Spotlight: Working Hoosiers Age 50+



Spotlight: Working Hoosiers Age 50+

AARP Indiana and the Institute for Working Families have teamed up on this spotlight on low-income working Hoosiers age 50+.

Picture an older Hoosier and you may call to mind a relaxed retiree swinging a nine iron on the golf course. However, this image does not represent the reality for the many Hoosiers age 50+ who work and/or experience financial insecurity in their later years. Even among adults who hit the traditional retirement age of 65, nearly a third continue to work or seek employment through their late 60's. As time goes on, these percentages are likely to increase. So too is the proportion of older Hoosiers living in poverty or below self-sufficiency; currently, eight percent of older Hoosiers live in poverty, and approximately one in four have an income below what is necessary to be self-sufficient. Why are these numbers expected to rise?  

In two words, retirement savings. Today, 64% of Americans are worried about having enough money for retirement, up from 60% in 2015. According to the Financial Security Scorecard, only about half of Hoosier workers participate in an employer-sponsored retirement plan and the average savings in defined contribution (DC) accounts in Indiana is $26,971. This is not far off from the national average, with 46% of private sector workers participating in a retirement plan and defined contribution account balances averaging $30,345. Experts recommend that by one’s 40’s, an individual should have saved 2-3 times her salary. Without these savings, many come to rely almost exclusively on social security. In Indiana, 26% of Hoosiers age 65+ depend on social security for 90% or more of their income, and the average benefit amount is only $1380 per month.

Some advocates and policymakers are taking action to help individuals prepare financially for the later years. California recently launched a new state retirement plan for small business employees who lack access to workplace plans. Last session in Indiana, AARP championed a bill that would have established the Hoosier employee retirement options (HERO) portal – a platform to connect Indiana employers with financial services firms for the purposes of establishing retirement plans for their employees. It is uncertain whether this bill will be reintroduced this session. Either way, getting retirement savings rolling is only half the battle.

Even among savers, income equity is an issue. Women are more vulnerable to retirement savings shortfalls - they typically live longer, have higher lifetime medical costs, and receive lower pay. They are also more likely to take time out of the workforce or change careers for caregiving purposes. The hidden costs of these gaps in employment can amount to as much as four times an individual’s salary per year out of the workforce. As a result, paid family leave and a more reliable, cost-effective childcare system would also improve Hoosiers’ ability to retire with dignity by facilitating primary caregivers’ abilities to persist in their careers.

Paid leave is not only just an important support to new parents. While many older adults are no longer giving birth, the need for family and medical leave is still great as these workers balance the needs of their employers with their own medical needs and those of aging parents, ill spouses, and grandchildren. The Council for Disability Awareness suggests that 1 in 4 workers will experience a medical event requiring significant time off work over the course of their career, but not all individuals are prepared for the accompanying loss of income such an event can bring. Furthermore, AARP Public Policy Institute estimates that in Indiana, 837,000 family caregivers provided 779 million hours of care to elderly or disabled family members. Many older Hoosiers also need time to care for grandchildren; in 2015, 124,000 Hoosier grandparents lived with their grandchildren, and nearly half were responsible for the children’s basic needs. These responsibilities and the lack of leave policies beyond the Family and Medical Leave Act mean that each year, an estimated 3.6 percent of Hoosier employees age 50+ need time off from work and are unable to take it.

For Hoosiers who have worked hard in their jobs and in their homes, the third act should be a time to enjoy the fruits of those labors. Without a shift in policies, too many Hoosiers will spend those golden years struggling to balance both their checkbooks and the competing demands of work and family. AARP Indiana and Indiana Institute for Working Families encourage the Indiana General Assembly to consider the needs of current and future Hoosiers, acting on legislation that will help Hoosiers achieve and maintain self-sufficiency across their lifespan.   
Monday, November 28, 2016

Five Reasons Why Head Start Should Be Front and Center in Indiana's Conversations About Preschool Expansion


Discussions about when and how to invest in preschool are set to take center stage during the 2017 legislative session. Eric Holcomb has promised to "responsibly expand access to pre-k options for the state's most at-risk children." Legislators are raising questions about preschool’s effectiveness. And All IN 4 Pre-K is advocating for expansion of the state pilot program to include more low-income Hoosier children. As the dialogue continues, Indiana Institute for Working Families wants to draw attention to the longest-running early childhood education program in the state and to ensure that Head Start – the “gold standard” in early childhood education - is maximized as we consider expanding investments in early childhood education.

Here are five reasons why.

1. Head Start is a cornerstone of the early childhood education system in Indiana: Head Start has been providing high-quality educational programming and services to children  from low-income families in Indiana for decades. The program has an established presence in all 92 counties and over 85% of Head Start teachers have at least an associate degree in early childhood education. Sixty-two percent of Indiana’s Head Start teachers have a bachelor’s degree or above. Head Start also brings over $100 million in federal dollars into the state each year.


Head Start
Early Ed Matching Grant
On-My-Way PreK
Founded
1965
2013
2015
Hoosier children served 2015
15,614 children / 8,813 4-year-olds
491
2300 (cohort 2)
2015 Budget
$113 million in federal funds for Indiana
$1.4 million in state funds
$10 million in state funds (budgeted)
Counties Served
92 counties
14 counties
5 counties
# Programs Funded
37 Head Start programs/ 20 Early Head Start
19 programs
Unclear; 219 providers were approved
Research Conducted
Click here for access to dozens of research projects conducted in partnership with Head Start, including the 2012 advisory committee research and evaluation final report   


2. Head Start does so much more than ABCs: While Head Start does offer a strong, research-based school readiness program with outcomes aligned to Indiana’s early learning standards, the program is also a whole-family approach, linking children and their families to medical services, nutrition, and parenting supports. Head Start programs offer developmental screenings, meals, and oral and mental health services. Program staff members also assist families with self-selected goals like housing stability, education, and financial security.

