Apple Packer Settles RICO Case

NPR has the story of a settlement in an unusual case  involving an apple-packing company in Washington.  The suit was brought as a civil RICO action against executives at Zirkle Fruit Company.  Filed as a class action on behalf of legally-employed workers at the company, the suit alleged that Zirkle executives violated  immigration laws by employing workers with forged work documentation.  The suit alleged that Zirkle executives knew the workers' documents were phony and looked the other way in order to depress the wages of all workers at the company, including those with the right to work.  The executives settled the case for $1.3 million, which will be paid to workers who worked at the company legally from 1999 to 2004.  Further articles about the case are here and here.

Apart from being another novel use of the RICO statute, the case presents interesting economic and political questions.  In terms of economic theory, the case alleges that legal workers would have been paid more by the company if it had properly refrained from hiring illegal workers.  As a theory applied to the economy as a whole, this makes some sense.  Immigration laws shrink the available labor pool, theoretically driving up the wages of workers allowed to work.  But would these effects extend to a particular company?  If Zirkle had not employed illegal workers for some of its positions, might it have had to pay less money to its legal employees, in order to remain competitive in a market where other companies used illegal workers?  In addition, there are the future ramifications.  If additional such settlements follow down the road, will these actions discourage employers from hiring workers without legal documentation?  And what would be the effects of this decrease in demand for undocumented workers?  Questions to follow as these suits go forward.