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Week 15: Employees and the Corporation & Managing

a Diverse Workforce

DISCUSSION QUESTION #1: Think back to the important


process of "stakeholder analysis" in Chapter 1 and the need to
identify all stakeholders and their interests when running a
business and facing business-society issues. Question: Which
stakeholders are helped and which are hurt when a business hires
unauthorized immigrants and why? (Make sure you're
considering ALL key stakeholders in this analysis: including but
not limited to stockholder/owners, managers, other employees,
customers, competitors, communities where the business is
located, governmental interests, etc.)
To begin, as a group, we each analyzed how the particular groups
of stakeholders would be affected by unauthorized workers in general,
and in turn, separated them into those who would benefit and those
who would be are hurt. In terms of those who benefit, we mostly
agreed that businesses, managers and customers all have the
potential of benefitting from illegal labor in one very similar way, lower
costs. Michelle pointed out that businesses can take advantage of
cheap labor by hiring unauthorized workers that they can either pay
less up front, or less in terms of other benefits such as healthcare or
tax advantages. Penny then went one step further by declaring that
businesses who hire unauthorized labor can benefit from producing
products at a lower cost, which in turn will help to make the company
appear more valuable/profitable on paper. This would ultimately result
in better loan terms and an overall lower cost of capital, among other

things. We believe this decrease in production costs and/or operating


costs will then continue to benefit those down the line, most notably
managers and customers. Managers, who arent considered higher
level executives, will directly benefit from these lower operating costs
because most managers are hired to ensure that a firm operates at
maximum efficiency, while keeping operating costs low and profits
high.
Now there is no known all telling statistic that can verify whether
authorized workers are more effective workers than unauthorized, so
this isnt necessarily a benefit to managers, but lower operating costs
and higher profit margins surely are. John pointed out that sometimes
unauthorized workers may be more open to doing jobs that other
workers arent willing to do and may even take lower wages to do so.
This also contributes to operating costs and profit margins, as well as
efficiency, killing three birds with one stone, so to speak. This is truly
because a large majority of unauthorized workers usually have some
friends or family members that they are attempting to take care of and
will usually take any and all work that is presented to them. This is as
long as they are receiving some level of compensation, which
ultimately influences the firm on some level or another.
Finally, the last and possibly the most important group of
stakeholders who may benefit from illegal labor are customers. As any
good marketer knows, the first thing that most customers notice is the
price. The lower the price the more likely people can be considered as
potential customers. So when a firm utilizes illegal laborers to both
decrease operating costs and increase profits there is usually some
effect on the price as well. Ultimately, as the price of the product or
service decreases it is not unreasonable to assume that both sales and
profits will increase accordingly and, in turn, more customers may be

willing to buy the product/service. Although this ties back into the
benefits yielded by the firm, it is actually the money saved by each
individual customer that makes the biggest difference. If the savings
obtained by the customers are noticeable, this may in turn, allow
customers to either have more money to spend on other consumables
or have more money to spend on that particular product or service.
This would result in significantly more consumption per dollar than
there would have been without illegal laborers. If customers are happy,
and continue to buy more and more of a product or service, then that
will once again have an impact all the way up the ladder of the firm
resulting in a very noticeable increase in shareholders equity which is
the very goal of each and every manager in a publically traded
company.
On the other side, though, there are certainly a number of groups
who may be negatively influenced by the utilization of illegal labor.
Franchesca made the point that those who are hurt the worst from
using illegal labor are the other legal and authorized employees within
the company. The use of illegal laborers may ultimately affect other
employees pay, benefits, and even hours which can be detrimental to
any employee, especially those who have to take care of a family.
Since these lower wages and benefits earned by illegal workers
indirectly decreases all compensation given to regular employees, a
firm is not only putting their employees best interests at risk, but they
are also entering into a very sticky situation which has to do with
taxes. Although our group had some differing opinions on some of the
advantages and disadvantages behind the use of illegal laborers, the
one aspect that every member agreed upon was that illegal workers
have an incredibly large and negative impact on taxation. Specifically,
when the taxation is used by those governmental entities that are
funded by state and federal taxation. As Penny pointed out,

