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The sudden influx of 115,000 or more Vietnamese refugees, large as it may appear at a time of rising domestic unemployment, is rela tively small in relation to earlier inflows of political refugees, such as the half-million Cubans of a decade ago. The influx is even smaller in relation to the annual flow of about 400,000 official immigrants, and is probably only a fraction of the uncounted numbers (perhaps millions) who enter the nation each year without benefit of any of the usual legal formalities. According to some authorities, the highly visible legal immigrants represent only the tip of the iceberg of total immigration. More than 46 million people have been counted on the immigra tion rolls over the past century and a half. Until World War I, about 90 percent of the total came from European countries. But then the flow slackened rapidly, under pressure of restrictive legislation enacted after that war. New legislation a decade ago liberalized the restrictive rules, in particular by expanding the overall quota and by doing away with the old national quotas. This stimulat ed both a resurgence in the immigrant flow and a dramatic shift in migration patterns. Within the past decade, about 31A million people entered the U.S. under this new law, but only about 30 percent of the total came from Europe. The vast majority came from the Americas and the Far Digitized for FR A SER East—including 475,000 Mexicans, 280,000 Cubans and some 400,000 Filipinos, Chinese and Koreans. How many illegals? Nonetheless, the illegal inflow has increased apace. The Immigra tion and Naturalization Service apprehended 790,000 illegal aliens in fiscal 1974—about one-half of them in California—and it esti mated the total inflow at three to four times that amount. There may be some double-counting involved, in view of the large numbers who cross and recross the border illegally, but the total un doubtedly is very large. Altogeth er, according to the INS, as many as 8 million illegals may be residing in this country at any one time. Approximately 1 to 3 million of them find employment—about one-third in agriculture, and most of the rest in low-paying factory and service jobs. There are a few success stories, such as the two aliens who jumped ship in New York and found $9.70-an-hour jobs painting (very appropriately) the Statue of Liberty, with its message welcoming "the home less and the tempest tossed" to these shores. Illegal immigration of course did not exist when all immigration was legal, but it seems unusual that it should increase so rapidly under the liberalized legislation of the past decade. Economic influ ences help account for this appar ent paradox. Consider, for exam ple, Mexico—the most accessible (continued on page 2) Opinions expressed in this newsletter do not necessarily reflect the views of the management of the Federal Reserve Bank of San Francisco, nor of the Board of Governors of the Federal Reserve System. source of foreign labor. The Mexi can population of about 60 million is growing at one of the fastest rates in the world— roughly 31/2 percent a year—while the U.S. population is growing quite slowly—less than 1 percent a year. Thus, finding jobs is an even greater problem in Mexico than it is here. Then there is a significant income differential. Threefourths of the 111/2 million Mexicans who reported any income in 1970 had wages of Jess than $1,000 a year—at a time when the U.S. poverty level income was close to $4,000. (The poverty level income in 1974 was $5,050 for a family of four.) Safety valves? For several decades, an important safety valve existed in the form of the bracero program—a device permitting temporary immigration of farm laborers for work primarily in the fields of California and the Southwest. This program provided farm operators with a constant source of low-paid farm labor, but it was strongly opposed by the union movement as a depressant on farm wages. In the early 1960's, about 100,000 foreign workers entered the country each year under this program. Congress terminated the program in 1964, but it continued in a minor way until 1968. Related to this is the attractiveness—at least to Mexicans—of the U.S. minimum wage. At $1.80 for farm workers and $2.10 for most nonfarm work ers, this U.S. minimum is several times the level of the Mexican minimum wage. Many employers in marginal manufacturing or service industries, hard-pressed to make ends meet in a recession atmosphere, find illegal aliens much more willing than Ameri cans to work at or below the minimum wage. With that program shut off, anoth er safety valve developed in the form of the border-factory pro gram, which encompasses almost 500 industrial plants on the Mexican side of the border. Under this program, about 100,000 Mexi can workers (mostly female) proc ess U.S. raw materials into finished