The Impact of Immigration Reform On Marketing

There is much talk these days about the possibility of comprehensive immigration reform. While it has been 26 years since the last major reform of the U.S. immigration system, and there have been many failed attempts in the last 10 years, it looks likely 2013 will be the year something gets done. Immigration is arguably the area of public policy with the biggest effect on the business of Hispanic marketing. As an industry based primarily on a population of immigrants from Latin America, the implications of a change in immigration policy can be huge.

So what would that effect be? Would it be positive or negative? How big would it be?

Predicting the future is always risky business, and trying to figure out the effect of a large, complex and amorphous piece of legislation on a dynamic marketplace is no easier. However, we can look back at history, think through the nuances of different elements of potential policy and start to get a sense of what the effect might be – at least directionally.

A good first step would be to see what happened last time immigration legislation was enacted in 1986 as part of the Immigration Reform and Control Act of 1986.

The IRCA enacted on Nov. 6, 1986, reformed U.S. immigration law by:

  • Requiring employers to attest to their employees' immigration status

  • Making it illegal to knowingly hire or recruit unauthorized immigrants

  • Legalizing certain seasonal agricultural illegal immigrants

  • Legalizing illegal immigrants who entered the United States before Jan. 1, 1982, and had resided there continuously with the penalty of a fine, back taxes due, and admission of guilt.

About three million illegal immigrants were granted legal status as a result of IRCA. The exact effect of IRCA on Hispanic immigration into the U.S. – particularly illegal immigration from Latin America – is more difficult to ascertain. That is because many different factors influence immigration – including relative economic conditions in the U.S. and Latin American countries, the level of border enforcement, economic liberalization through trade, and fluctuations in demand for agricultural labor in the U.S. (Linder, “The Amnesty Effect: Evidence from the 1986 IRCA). However, the unauthorized immigrant population swelled to 11 million during the 25 years after IRCA (Cato)

What is clear is the Hispanic population in the U.S. nearly tripled from 17 million in 1985 to 50 million in 2010. Ultimately, that huge growth in population spurred the expansion of the business of Hispanic marketing. As the population grew, so did their buying power. More Hispanics meant more potential customers for American companies. As the population of Spanish-speaking Hispanics increased, so did their demand for Spanish media. As they bought more stuff, an entire industry came into its own.

So knowing what happened last time, should we expect the same positive, boom time results?

It all depends on what the legislation looks like. Here is a quick breakdown of some components of the reform package being discussed and the potential effect on the Hispanic marketing industry.

Path to Citizenship

A key element of the reform being discussed these days is a path to citizenship for the 11 million undocumented, mostly Hispanic, immigrants in the U.S. People get confused about this, thinking all 11 million will become U.S. citizens immediately. That is highly unlikely, as current immigration law requires a person to live in the U.S. as a legal permanent resident for seven years before qualifying for citizenship. A path to citizenship is really a path to residency, with a subsequent path to citizenship. That is at least 10 years out for any of the 11 million undocumented. What we can expect instead is that the 11 million will be granted residency – aka a “green card” – and will be able to enter the formal labor market. This means their wages will likely go up, as will their participation in the formal economy – paying taxes, buying insurance, getting mortgages. It’s hard to imagine this won’t spell more spending, particularly in certain categories like tax prep services, financial services, etc.

Worker Visa Program – Low Skilled

It also appears that some type of low-skilled, agriculture-focused worker visa program will be included in any immigration reform. Hispanic immigrant laborers are the lifeblood of American agriculture, particularly in the West and Southwest. Improving or updating the low-skilled worker visa program will likely increase the number of laborers that enter the U.S. from Mexico and Central America, but that effect will likely be largest in labor-intensive agricultural industries outside of the West and Southwest. The risk for an undocumented worker going to Midwest or Southeastern agricultural states – think Georgia, Wisconsin – is much higher than going to work in states like California, Washington, or Texas. I think improvements in access to low-skilled worker visas will serve to hasten the dissemination of the Hispanic population to new markets in the Midwest and Southeast.

English-Proficiency Requirement

There is already buzz in the Hispanic community about the potential requirement to learn English / pass an English proficiency exam to qualify for residency with proposed immigration reform legislation. Assuming the inclusion of this type of provision, we can expect to see a huge increase in the number of Hispanics who can consumer English media. While this will be a boon to language learning products don’t expect a mass migration away from Spanish media. However, it’s reasonable to expect much more bilingual media consumption.

Increased Border Security

It also seems likely some type of increased border security will be part of a final immigration reform package. Although border security has a relatively ineffective track record in reducing illegal immigration, it’s hard to imagine it will positively affect net immigration. With the economy still struggling, it appears likely any type of increased border security will further put downward pressure on illegal Hispanic immigration into the U.S. It’s hard to imagine the same level of Hispanic population growth, particularly from immigrants, during the next 20 years.

While it’s hard to know what, if anything, will happen with immigration reform, it’s important to keep an eye on it, because the effects will be significant for the business of Hispanic marketing.

Tags: hispanics
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