3. Head Start is remarkable when it comes to family involvement: Family involvement can mean a lot of things in education, from sending notes home and hosting one-time events like “family fun day” to fully immersing families in the life of school. Head Start programs are required to include systemic, integrated, and comprehensive family engagement. Nearly 22,000 current and former Head Start and Early Head Start parents volunteered in programs last year, and family and community members participate in policy councils to engage in shared governance of the program. John Pennycuff, Indiana Head Start Association (IHSA) Board President and Director of Children’s Services for ICAP Head Start, has seen whole family trajectories change as a result of this involvement. One mother’s term of service on the policy council at his Head Start program led her to return to school for her bachelor’s degree in social work. “She came back a fifth year to be a community rep for the community in which she lived for our policy council [and] she mentored families who had been in the same boat that she had been in at one point in time,” John shared. “We really encouraged her. We really rallied behind the family.”

4. As Indiana’s demographics shift, Head Start is well-equipped to serve all children: In 1991, the Head Start introduced Multicultural Principles for Head Start Programs and since that time, the organization has been encouraging staff to develop strengths-based connections with the families they serve. Head Start has a program specifically geared toward the children of migrant workers and it also prioritizes serving students who have an Individualized Education Program (IEP) or Individualized Family Service Plan (IFSP). Head Start recognizes bilingualism as a strength and provides interpreters and translation services to families.

5. Head Start is rigorously evaluated and continually improving: This year, new regulations will change the way Head Starts operate based largely on ongoing assessments of the program’s effectiveness. For example, when researchers looked at the program effects in the most recent Head Start Impact Study, they found greater benefits for children in full-day programs. Accordingly, beginning 2019, at least half of Head Start preschoolers will be enrolled in longer programs. Also, Head Starts will strengthen services, curriculum, and professional development in line with current research.

Like many others who support Head Start, John Pennycuff wants state policymakers to recognize its value and what supplementing rather than supplanting federal Head Start dollars could do. First, it could create opportunities for the thousands of Hoosier children and low-income families who are currently on Head Start waiting lists. Beyond this, with smart policy that promotes federal and state investments to work in tandem, John envisions that “every child could have an amazing, amazing experience in early childhood.” The Indiana Institute for Working Families echoes the call for Head Start to maintain its prominent place in Indiana’s early childhood education system as the state considers expanding its investment in preschool.

This is part one in IIWF's series on Head Start in Indiana. Stay tuned for future discussions of the research on Head Start and ways in which local Head Start programs are transforming communities in Indiana.

Wednesday, November 16, 2016

Where We Go From Here in Indiana

Dear Friends of the Institute,

The election is over and we are rolling up our sleeves. Now more than ever, we need your help to make sure that working families have a voice in Indiana.

While we don't yet fully know what the new federal and state administrations' priorities will be, we do know that despite incremental gains from the national recovery, many Hoosier families are still suffering. For example, while Indiana's poverty and unemployment rates have largely tracked national improvements, our household income gain last year was just half that of the median U.S. increase, and smaller than all neighbors'. Meanwhile, our state was one of only eight that saw inequality rise in 2015. Indiana's policymakers have missed too many shots to improve economic mobility, and working families can't afford for them to miss any more.

Next month, the Institute will release our 2017 policy agenda. As in years past, we will focus on advancing new policies that will ensure that Hoosiers get the education, skills, and support they need to get and keep family-sustaining jobs. We'll also be closely watching the state budget process to ensure that Indiana's investments result in an economy that works for all Hoosiers. We have been successful in accomplishing policy victories in the past, but with many new lawmakers in the General Assembly next year, we need to turn up the volume. In order to get the message across to policymakers, we need you to do three things:

  1. Invite seven friends to support the Institute's work by signing up for our newsletters, liking our Facebook page, or following us on Twitter.
  2. Donate $20.17, or whatever you can comfortably afford, to ensure that 2017 is a year of progress for working Hoosier families.
  3. Pledge to be an active participant in the 2017 legislative session by making calls to your lawmakers or by testifying on a bill.

Also, please contact us and let us know what policy gaps you see for families in your community, and how we can help you fight to fill them in 2017. We look forward to working with you and all Hoosier families that face difficult economic circumstances to make Indiana a better place to live and work for all who live here. 

Kind Regards,
Jessica Fraser
Director; Indiana Institute for Working Families
Indiana Community Action Association
Tuesday, November 15, 2016

Transit Plan Would Bring Monthly Savings, Economic Mobility to Working Families

The Julia M. Carson Transit Center (photo by author) 

By Andrew Bradley

My brakes gave out a few weeks ago, and after getting a $1,058 bill, it looks like my ’99 Accord is done for. While I’m looking for a replacement, my wife and I can usually carpool, but on a couple of occasions, I’ve had to take an IndyGo bus to work. Because the infrequent stops tripled my commute time, I wouldn’t choose to ride again without more rapid public transit, despite having a bus stop just a block from my house and a gleaming new transit center downtown. But for the more than one in three Marion County residents who live below economic self-sufficiency, there may not be a better choice. The lack of reliable frequent public transit can mean that a breakdown or repair bill can cost them a job and threaten their family’s well-being. However, the Central Indiana Transit Plan would provide thousands of dollars in annual savings for working families while opening the door to better jobs, education and services. That’s why approving the Central Indiana transit referendum on November 8th will help unlock economic mobility for Indianapolis residents and boost the economy of the entire region.

