The informal economy in an advanced industrialized society: Mexican immigrant labor in Silicon Valley.

• Author: Zlolniski, Christian
• Position: Symposium: The Informal Economy

Christian Zlolniski presents his empirical study of immigrant labor in the Silicon Valley. He explores the relationship between urban poverty and two types of labor in the informal sector: subcontracting of unskilled labor and small-scale vending. He concludes that policymakers must consider alternative approaches to the regulation of this significant, but all to invisible, labor market.

INTRODUCTION

This Essay uses an ethnographic study of Mexican immigrants living in a low-income neighborhood in San Jose, California to demonstrate the relationship between urban poverty and two types of labor in the informal sector: subcontracting of unskilled labor and small-scale vending.(1) During the 1980's, many of Silicon Valley's manufacturing and service industries restructured their operations, moving toward greater decentralization and labor flexibility. Part of this restructuring was accomplished by subcontracting work that had previously been performed in-house. Widespread subcontracting has led to the expansion of the informal labor Market--which employs largely immigrant workers under poor working conditions--and, in turn, to deteriorated working conditions in the formal labor Market. Because many workers now earn lower pay and suffer more frequent periods of unEmployment, the class labelled the "new working poor" has expanded. Immigrant workers have adapted to the lower incomes their regular jobs now pay by engaging in another type of informal economic activity-small-scale vending within their home neighborhoods. Vending has received even less attention than Industrial subcontracting in the literature on California's informal economy, yet it is a crucial part of the growing informal sector. Moreover, as this Essay argues, revenues accrued by informal workers through vending contribute to the reproduction of their labor power and to the accumulation of capital in those California industries that rely on these workers.(2)

The Essay is divided into four parts. Part I briefly discusses the theoretical context within which I situate my research questions and hypotheses. Part H provides a brief historical description of the rise of the high-tech economy in Santa Clara Valley (also known as and used interchangeably with Silicon Valley) and the way in which it is connected with immigrant labor. Part III explains how the restructuring of Silicon Valley's janitorial industry in the 1980's led to the formation of a labor niche that relies on Mexican immigrant labor, as well as the proliferation of informal subcontracting arrangements. Part IV describes several types of informal selling activities engaged in by immigrant workers and their families in the neighborhood where I conducted my study. This description explores examples typical of the enormous variety of small-scale, informal, income-generating activities that can be found in a Mexican immigrant neighborhood. These activities are essential for understanding not only the characteristics of this segment of the informal sector, but also how immigrants act as social agents in response to their low-paid and insecure position in the job Market. The Essay concludes with some theoretical considerations relevant to the current conceptualization of the informal economy in the United States and outlines some public policy implications that derive from the main findings of my research.

1. ECONOMIC RESTRUCTURING AND THE INFORMAL ECONOMY

   Recent studies indicate that the informal economy has grown in large U.S. cities because of changes in labor Markets and the economic polarization produced by economic restructuring.(3) Today, informal economic activities once thought typical only of Third World countries are common in advanced Industrialized countries like the United States. Saskia Sassen's research indicates that the growth of the informal economy results from broader economic changes, including an increased demand for luxury goods and services by an expanding high-income population, and, in tandem, a growth in demand for low-cost goods and services by an expanding low-income population. As a backdrop to this hourglass phenomenon, Sassen points to the proliferation of subcontracting practices in different industries.(4) According to this model, immigrants constitute the main workforce for firms that operate by informal labor subcontracting, and/or produce goods and services directed at the affluent or low-income sectors of the population.(5) Sassen's paradigm allows us to conceptualize within a single framework a number of socioeconomic trends that otherwise would appear disconnected if not contradictory. The paradigm also makes clear that it would be a mistake to identify the informal economy with declining and "backward" Industrial sectors. As she shows, the development of the informal economy results from the reorganization of the productive process within the new global economy and it affects both old and technologically advanced industries.(6)

