Flawed Immigration Reform May Hurt Low-Wage Workers

Service members rise after being sworn in as citizens during naturalization ceremonies.
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Service members rise after being sworn in as citizens during naturalization ceremonies.

Journalist John Judis points out that the immigration reform proposal making the rounds on Capitol Hill may mix with Obamacare to hurt the employment prospects of American citizens.

The bill denies health insurance coverage to the 11 million undocumented workers, who will become "registered provisional immigrants" (RPIs), and to over 100,000 guest agricultural workers (who will get "blue cards" rather than "green cards"). Only after immigrants become permanent residents, which in the case of the eleven million undocumented will take a minimum of ten years and as long as 15 years, will they become eligible for Obamacare.

It creates an incentive for employers to hire the new immigrants over citizens or green-card holders and to provide neither with health insurance. Under the Affordable Care Act, employers with fewer than 50 workers do not have to buy health insurance for their employees, but businesses with 50 or more workers—which employ about three-quarters of American workers—either have to provide insurance or pay a fine for those workers who buy insurance through the exchanges the act creates. The fine is ordinarily $2,000 but can run as high as $3,000.

Businesses with 50 or more employees that choose to pay a fine rather than provide insurance will not have to pay fines for the RPIs or blue-card holders because they are not eligible for the exchanges. So employers will be able to save from $2,000 to $3,000 a year by hiring a new immigrant over an American citizen. For salaries that hover between $15,000 and $25,000, as they do in many immigrant-heavy industries, that's no small savings.

In other words, a provision meant to deny a benefit to illegal immigrants will wind up denying jobs to U.S. citizens.


_By CNBC's John Carney. Follow me on Twitter @Carney