According to a new policy brief by the Indiana Institute for Working Families, the transit plan would help low-income working families by transforming Central Indiana’s public transportation system into a tool for economic mobility.  In Indiana, a family of one adult, one preschooler, and one school-age child must currently spend $255 per month to own and operate a car. In similar-sized cities with adequate public transit, monthly transportation costs are much lower: for the same family in Denver, it’s $140; in Seattle, it’s $99; in San Francisco, it’s $76. But the key isn’t just transit; it’s the public investment that makes transit frequent and reliable, not a system of last resort for the most disadvantaged.[1]
There’s a reason why 32% of Marion County’s public transit commuters are currently in poverty, and why their median annual income is just $12,925 (barely above the poverty line for one) compared to a county median of $30,821. For a working family in Indy whose income isn’t enough to meet basic expenses, taking the bus sounds like an attractive alternative, but lack of access and long wait times keep it from being a long-term answer. Under the current system, a family needing a stop for childcare on the way to and from work could easily spend up to two hours a day just waiting for the bus. The proposed transit plan would not only increase coverage of frequent routes for impoverished residents from a current 16% to a projected 51% by 2021, but by cutting waiting times it would also reduce the financial and opportunity cost of transit for working families.

The net benefit of the transit plan for working families would far exceed the 0.25% county economic development income tax rate on the ballot. For the 58% of Marion County households who earn less than $50,000 per year, the tax increase works out to $7.33 or less per month, according to analysis by the Institute for Taxation and Economic Policy. But as a result of more efficient transit, working families could see a net savings of $158 per month for one adult, one preschooler and one school-age child, for an annual saving of $1,896. That’s more than a semester’s tuition at IvyTech[2]. For two adults with one preschooler and one school-age child, the monthly net savings would be $315, or $3,780 per year. The savings for this family equates to about 70% of the cost of family child care for a preschooler and a significant step towards keeping both parents secure in work.[3]

Even for residents who don’t plan to commute with expanded transit, the referendum on November 8th is a clear winner. For employers, the plan will open more workplaces to a workforce that won’t be sidelined by a brake repair (like mine). Residents will have better access to parking-restricted sporting events and cultural celebrations. And everyone in the Central Indiana region will benefit from an economy boosted by the increased incomes of working families who have the mobility to get to better jobs, better educations, and better skills.



[1] See the full policy brief ‘Central Indiana Public Transit and Self-Sufficiency’ at goo.gl/2eGhmd
[2] Tuition for 12 credit hours for Indiana residents at Ivy Tech for the 2016-2017 academic year is $1,621.80 goo.gl/1oQwxI
[3] Family Child Care for a 4-year old in Marion County was $5,503 annually in 2015 according to a report by ChildCare Aware of America goo.gl/UZjNBT

Tuesday, November 1, 2016

Spotlight on Latino Workers in Indiana

Celebrating Latin American Independence Days with
a Look at the Contributions and Needs of Latino Workers in Indiana


By Erin Macey
Contact: emacey@incap.org

September 15th and 16th are independence days for a number of Central American countries and, in the U.S., kick off a month of heightened attention to the contributions and needs of Latino families in this country. According to the American Community Survey, Indiana is home to 439,094 Hispanic or Latino individuals - this represents 6.6 percent of Indiana’s total population. Though small in number, this growing community has made tremendous contributions to Indiana’s neighborhoods and economy. Many volunteer in their local communities and/or own businesses in Indiana. However, barriers remain that keep many Latino Hoosiers from reaching their fullest potential, to the detriment of their families and Indiana as a whole.

In Indiana, more than one in four Hispanic or Latino Hoosiers lives in poverty even though 42 percent of Latino adults worked full time, year round and 82 percent worked at least part time. But for barriers to opportunity, these numbers might be higher: more than 1 in 4 Latino Hoosiers felt that job opportunities were rarely or never available, and one half expressed that leadership or supervisory positions tended to be out-of-reach for members of Indiana’s Latino community. Nationwide, Latino workers tend to be clustered in low-wage industries and to be victims of wage theft more often, and wage theft has been reported here in Indiana.

Nationwide, Latino workers earn lower wages than white, non-Hispanic or Latino workers and again, Indiana is no exception. Here in Indiana, the 2015 median earnings of full time, year round Latino Hoosiers are $32,142 for men and $26,870 for women; by comparison, white non-Hispanic men earned $50,050 and women earned $36,583. Job quality is also an issue, with fewer Latino workers in jobs that provide sick days, fair scheduling, and paid leave. Increasing wages and job quality across the board would have a huge impact on Indiana’s Latino workers.   

Increasing access to higher education is another way to help change these statistics. Currently in Indiana, only 11.9 percent of Hispanic or Latino adults hold a bachelor’s degree, as compared to 25 percent of white Hoosiers. More than half of surveyed Latino Hoosiers see access to and supports for higher education as sometimes or rarely available. Focus groups with Latino families suggest that locating educational programs within local schools, expanding mass transit, and making financial aid information more readily available might help break down some of these barriers, but financing higher education remains a persistent challenge.

The growing Latino population in Indiana contributes in numerous ways to our communities, our economy, and our state. However, there is still work to be done to extend opportunity to these Hoosiers. To make Indiana a state that works for all, we must ensure that our policies equally reward initiative and hard work, strengthen economic security, and provide mobility so all Hoosier families can reach their potential.
Thursday, September 29, 2016

GUEST BLOG: Testimony before the Indiana Senate Select Committee on Immigration Issues by EPI's Daniel Costa



For this special guest post in our 'Inside The Statehouse' series, we present the testimony of Daniel Costa of the Economic Policy Institute, delivered before the Indiana Senate’s Select Committee on Immigration Issues on Wednesday, September 21, 2016. [Text republished from EPI's website with permission.]