   Sassen's theoretical model, however, does not sufficiently address the question of how immigrant workers survive within this new urban economy given their segregated (and inferior) position in the job Market. Sassen views immigrants as the primary labor force for the numerous low-wage jobs the new economy has created, especially in such industries as apparel, electronics, or footwear, all of which have gone through a restructuring process.(7) She spends little time analyzing informal economic activities in which immigrant workers are engaged, in the neighborhoods where they live. Analysis of such activities allows us to demonstrate that the informal economy functions to reproduce the cheap immigrant labor that the new economy requires. Only by combining formal jobs with informal labor at the household level can immigrant families subsist in this new economy. This study emphasizes how immigrants creatively respond to the structural forces of the restructuring process, demonstrating that their choices in the face of structural limitations contribute to defining the economic and social context in which economic restructuring takes place. In doing so, it remedies a fundamental problem in Sassen's approach, which tends to portray immigrants as passive agents.

   My study finds immigrant workers undertaking two basic types of informal economic activities. First, a number of unskilled jobs, especially in the service sector, are common sources of informal Employment for Mexican immigrants. Here, the informal sector refers to "the production and/or sale of licit goods and services . . . outside the regulatory apparatus" of the state.(8) A large number of immigrants, for example, work under informal subcontracting arrangements in the janitorial, landscaping, construction, and restaurant industries. These immigrants have been placed in a niche created by the restructuring of high-tech firms. During the 1980's, many high-tech firms that once directly employed workers to perform productive and service operations began to contract out some portion of that work to independent contractors in order to reduce labor and overhead costs. Second, many Mexican immigrants have found such casual Employment as home and street vending, house cleaning, baby-sitting, day labor, and recycling. The number and variety of these activities has substantially grown in Californian cities like San Jose, and are most visible in Latino immigrant neighborhoods. These activities often involve immigrants' extended households, including adults, children, and the elderly.

   The growth of informal, low-wage subcontracting jobs, as in the case of the janitorial industry, is a major factor behind the rise of poverty among immigrant workers. Low-income immigrants cope with their poverty by engaging in small-scale informal economic activities in their home neighborhoods. Thus, the informal economy in immigrant barrios creates and reinforces poverty rather than leading to upward mobility or a strong neighborhood economy.

2. THE GROWTH OF THE HIGH-TECH ECONOMY IN SILICON VALLEY AND THE ROLE OF IMMIGRANT LABOR

   Santa Clara Valley's economy was historically based on agricultural products, which were easily grown in the region's extremely fertile soil. In the 1950's, the region began to Industrialize, after the U.S. government selected Santa Clara Valley as the central location for the development of the high-tech research military industry.(9) The Santa Clara Valley area soon became widely known as Silicon Valley, because it was the locus of the birth and evolution of the microelectronics industry.(10) It was not, however, until the nonmilitary Market for microelectronics boomed in the late 1960's and 1970's that Santa Clara County began to grow rapidly both economically and demographically. By 1970, this former agricultural valley had become one of the wealthiest and fastest growing urban areas in the nation.(11) The Industrialization of the region marked the beginning of a spectacular demographic growth that made San Jose, the capital of Silicon Valley, the fastest growing city in the country for several years during the 1970's. Today, San Jose, with its 782,225 inhabitants, is the third largest city in California behind Los Angeles and San Diego.(12)

   The transition of Santa Clara Valley from an agricultural to a high-tech economy had a crucial impact on the Occupational and social structures of the region. In traditional manufacturing industries, such as automobile, metallurgy, and mining, most of the workforce is made up of semiskilled blue-collar workers. The electronics industry, by contrast, has a highly bifurcated Occupational structure: highly educated engineers, scientists, and managerial workers on the one hand, and unskilled and semiskilled production workers on the other. For example, roughly 30% (50,000 - 70,000 persons) of the total labor force employed in the Silicon Valley microelectronics industry works in low-paid, semi-skilled operative jobs.(13) While...