firefighters, policeman, public officials, schools and many other


incredibly important members/aspects of society are compensated or
funded through money yielded from taxes. Yet, when illegal laborers
are utilized they not only get to benefit from all of these services but
they do not have to pay for any of it in the form of taxes, as most
illegal laborers are paid under the table to avoid red flags from the IRS.
This burden created by a deficiency in the taxation system, in turn, is
placed on the other taxpayers and may come with a cost somewhere
in the area of several billion dollars a year, which is an incredible
amount of money. This burden, also pointed out by Penny, will then
place great strain on local businesses, communities and economies. It
will also increase necessary taxation in the long run as more people
means more need for social services such as firefighters and police
officers, which may result in an extremely vicious and repetitive cycle.
It could then be argued that as all Americans are taxpayers, all
Americans are in turn negatively impacted by the use of illegal
laborers. Including those firms, managers and employees mentioned
previously who receive some positive impact from their use.
From there, the two questions posed were Does illegal labor
have more of a positive or negative impact on society? and Would
you, as a taxpayer, recommend the government place recourses into
ridding the country of these illegal laborers or place those resources
into efforts to authorize these workers and in turn convert them into,
at the very least, taxpaying workers? Ultimately, as a group, we
believe there are more negative than positive impacts that result from
the use of illegal laborers. Although it is an imperfect system,
something must be done to mitigate the burden placed on the taxation
system and taxpayers, in general, before this problem gets out of
hand. From taxation, to reputation, to overall ethicality, as a group we
firmly believe that the negative impacts greatly outweigh the positive

impact, though we are slightly divided in terms of how we think the


problem should be handled. Several group members agree that the
best course of action would be some combination of the two, which
would be deporting some workers and authorizing others. Yet, it was
also agreed that this sweet spot between the two would be very
difficult to find without having some other negative impact on the
economy. As Michelle pointed out, any major immigration reform is
certain to have a long lasting impact on the agriculture industry,
among others, and a major labor shortage could bring much more
harm to society than the tax burden yielded from having illegal
workers. In conclusion, while it is clear to us as a group that something
should be done, the exact blueprint for that change is not so clear. As
the immigration system is clearly an imperfect one and there is
obviously a large amount of work to be done to help decrease this
burden placed on the taxpayers without resulting in other, more severe
problems that may occur in doing so.

DISCUSSION QUESTION #2: Based on the general knowledge


you may have of the unauthorized immigrant workforce in New
Mexico, what industries (types of businesses) seem to depend
most on unauthorized immigrant labor and why? What are some
of the economic and social upsides and downsides of these
workers being in the New Mexico workforce?
As a group we are actually pretty united in terms of the
industries we believe depend most on the usage of unauthorized
immigrant labor, at least here in New Mexico. These industries include
construction, hospitality including hotels and personal house-keeping,
restaurants, agriculture, and manufacturing. While the majority of us

were brought up here in New Mexico, though from different parts of the
state, collectively we have had a lot of experience with or around the
use of illegal labor, which is why it is believed we are so close in our
assertions. As Penny pointed out, growing up in Northern New Mexico,
it is not difficult to see a significant number of illegal laborers working
in hotels, restaurants, or out on the farms. She also had a very
interesting take on why these are the most common industries as she
made the comment, that in her opinion, a lot of these jobs are held by
immigrants because of their fears of being noticed and being deported.
This is because a lot of illegal immigrants tend to be housekeepers,
cooks, cleaners, and laborers, which makes it logical to see why these
may be chosen professions for illegal works since there is little
interaction with the general public and the ability to be paid under the
table without raising many flags is present. Penny also pointed out
that if some of these illegal laborers held more prominent or noticeable
jobs they would be at a much higher risk for deportation as it would
effectively place them in the radar of the Immigration Border Patrol,
which I also firmly agree with. Especially in a state that so heavily
relies upon the immigrant labor in general, illegal immigrants must be
much more careful to stay under the radar, and many of these
industries are a safe and effective way of doing so which results in a
two way dependency so to speak.
Another industry that we believe heavily relies upon illegal labor
is construction, and as I have had lots of personal experience in this
area, I can say that the majority of laborers in the construction industry
here in New Mexico are immigrants of which I can only imagine what
percentage of those immigrants are working illegally. For construction
companies, usually the hardest part about hiring employees, is finding
people who will be consistent and last longer than a few months as
construction work is usually long, grueling, and tedious which forces