Thank you Chairman Delph and other members of the Select Committee on Immigration Issues, for allowing me to testify at this hearing. I work for the Economic Policy Institute, a think tank in Washington D.C., that was founded 30 years ago and is dedicated to analyzing the labor market and advancing policies that ensure broadly shared prosperity for all workers in the United States.
I am myself the son of two immigrants to the United States, each of whom came from a different country, thus I am a direct beneficiary of America’s openness to immigration and immigrants. But beyond how immigration benefits the individuals who immigrate, the United States has also benefitted greatly from immigration—both economically and culturally—and there is no question in my mind that immigration is good for the United States in myriad ways.
Nevertheless, it cannot be said that the American immigration system is functioning properly or ideally, or in a manner that can achieve a more broadly shared prosperity. The immigration system needs major reforms, some of which I’ll talk about today, but I’ll just start off by noting that one basic principle of our immigration system should be that all migrant workers in the U.S. labor market—whether they have been here for one day or ten years, and whether they are a guestworker, a refugee, a naturalized citizen, or in an unauthorized status—should always have access to the same labor and employment law protections that American workers have, and be able to exercise those rights in practice.
With that in mind, the rest of my testimony will focus on unauthorized immigration and the U.S. labor market, as well as the use of temporary foreign worker programs (also commonly referred to as “guestworker” programs) and their impact on the U.S. labor market.

The unauthorized immigrant population in the United States: Basic statistics and background