goods which are eventually sold back in this country under liberal ized U.S. tariff procedures. These industrial plants, which are strung out along the border from Tijuana on the Pacific to Matamoros on the Gulf of Mexico, may be viewed collectively as another Hong Kong, but one with greater loca tional advantages than that Far Eastern manufacturing center can boast. The border-factory pro gram, like the earlier bracero program, has been severely at- DigitiZed for FRA SER tacked by U.S. labor unions, on the grounds that it permits the flight of American factories (and American jobs) south of the border. Despite this opposition, the pro gram has grown rapidly to become an important factor in electronics, apparel and other U.S. industries. welfare payments to unemployed American workers who are avail able to fill the jobs now held by illegal aliens, as well as the cost of transporting the illegals home and the cost of the 1,700 border-patrol agents who are involved in the policing of the problem. Still, economic factors have con tinued to propel illegal aliens into the U.S. labor market, where they have taken over perhaps several million low-paying jobs in manufac turing, trade and service indus tries. What has evolved is an illegal version of the bracero program—or an illegal version of the European “ guest worker" program, whereby Northern Eu ropean industries employ millions of Southern European workers under contract, and send them home during seasonal or cyclical lulls. Bills prohibiting the intentional employment of illegals have been introduced into Congress on a number of occasions in the last half-dozen years, but most of them have remained bottled up in committee. Still, legislation may not solve the basic economic problems involved. Illegal immi gration undoubtedly will continue as long as the nation's borders remain relatively open, as long as national economies (especially the Mexican and American econo mies) become increasingly in terdependent, and as long as U.S. earnings remain several times higher than those available in Mexico and other nations. But the underlying stresses will continue to plague the U.S. economy, with its chronic unemployment among low-income unskilled workers and its present cyclical unemployment among all types of workers. Continuing phenomenon The illegal immigrants perform an economic function in the U.S. by filling low-paying unskilled jobs, but they also impose certain costs on the economy. According to the House Government Operations Committee, Federal and state governments lose at least $115 million in tax revenues annually because of such factors as non reporting of income by illegal aliens. Also, in California alone, welfare payments to illegal aliens amount to about $100 million or so each year. Then there is the cost of unemployment-compensation and Digitize3 for FRA SER Verle Johnston William Burke uojSinijse/w • i|m n • uo S o jo • BpEAafsj • oqepi MBAABH • BJUJOJ!^ • BUOZjJV . B)|SB|v o s s m n m * | I | B 3 'O D S p U B J J U B S ja r[1gJ!®p ZSZ ON* HWBHd aivd 3D V lSO d *s*n 1IVW SSV1D ISH IJ p B fflH U ip B d S Q BANKING DATA—TWELFTH FEDERAL RESERVE DISTRICT (Dollar amounts in millions) Selected Assets and Liabilities Large Com mercial Banks Amount Outstanding 4/30/75 Change from 4/23/75 + + + + + + + + + - Loans (gross, adjusted) and investments* Loans (gross, adjusted)—total Security loans Commercial and industrial Real estate Consumer instalment U.S. Treasury securities Other securities Deposits (less cash items)—total* Demand deposits (adjusted) U.S. Government deposits Time deposits—total* States and political subdivisions Savings deposits Other time deposits}: Large negotiable C D ’s 85,016 64,912 1,133 24,114 19,520 9,822 7,683 12,421 84,329 22,585 969 59,423 7,516 19,412 28,993 15,637 W eekly Averages of Daily Figures Week ended 4/30/75 Member Bank Reserve Position Excess Reserves Borrowings Net free (+) / Net borrowed (-) Federal Funds—Seven Large Banks Interbank Federal fund transactions Net purchases (+) / Net sales (-) Transactions of U.S. security dealers Net loans (+) / Net borrowings (-) - 54 3 51 215 1 41 57 42 23 164 52 456 455 698 18 114 4 98 177 Change from year ago Dollar Percent + + + + + + + + + + + + + + Week ended 4/23/75 - + + + + + + + + + + + + + 2.53 0.98 0.27 3.73 2.85 6.03 41.44 5.93 7.13 4.86 30.69 8.95 0.31 8.42 9.57 + 14.84 2,098 630 3 866 541 559 2,251 783 5,614 1,046 429 4,882 23 1,508 2,532 2,021 Comparable year-ago period 36 38 2 - 37 134 97 + 502 + 2,078 + 2,151 + 278 + + 659 125 "Includes items not shown separately. t Individuals, partnerships and corporations. Information on this and other publications can be obtained by calling or writing the Public Information Section, Federal Reserve Bank of San Francisco, P.O . Box 7702, San Francisco 94120. Digitized for F r A S IR " (41S>
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