many people to withdraw from the industry. So, when illegal laborers
come along and are willing to work regardless of the task and often for
lower wages than a legal immigrant or American-born citizen, it is very
difficult not to hire them. As John pointed out, fast food, construction,
auto repair shops, farming, machine and welding shops, among others,
all tend to be high turnover and low paying jobs that the majority of
the population is unwilling to do. Furthermore, many of these jobs
have low profit margins and are seldom inspected by immigration
services. This, in combination with being paid under the table and the
absence of taxes, effectively renders these industries perfect for illegal
laborers.
The final industry that we would like to touch on is the
agriculture industry, and specifically, during the spring and summer
months when both production and tourism picks up, which fuels the
need for more laborers out in the fields. These situations are also ideal
for illegal laborers as they are often seasonal jobs which lowers their
risk of being detected by immigration and often provides them with
wages that are paid under the table which benefits both the
company and the unauthorized workers in terms of taxation. Michelle
ended up making one of the best comments on this particular topic
when she stated that most illegal workers are hired to perform jobs
that Americans simply wont do. Which, for the most part, Americans
shun nearly any and all unskilled labor positions that require hard
and dirty work. This opens the door for illegal laborers to come in and
benefit from this common perception. She then went on to point out
that because of this New Mexicos workforce, economy, and society, in
general, are quite dependent on illegal immigrants and indicates that
they play a much bigger role in society than what first meets the eye.
Making the comment that Americans benefit from the contributions
that immigrants make to our economy, including lower consumer

prices, Michelle essentially highlighted the importance illegal laborers


have on the average citizen. This is very important because the
average citizen may truly not realize the gravity of these effects.
Ultimately, as a group I think we all understand just how big of a role
illegal immigrants play in our society, at least here in New Mexico, so it
is no surprise to us that so many major industries are relying upon this
illegal labor market.
From there, the questions posed to the group were In your
opinion, would you say New Mexico has an illegal labor problem or do
you think it is more of an immigration policy problem affecting the
whole country? and If you were a construction company owner here
in Albuquerque, would you say it is worth taking the risk of hiring
undocumented workers or do you think the benefits incurred from
doing so are outweighed by the possible backfire from the government
and any legal action that could be taken? In terms of question
number one our group was unified in saying that New Mexico has a
problem with illegal labor, but the country also has a larger
immigration problem, both of which are at play within this discussion.
Penny made the comment that if laws were better enforced with bigger
fines for companies that hired unauthorized immigrants it may slow
down the numbers, at least crossing the borders. While John pointed
out that the US needs to come to common ground on what to do and
how to handle the issue of illegal immigration for a real solution to be
reached. Altogether, while our group is unified on what the problems
being posed are, like the rest of the country we are scattered in terms
of how we believe these problems should be handled. One thing is
clear though, the United States needs to take a good, strong look at
our immigration policy and take steps to help solve the problem.

In terms of the second question, our group was once again


unified, but this time it was on the subject of how the problem should
be handled. All across the board we agreed that hiring illegal workers,
no matter the upfront benefits that may be had, is not worth the risk
because of the numerous legal repercussions that could be brought
down against your business. Franchesca made the comment that it is
not worth putting her company in harm regardless of any possible
advantage that may be had. Michelle outlined the precise fines and
penalties that a business owner may incur by hiring illegal laborers,
therefore highlighting the level of risk one is undertaking in doing so.
Ultimately, while many of us can understand why illegal immigrants
come to the U.S. and how they go about finding work, we are unified in
our belief that there are simply too many risks, as business owners,
managers, and taxpaying citizens to step foot into the illegal labor
market.