According to the Pew Hispanic Center, an estimated 11 million unauthorized immigrants live in the United States, and those who work make up about 5 percent of the U.S. labor market. The vast majority of unauthorized immigrants are not recent arrivals to the United States. In fact, nearly two-thirds have been in the country for more than 10 years, and one-fifth have been here for two decades.1 This trend is likely to continue, since the unauthorized population has not been growing. In fact, the latest data show it’s slowly shrinking.2
Even though the unauthorized immigrant population makes important contributions to the American economy, it is far from ideal to have 5 percent of the labor market who are not authorized to be employed. Unauthorized immigrant workers are often beyond the reach of either labor or immigration laws; they are often subjected to grave risks, exploitation, and uncertain futures in the United States, and the presence of vulnerable and exploitable workers in the labor market puts downward pressure on the wages and working conditions of all workers. Moreover, unauthorized immigration is also unfair to migrants who sometimes wait years to gain legal entry, and it undermines the rule of law, and strengthens the conviction that the federal government is powerless to solve important national problems.
But how did we get here? I think we have to have an honest discussion about this before we can talk about impacts and solutions.
Many in the public, as well as federal and state legislators, believe that unauthorized immigrants are “law breakers” and solely to blame for coming to the United States in search of a better life without permission. That of course, is one part of the equation, but it ignores and absolves the other responsible parties. Those who have this perspective would be on much firmer ground if the United States had a good set of immigration laws that were fair, transparent, and enforceable. At present, no one on any side of the debate can credibly argue that’s the case.
In fact, major elements of American society abetted the creation of a large population of unauthorized immigrants, including major industries such as agriculture, meat packing, and construction, which came to rely on unauthorized workers. For decades, U.S. employers recruited and illegally hired workers from abroad for low-wage jobs with impunity. And unauthorized immigrants entered the country without inspection at the border in order to take those jobs, or overstayed temporary visas.
The U.S. government also played a major role: Democratic and Republican administrations ignored the problem and failed to adequately enforce existing laws. Congress itself got the ball rolling when it passed an immigration reform law in 1986 that included a paper-based “I-9” employment verification system that is easily susceptible to fraud and difficult to enforce. And the legalization program the 1986 law included wasn’t nearly broad enough; it failed to legalize millions, which left behind the core of today’s unauthorized population.
Employers, unauthorized immigrants, and the government must now share the blame equally, but only the U.S. Congress can fix this for good.
The impact of immigration and unauthorized immigration on the U.S. labor market
With that said, I’d like to turn now to a discussion of the impact of both immigration overall, and unauthorized immigration, on the U.S. labor market.
First, it must be said that overall, when all workers are included in the aggregate, most evidence and research suggests immigration is good for the country, including its effects on the wages of most workers. The most rigorous work on the effect of immigration on wages finds extremely modest effects for native-born workers, including those with low levels of education.
My former EPI colleague, economist Heidi Shierholz published a paper showing immigration’s relative impact on wages from 1994 to 2007 by gender and education for both U.S.-born and foreign-born workers.3 Her research showed that earlier immigrants who have less than a high school degree are the group that is most adversely affected by new immigration. This is because they are often the most substitutable for new immigrants, often living in the same places and possessing similar skills. But for native-born workers, the effects tend to be very small, and on average, modestly positive.4 Even the economists who are the most skeptical of immigration, for example George Borjas at Harvard, have estimated that immigration has reduced the wages of native high school dropouts by somewhere between 2 to 5 percent.5
This is useful for reminding policymakers that native-born workers have little to fear in the aggregate as far as immigration’s labor market impact is concerned.
There is also research that shows that competition with new lower-wage, lesser-skilled immigrants can be a problem for low-wage-earning native-born workers during a recession or a time of high unemployment,6 although that effect generally equalizes over the long term. That suggests a simple policy solution when it comes to low-wage migration: create a mechanism that can increase or decrease immigration flows in response to economic conditions. When the economy is in a recession or a slow-growth period, the levels could be decreased, and when the economy is growing smartly and jobs get harder to fill, it could be increased accordingly. And furthermore, whenever a new migrant worker comes to the United States, employers should first have to prove that there are no American workers available, and be required to pay the migrant no less than the local average wage. That will ensure that employers are not using immigration to supplant American workers and to undercut U.S. wage rates.
I will turn now to now unauthorized immigration, and its impact on lesser-skilled native-born American workers. Unauthorized immigrants contribute to the economy in vital industries and pay billions in taxes, but it’s also true that the 5 percent of the labor force they make up are not fully protected by U.S. labor laws—this of course, is not helpful to American workers. Unauthorized workers are often afraid to complain about unpaid wages and substandard working conditions because employers can retaliate by taking actions that can lead to their deportation. This gives employers extraordinary power to exploit and underpay them. And when the immigrants’ wages are suppressed, so are the wages of U.S. workers competing for similar jobs.
This exploitation is not just theoretical. According to a landmark study and survey of thousands of workers, 37 percent of unauthorized immigrant workers were the victims of minimum wage law violations at the hands of their employers (meaning they were not paid the legally required minimum wage). And an astonishing 84 percent of unauthorized immigrant workers who worked full time were not paid for overtime, that is, they were not paid the legally required time-and-a-half rate for the hours they worked in a week beyond 40 hours.7 While American workers also suffer unacceptably high rates of wage theft, unauthorized workers are much worse off. A study from the U.S. Labor Department also found that non-citizens were 1.6 to 3.1 times more likely to suffer from a minimum wage violation than a U.S. citizen.8
The result is that bargaining power of U.S.-born workers competing in the low-wage labor market is undercut when millions of unauthorized workers cannot safely complain to the Labor Department or sue for unpaid wages.
The impact of unauthorized immigration on budget costs for states and the federal government
Now I’ll discuss the impact of unauthorized immigration on budget costs for states and the federal government. There is a fairly broad consensus that the present value of the long-run net fiscal impact of unauthorized immigration, at all levels of government combined, is small but positive—meaning that immigration reduces overall budget deficits.9 The long-run fiscal impact at the federal level is strongly positive; however, the impact at the state and local levels is negative. There is also a clear understanding that while the negative state and local impacts are largely concentrated in the states and localities that receive most of the new immigrants—the main costs are for education and health care—but the federal impact is shared evenly across the nation.
Unauthorized immigrants are a net positive for public budgets because they contribute more to the system than they take out.10 Unauthorized immigrants generally cannot receive benefits from government programs, except in some cases, such as when unauthorized immigrant children receive public education, and in some states that allow unauthorized immigrants to attend state colleges at in-state tuition rates. Nevertheless, most of these unauthorized immigrants will still pay taxes. The vast majority pay sales taxes in states with sales taxes, and property taxes through properties that they own or rent. Additionally, most unauthorized immigrant workers also pay payroll and income taxes. The Social Security Administration estimates that 75 percent of unauthorized immigrants are actually on formal payrolls, either using fraudulent Social Security numbers or Social Security numbers of the deceased.11Unauthorized immigrants pay into Social Security via automatic payroll deductions, but they can never claim Social Security benefits. In 2005, it was estimated that unauthorized immigrants paid about $7 billion per year in Social Security taxes that they will never be able to reclaim.12
Unauthorized immigrants are also unlikely to receive any income credits available through the tax code, or to receive a tax refund if they overpaid in their regular payroll withholdings. The Tax Policy Center estimates that 78 percent of American households that earned less than $33,000 owed no federal income taxes in 2011.13 Many low-income taxpayers only paid marginal amounts if they did owe. Because of their low income levels, most unauthorized immigrants would likely fall into either of these categories. A significant portion of unauthorized immigrants file taxes using Individual Taxpayer Identification Numbers (ITINs);14 however, many unauthorized immigrants don’t file because they fear deportation if they avail themselves to a government agency.
It is also often falsely claimed that unauthorized immigrants use public support programs like welfare, unemployment insurance, and food stamps. While it is possible that an unauthorized immigrant could benefit from a U.S. citizen or lawful permanent resident who is a family member receiving income support through a federal or state program—unauthorized immigrants themselves by and large are ineligible for such programs because of their immigration status. Even immigrants who are granted lawful permanent residence must usually wait a period of five years before they can collect most federal social benefits.
It is also important to point out that the most reliable and often cited research on the economic and fiscal costs and benefits of immigration was conducted nearly 20 years ago, as part of a study conducted by the National Academies of Science. At this point the information in it is certainly dated but still heavily relied upon. However, later this week the National Academy of Sciences, Engineering and Medicine will publish it’s new, updated report on the same topic, titled The Economic and Fiscal Consequences of Immigration. This report will be the first comprehensive new look the issue since 1997. I am not privy to the reports findings, so I urge the committee to take a fresh look at the evidence after it’s released. I know I will certainly be following it with great interest.

