‘Informal’ Economy Changing L.A. Into ‘Third World City,’ Study Says

The availability of cheap labor from Los Angeles’ burgeoning immigrant population, coupled with an ongoing industrial restructuring that some label “another industrial revolution,� is rapidly leading to the creation of Third World labor conditions in the midst of the city’s expanding economy, according to a new study presented Friday by researchers at UCLA.

“Los Angeles is becoming a Third World city, developing a larger and larger informal sector of the economy,� Goetz Wolff, a member of the urban studies research team, told a conference on immigration and labor sponsored by the Los Angeles Business Labor Council.

A transformation among industries in Los Angeles County to produce goods overseas, as well as to contract out much of their production functions locally to smaller firms more willing to risk hiring illegal immigrants, ultimately results in a greater exploitation of the immigrant work force, Wolff told those attending the conference at USC.

Legal Liabilities

According to Wolff, these smaller, “secondary� firms that tend not to conform to accepted business practices such as complying with health and labor standards, permits the larger firms to avoid the legal liabilities of not complying with established labor laws. As a result, “all those things that Americans pride themselves in having gotten rid of (such as child labor and underpaid workers) are being reintroduced here,� Wolff said.

Wolf referred to the garment and electronics industries as examples of the growing tendency toward contracting with smaller firms, which include sweatshops and those that provide take-home work. He also contended that in the service industries--such as the hospital, hotel and restaurant industries--immigrant workers are subsidizing the rest of the population as an exploited labor force.

He added that because this informal sector of the economy provides services and goods at below market price, it has the effect of relieving pressure for higher wage demands on the part of workers in the mainstream economy.

Indirect Subsidy

“In a sense, immigrant workers are providing an indirect subsidy to the big firms that can get the formal work force for lower wages,� he said.

The result, he said, will be “a general degradation in the standard of living of a large portion of the work force (not just immigrants),� he said.

Wayne Cornelius, director of the Center for U.S.-American Studies at the University of California, San Diego, maintained that stepped-up border enforcement and the implementation of long-proposed sanctions against employers who hire illegal aliens would further accelerate the trend among industry to contract out production to small firms.

“If the larger firms feel harassed by INS (U.S. Immigration and Naturalization Service), they’ll just subcontract out more work,� he said. And the smaller firms, which are typically non-union shops, “will continue to hire illegal aliens, law or no law,� he added.

Industry Representatives

Cornelius said this would result in the “further degradation of labor standards in the United States.�

Representatives of the garment, hospital and electronics industries, who also spoke at the conference, were forthright about their reliance on an immigrant work force. Although there was no consensus among them regarding the continuing debate over immigration law reform, Bernard Brown, a state and national spokesman for the garment industry, said the industry favored employer sanctions and a guest foreign worker program that would continue to provide needed employees.

Another panel discussed the ongoing debate over immigration reform in Washington. It was noted that a number of proposals are in the works to resurrect legislation to address the issue of immigration. Most panel members, however, were not optimistic about the chances of a new immigration reform law being passed by Congress after three years of failed efforts.

INS View

Howard Ezell, INS Western Regional Commissioner, disagreeing with most conference participants, contended that the notion that illegal immigrants bolster rather than drain the American economy is a “misconception.�

He also argued that the United States must seize control of its borders. “God help us if we don’t have immigration reform in 1985,� he said.

But Linda Wong, director of the immigrants’ civil rights program of the Mexican American Legal Defense and Education Fund, contended that immigration reform focusing on employer sanctions and other enforcement measures to control the country’s border, would merely “open a Pandora’s box.�

She believes that realistic immigration reform must take into account such far-reaching issues as changing labor needs and demographics. Noting that the American work force is aging and that the birth rate is down, she said that within 10 years the United States will be facing a labor shortage and looking to foreign countries to supply it.