What Obama's Immigration Reform Means for Employers, and More

IMMIGRATION CHANGES – In a nationally televised address last night, US President Barack Obama unveiled a plan to protect more than 4 million undocumented immigrants, out of an estimated 11.3 million, from the threat of deportation. The parents of US citizens or legal residents who have been in the country at least five years would be allowed to stay temporarily and apply for job permits, without fearing that that would bring them to the attention of immigration enforcement officers. Obama's executive decision, which does not require the approval of Congress, also extends the protection of so-called "Dreamers" – people who were brought to the country illegally as children and have virtually only ever known an American life. Enforcement of deportation rules would be focused on gang members, criminals and recent arrivals. Barack Obama had tried and failed to pass immigration reform through Congress. While Democratic and Republican presidents alike have used executive orders on immigration before, this is the furthest reaching ever, by Obama's own admission, and the Republican opposition says he is overstepping his constitutional powers.

This is not all happening right away, but for businesses, these sweeping changes could have unpredictable ripple effects. In a state like Nevada, an estimated 10 percent of the workforce are undocumented. In an industry like farming, it's 25%. Not having to hide changes the power balance between workers and employers. Many may go after jobs with better pay and benefits, creating more competition in some industries and a labor shortage in others. The Wall Street Journal's Damian Paletta points to similar changes after a 1986 law that freed up nearly 3 million workers:

By the time they became naturalized in the early 1990s, just 4% of farm workers were in the same industry, while roughly a quarter of those workers had shifted over to construction and other laborer jobs with better pay, according to a study published in 2002 by the federal agency that handled immigration policy.

Other workers, though, were less likely to move. One-third of undocumented immigrants who worked in service-sector or professional, managerial and technical jobs stayed in their sector even after becoming naturalized. (Read the full story – paywall.)

At the same time, it could make hiring easier for sectors that unauthorized workers had been recently avoiding, for fear of immigration raids, like meatpacking. And the US government can expect more tax revenue from above-board work contracts. Long story short, as Paletta is careful to point out, there are economic studies and arguments on both sides of the issue and only time will tell.

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UBER AND OUT – I swear it's not a vendetta, but there's more Uber news. An internal deck leaked, revealing Uber's revenue structure. And its impressive. Adding up its top five markets alone (NYC, DC, San Francisco, DC, Chicago and LA), Uber is a billion-dollar startup already. And that's based on 2013 figures, not counting (probably) impressive growth this year. (We don't know because Uber is a private company.) On New Year's Eve alone, Uber made $11 million and as of then, made more than 100,000 trips per week in each of its largest markets. In other news, Uber hired a law firm to review its privacy policy after revelations this week that its employees seemed to be taking customer privacy lightly.

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FEDERAL INTROSPECTION – Also going through an introspection, the Federal Reserve is launching a large-scale review of the way it supervises big banks. That's after a NY Fed employee was fired for leaking documents to Goldman Sachs and after another for wanting to be tough on Goldman Sachs. Fed staff in DC and, separately, the Fed's inspector general will investigate whether senior staff are getting the right information to make their decisions on major financial institutions, and especially "whether channels exist for decision makers to be aware of divergent views." Not a coincidence: New York Fed President William Dudley is scheduled to testify today before a Senate subcommittee on "regulatory capture" – a term that designates regulators who stand too close to those they supervise to see them clearly.

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CENTRAL BANKS – It's a busy day for central bankers. On the other side of the ocean, ECB chief Mario Draghi pledged to continue stimulating the European economy as the continent stands on the edge of deflation. At a conference in Frankfurt, Draghi said:

We will do what we must to raise inflation and inflation expectations as fast as possible, as our price-stability mandate requires. (Some inflation expectations) have been declining to levels that I would deem excessively low.” ( Read the full story.)

The ECB's next policy meeting is in less than two weeks, and while the US central bank is ending its QE (quantitative easing) program, Europe could well expand its own. Meanwhile in China, the central bank unexpectedly cut its benchmark rate for the first time in two years. China's growth, while impressive by Western standards, has been slowing and the theory is that a lower cost of borrowing will boost investments.

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