State-based solutions that will raise wages and improve labor standards for all workers

I know that this committee is not tasked with considering federal solutions to unauthorized immigration, so I won’t waste your time with it. I’ll just say one sentence about it, which is that Congress could resolve the issue once and for all, while also helping native-born American workers, by passing legislation that legalizes all unauthorized immigrants and provides them a path to citizenship. That would allow immigrants to assert their rights, and raise standards and wages for everyone.
The solution to unauthorized immigration is certainly not not mass deportation, or the criminalization of unauthorized immigrants, or state and local programs that assist the federal government in identifying unauthorized immigrants and facilitating their removal. Unauthorized immigrant workers aren’t at fault for keeping wages down and conditions deplorable in lower-skilled occupations—they shouldn’t be blamed for that—the fault lies with U.S. employers. Unauthorized immigrants also didn’t craft and implement policies that have led to the United States having the highest share of low-wage jobs in the developed world, at about a quarter of all jobs.15
A much better solution, and one which Indiana could implement, would be to raise the state’s minimum wage. Even the largest estimated effects of low-wage immigrants on the wages of U.S.-born workers are so small that they would be more than eliminated by raising the minimum wage to $10.10 an hour, $12 an hour, or even better, $15 an hour.
Something else that is usually not debated in the context of the immigration discussions, is the fact that the biggest single culprit in the growth of wage inequality has been deunionization.16 Unions are not just good for union members who can collectively bargain for higher wages and benefits, but higher rates of unionization also benefit workers who are not in a union. As a recent EPI report showed,17 for nonunion private-sector male workers, their weekly wages would have been an estimated 5 percent ($52) higher in 2013 if private-sector union density—that is, the share of workers in similar industries and regions who are union members—remained at its 1979 level. For a year-round worker, this translates to an annual wage loss of $2,704. For the 40 million nonunion private-sector men, this loss is equivalent to $2.1 billion fewer dollars in weekly paychecks, which represents an annual wage loss of $109 billion.
For nonunion private-sector men without a bachelor’s degree or more, weekly wages would have been an estimated 8 percent higher, and for those with a high school diploma or less, weekly wages would be an estimated 9 percent ($61) higher. For a year-round worker at this education level, this translates to an annual wage loss of about $3,172.18
That’s a good reminder that the only way to achieve sustained wage growth is if American and immigrant workers are able to organize and build power together through unionizing and collective bargaining. Any measures or legislation that increases the ability of immigrants to join unions and collectively bargain will only help improve wages for immigrant and American workers alike. Any laws that restrict collective bargaining will exacerbate wage inequality for low-wage workers.
Another thing that Indiana and other states can do is increase staff and funding dedicated to wage and hour enforcement. Workers lose billions in wages ever year, yet the federal government is woefully under-resourced to tackle the problem. In fact, in 2012, the amount of wage theft recovered for workers was almost three times greater than all the money stolen in all robberies that year.19 And the total amount that is stolen, including wages that aren’t recovered, is estimated to be as high as $50 billion per year.20
This is hard to combat because the Wage and Hour Division in the U.S. Department of Labor has a herculean task: With only about 1,100 inspectors, they are responsible for protecting over 150 million workers in more than 7 million establishments throughout the country. Every year, the federal government only spends a fraction of what it does for labor enforcement compared to what it spends on immigration enforcement: in 2012 only $1.6 billion was appropriated for all labor enforcement agencies combined, while $18 billion was appropriated for immigration enforcement.21 Anything the state can do to assist in these efforts would greatly help workers recover what they’ve lost.
There are also two innovative laws from California which the legislature could consider. California is the state with the largest population of unauthorized immigrations in the nation, with an estimated 1.85 million unauthorized immigrants working in California, accounting for about a tenth of the workforce. That share of the workforce is particularly vulnerable to exploitation on the basis of their immigration status. As I’ve already noted, it is difficult for unauthorized workers to enforce minimum wage and overtime laws because employers use the threat of deportation to prevent labor organizing and to keep workers from complaining. Employers can also report the undocumented to Immigration and Customs Enforcement, or require them to update or provide documentation for their “I-9” file, or run their name through E-Verify, the government’s electronic employment verification system. This increases the likelihood they’ll be fired and/or deported.
What California did, is pass two laws in late 2013 that would prohibit employers and their agents from using immigration status in retaliation for organizing, demanding their wages be paid, reporting employer violations, cooperating with a government investigation, or testifying against employers who act illegally. Both laws established a $10,000 civil penalty. One makes retaliation a misdemeanor and entitles victims to reinstatement and back pay, and expands the definition of extortion to include threats related to immigration status, thus prohibiting employers from stealing wages using threats of deportation. The other permits suspension or revocation of violators’ business licenses, or the suspension or revocation of the Bar Association license of any attorney who participates in retaliation that has an immigration status component.

