C., and Sacramento in recent weeks -- capped last week by Gov. Pete Wilson's proposal to cut off illegal immigrants' benefits and deny citizenship to their offspring -- could significantly alter the face of the Southland's economy.

In the short run, the measures may dramatically reduce the ranks of the estimated 700,000 undocumented immigrants now residing in Los Angeles County, the bulk of whom work for less than minimum wage at thousands of local "sweatshops" in the apparel, furniture and electronics industries, according to local experts.

That work force reduction would come as a result of several legislative proposals now circulating. The measures call for beefing up border patrols, issuing counterfeit-resistant identification cards to immigrants, imposing border-crossing fees, stepping up enforcement of U.S. labor laws, stiffening sanctions on employers that hire undocumented workers and more.

The wave of reform comes on the heels of a controversial report issued by the County of Los Angeles a few weeks ago that showed immigrants contribute only $139 million a year to county coffers but consume $947 million in county services.

"The local economy has an enormous underbelly of sweatshops that employ huge numbers of undocumented immigrants, and they're going to have to adjust in some way. Many (sweatshops) may go out of business," said Allen Scott, director of the Lewis Center for Regional Policy Studies at UCLA.

Vacated sweatshop jobs would likely be filled, in the short run, with the current surplus of legal but unskilled immigrant workers in L.A., sources said.

They would conceivably command the $4.25-an-hour minimum wage, which many manufacturers insist they cannot afford to pay. So some sweatshops may relocate out of the area or go out of business altogether, resulting in a loss to the local tax base.

But in the long run, many local sweatshops would likely be upgraded to higher-skilled, higher-wage operations with far more automation, experts said.

"A similar scenario played out in the agricultural industry in the 1960s, when immigrants began leaving the fields for higher-paying urban jobs. After that, agriculture became highly automated," said Kevin McCarthy, a researcher at Rand Corp., a Santa Monica-based think tank. "Now, certain industries that have not yet been fully mechanized could become more mechanized, as higher wages reduce the relative cost of automating."

But McCarthy said he is skeptical any of the new legislative proposals would become a reality any time soon.

Scott of UCLA agreed that immigration reform could eventually benefit the Southland's economy.

"In the long run, (immigration reform) will encourage firms to invest in labor-saving capital to improve their efficiency," Scott asserted. "It will force them to compete on quality and skill, rather than low cost."

Most sweatshops would likely upgrade rather than relocate because of several factors, sources said. For one, most sweatshops are very small operations, each employing only a dozen or so workers. Hence, they could not afford to relocate.

Also, sweatshops are almost always clustered around their main customers to allow for quick responses to small-batch orders, which comprise the bulk of their business. For example, virtually everything coming out of L.A.'s apparel sweatshops is high-fashion sportswear and swimwear, which must constantly be altered to keep up with changing fashions.

"If a (fashion) line goes bust, you damn well better have a new line to replace it within a few weeks, or you're down the tubes," said one industry source who asked not to be named. "We're not talking about K mart (apparel); all that stuff is already being sewn in Taiwan."

A similar situation exists at L.A. electronics assembly and fabrication sweatshops.

"Say an electronics company needs 200 printed circuit boards right away for an order it's working on," posited Scott of UCLA. "Nobody's going to cross the Pacific (Ocean) for 200 circuit boards. The transportation cost would exceed the cost of the order."

Meanwhile, local labor officials and immigrant-rights advocates were highly critical of the new wave of immigration reform.

"The effect of this legislation will be more intimidation of (immigrant) employees," said Jeff Stansbury, western regional community outreach coordinator for the Hotel Employees & Restaurant Employees International Union, which represents more than 10,000 service workers in L.A. County.

"(The proposed reform) puts a 'Damocles sword' over undocumented workers' heads by allowing employers to intimidate them by threatening to turn them in (to immigration officials)," he said. Damocles was a courtier of ancient Syracuse who, according to legend, was seated under a razor-sharp sword hanging from a single hair so he could learn about the perils faced by his king.

"None of these measures deals with the employers who are actively recruiting these immigrants. They all focus on controlling the labor force," Stansbury said. "As long as employers keep recruiting, and that tremendous pull factor is overlooked, none of these measures will do anything to slow illegal immigration."

David Sickler, regional director of the AFL-CIO, was also critical. "These measures are economically stupid and immoral," he said. "What we need is a meaningful trade agreement to address why these people are leaving Mexico in the first place."

Most sources agreed that the reform proposals are being triggered by the state's economic recession.

"Putting National Guardsmen on the border, denying immigrants drivers' licenses, effectively transforming a whole host of federal agencies into arms of the (Immigration and Naturalization Service) ... it all boils down to scapegoating immigrants for the economic problems of this state," Stansbury said.

Indeed, Los Angeles has a long tradition of recruiting foreigners, especially Mexicans, during boom times and expelling them during busts. In similar fashion, European countries, especially Germany and France, have long histories of recruiting large numbers of Turks, Armenians and Yugoslavs during boom times, and deporting them during downturns.

The timing of these reform measures is also hardly coincidental. If they had been introduced during the expansionary 1980s, U.S. manufacturers (who are also large political contributors) would be howling that the government is destroying the nation's job base, said Scott of UCLA. "Whereas now, the chances of protest from manufacturers is minimal because we have a big labor surplus."