Temporary foreign worker programs and the U.S. economy

One aspect of the immigration system that employers lobby heavily over are the many U.S. temporary foreign worker programs. These are guestworker programs where workers have limited rights and are tied to one employer. But this is problematic because any situation where workers’ individual bargaining power is reduced is going to put downward pressure on their wages, and therefore also on the wages of workers in similar occupations and industries.
That means that for guestworkers, if their employer treats them badly, their only recourse is to leave the country, and many incur a great deal of debt to get to the United States and to acquire their temporary job. Additionally, “prevailing” wage rules in guestworker programs often allow guestworkers’ employers to pay them a lower wage than the market rate. In short, these workers’ lack of bargaining power—their weak position puts downward pressure on the wages and working conditions of native- and foreign-born workers alike in the occupations and in the places where guestworkers are present.
Regardless of employees’ immigration status, employers must abide by the rules set out in the Fair Labor Standards Act (and its implementing regulations), which include the federal minimum wage and overtime pay requirements for most workers in the United States, as well as any applicable state and local wage and hour laws. However, some occupations filled by temporary foreign workers are sometimes exempt from the state or federal minimum wage (for example, if they work for an amusement park that is only open seasonally).
In some guestworker programs, there are rules intended to safeguard the wages of U.S. workers. Three programs in the H visa category require employers to pay a “prevailing” or “adverse effect” wage rate. This is because under U.S. laws and regulations, the wages and working conditions of foreign workers in these programs are prohibited from adversely affecting the wages and working conditions of U.S. workers. Nevertheless, in practice, there is a growing body of research which proves that in many cases, prevailing wage rules result in allowing employers to pay their temporary foreign workers less than the true market rate. I’ll just provide two examples from recent EPI research.
First, H-2B labor certification data published by DOL show that in landscaping, the largest H-2B occupation, employers nationwide saved an average of $2.59 per hour in 2014 by hiring an H-2B worker rather than a U.S. worker earning the average wage for landscaping. The savings are similar for employers in states with large numbers of H-2B landscapers.22 Second, in the H-1B program, thanks to recent reporting by the New York Times and others, we know that profitable companies like Disney, which earned billions in profits last year laid off hundreds of information technology workers and replaced with them with H-1Bs.23 But first, the U.S. employees were required to train the H-1B workers who would soon be sitting at their desks, doing their jobs. Thanks to a review of federal data by Professor Ron Hira, we know that in some cases, the H-1B worker replacements were earning $40,000 less than the comparable American workers.24 This seems like it should be illegal, but as the Labor Department has found, it is not. This can occur for two reasons: First, because employers are permitted to pay their H-1B workers the Level 1, entry-level prevailing wage—which is set at the 17th percentile wage according to U.S. Department of Labor wage survey data—rather than being required to pay no less than the local average wage for each H-1B job. And second, employers are not required to first recruit local American workers before hiring an H-1B worker, and are even permitted to replace their workforce with H-1B workers.25
There are also a number of other guestworker programs such as the L, E, O, TN, and J visas, and the OPT program for foreign students, that have no wage rules whatsoever, or requirements that employers first seek available or unemployed American workers before hiring a temporary foreign worker. There is almost no public data available from the government that could allow us analyze the wage impact of these guestworker programs, but the media has reported cases of L-1 workers being paid less than $2 an hour to do skilled work in the computer occupations,26 and the recent scandal at a Tesla auto plant in California—where workers who should have been earning $55 an hour were only earning $5 an hour while working on business visitor and tourist visas—shows that employers know how to game the system to keep guestworkers on almost any visa indentured and underpaid.27
One other relevant data point worth mentioning was published in an EPI paper last year, showing that low-wage temporary foreign workers from Mexico in the H-2A and H-2B programs earn, on average, approximately the same wages as similar unauthorized immigrant workers.28 This shows that there is no wage premium for “legal” guestworkers as compared to unauthorized immigrant workers. Guestworkers are paid just as little because they are just as powerless as unauthorized immigrants. And in some ways, as the paper describes, unauthorized workers are actually in a better situation than guestworkers.

Use of temporary foreign worker programs in Indiana

Relatively few guestworkers are hired in Indiana every year. The most recent federal data show that in 2015 there were about 1,100 H-2B certifications for nonagricultural jobs in Indiana, and 1,250 certifications for agricultural jobs in the H-2A program.29 In the H-1B program, in 2013 just over 1,500 H-1Bs were granted to petitioners from Indiana (which includes approved petitions for new employment and visa extensions), with the top petitioner being Purdue University, and the top occupation overall being in “College & University Education.”30
It appears that so far, Indiana employers have by and large, resisted using these indentured worker programs that tie workers to one employer and allow them to be underpaid according to local standards.

Conclusion

I’ll conclude there. Thank you again to the Committee for inviting me to this hearing, and I welcome any questions you may have.

Endnotes

1. Jeffrey S. Passel, D’vera Cohn, Jens Manuel Krogstad and Ana Gonzalez-Barrera, As Growth Stalls, Unauthorized Immigrant Population Becomes More Settled, Pew Research Center (September 3, 2014), http://www.pewhispanic.org/2014/09/03/as-growth-stalls-unauthorized-immigrant-population-becomes-more-settled/.
2. Jens Manuel Krogstad, Jeffrey S. Passel, and D’vera Cohn, 5 facts about illegal immigration in the U.S., Pew Research Center (September 20, 2016), http://www.pewresearch.org/fact-tank/2016/09/20/5-facts-about-illegal-immigration-in-the-u-s/.
3. Heidi Shierholz, Immigration and Wages: Methodological Advancements Confirm Modest Gains for Native Workers, EPI Briefing Paper No. 255 (February 4, 2010),http://www.epi.org/publication/bp255/.
4. Id.
5. George Borjas, Immigration and the American Worker, Center for Immigration Studies (April 2013), http://cis.org/immigration-and-the-american-worker-review-academic-literature.
6. Giovanni Peri, The Impact of Immigrants in Recession and Economic Expansion, Migration Policy Institute (June 2010), http://www.migrationpolicy.org/research/impact-immigrants-recession-and-economic-expansion.
7. Annette Bernhardt, Ruth Milkman, Nik Theodore, et al., Broken Laws, Unprotected Workers(2009), http://www.nelp.org/content/uploads/2015/03/BrokenLawsReport2009.pdf.
8. Eastern Research Group, Inc., The Social and Economic Effects of Wage Violations: Estimates for California and New York, prepared for the U.S. Department of Labor (December 2014),https://www.dol.gov/asp/evaluation/completed-studies/WageViolationsReportDecember2014.pdf. The data used for the cited finding in this report was not able to distinguish whether the immigrants were authorized or unauthorized; only if they were a citizen or non-citizen. According to the Pew Research Center, 45 percent of all non-citizens in the United States are unauthorized, see Jeffrey S. Passel, “Measuring illegal immigration: How Pew Research Center counts unauthorized immigrants in the U.S.,” Pew Research Center (September 20, 2016), http://www.pewresearch.org/fact-tank/2016/09/20/measuring-illegal-immigration-how-pew-research-center-counts-unauthorized-immigrants-in-the-u-s/.
9. National Resource Council, “The Future Fiscal Impacts of Current Immigrants,” Chapter 7 in James P. Smith and Barry Edmonston [editors], The New Americans, National Academy Press, Washington, D.C. (1997), http://isites.harvard.edu/fs/docs/icb.topic803549.files/Week%209-November%203/Smith_Future.pdf.
10. Jordan Rau, “Immigrants Contribute More to Medicare Than They Take Out, Study Finds,” Kaiser Health News (May 29, 2013),http://www.kaiserhealthnews.org/Stories/2013/May/29/immigrants-Medicare-health-costs.aspx.
11. Eduardo Porter, “Illegal Immigrants Are Bolstering Social Security With Billions,” New York Times (April 5, 2005), http://www.nytimes.com/2005/04/05/business/05immigration.html?pagewanted=1&_r=3&.
12. Id.
13. Tax Policy Center, “T11-0176 – Baseline Distribution of Tax Units with No Income Tax Liability by Cash Income Percentile; Current Law, 2011” (July 13, 2011),http://www.taxpolicycenter.org/numbers/displayatab.cfm?DocID=3057.
14. Nina Bernstein, “Tax Returns Rise for Immigrants in U.S. Illegally,” New York Times (April 16, 2007), http://www.nytimes.com/2007/04/16/nyregion/16immig.html?pagewanted=print.
15. Kevin Short, “America Has More Low-Paying Jobs Than Any Other Developed Country,” Huffington Post (September 23, 2014), http://www.huffingtonpost.com/2014/09/23/low-paying-jobs_n_5868350.html?ncid=engmodushpmg00000004; see also, OECD, Wage levels (indicator). doi: 10.1787/0a1c27bc-en (Accessed on 21 September 2016),https://data.oecd.org/earnwage/wage-levels.htm.
16. Lawrence Mishel, Unions, inequality, and faltering middle-class wages, Economic Policy Institute (August 29, 2012), http://www.epi.org/publication/ib342-unions-inequality-faltering-middle-class/.
17. Jake Rosenfeld, Patrick Denice, and Jennifer Laird, Union decline lowers wages of nonunion workers: The overlooked reason why wages are stuck and inequality is growing, Economic Policy Institute (August 30, 2016), http://www.epi.org/publication/union-decline-lowers-wages-of-nonunion-workers-the-overlooked-reason-why-wages-are-stuck-and-inequality-is-growing/.
18. Id.
19. Ross Eisenbrey, “Wage Theft is a Bigger Problem Than Other Theft—But Not Enough is Done to Protect Workers,” Economic Policy Institute (April 2, 2014),http://www.epi.org/publication/wage-theft-bigger-problem-theft-protect/.
20. Brady Meixell and Ross Eisenbrey, An Epidemic of Wage Theft Is Costing Workers Hundreds of Millions of Dollars a Year, Economic Policy Institute (September 11, 2014), http://www.epi.org/publication/epidemic-wage-theft-costing-workers-hundreds/.
21. Daniel Costa, “Huge disparity in funding for immigration enforcement vs. labor standards,” Economic Policy Institute (January 23, 2013), http://www.epi.org/blog/funding-disparity-immigration-enforcement-labor-standards/.
22. Daniel Costa, The H-2B temporary foreign worker program: For labor shortages or cheap, temporary labor? Economic Policy Institute (January 19, 2016),http://www.epi.org/publication/h2b-temporary-foreign-worker-program-for-labor-shortages-or-cheap-temporary-labor/.
23. See, for example, Julia Preston, “How the H-1B Visa System Can Hurt American Workers,” New York Times (November 10, 2015),http://www.nytimes.com/interactive/2015/11/06/us/11visa-listy.html.
24. Ron Hira, “New Data Show How Firms Like Infosys and Tata Abuse the H-1B Program,” Economic Policy Institute (February 19, 2015), http://www.epi.org/blog/new-data-infosys-tata-abuse-h-1b-program/.
25. See, for example, Daniel Costa, “Hatch should fix H-1B visa program instead of expand it,”The Salt Lake Tribune (June 13, 2015), http://www.sltrib.com/opinion/2614737-155/op-ed-hatch-should-fix-h1-b-visa; Ron Hira, Testimony before the U.S. Senate Judiciary Committee: “Immigration Reforms Needed to Protect Skilled American Workers,” Dirksen Senate Office Building (March 17, 2015), http://www.epi.org/publication/congressional-immigration-reforms-needed-to-protect-skilled-american-workers/.
26. George Avalos, “Workers paid $1.21 an hour to install Fremont tech company’s computers,”The Mercury News (October 22, 2014), http://www.mercurynews.com/2014/10/22/workers-paid-1-21-an-hour-to-install-fremont-tech-companys-computers/.
27. Louis Hansen, “The Hidden Workforce Expanding Tesla’s Factory,” The Mercury News (May 15, 2016), http://extras.mercurynews.com/silicon-valley-imported-labor/.
28. Lauren A. Apgar, Authorized Status, Limited Returns: The Labor Market Outcomes of Temporary Mexican Workers, Economic Policy Institute (May 21, 2015),http://www.epi.org/publication/authorized-status-limited-returns-labor-market-outcomes-temporary-mexican-workers/.
29. Office of Foreign Labor Certification, U.S. Department of Labor, “Disclosure Data,” available at https://www.foreignlaborcert.doleta.gov/performancedata.cfm#dis.

30. Economic Policy Institute and Jobs with Justice Education Fund, Guestworker Data website, available at http://guestworkerdata.org/.
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