I don't see this as a problem. As I stated upthread, I worked in Detroit for about 5 years, alongside (East) Indian and Chinese contract programmers who did pretty much exactly the same thing as me. One of them would get here through the process, start a business, and become an anchor. He'd rent a little house somewhere and start stacking the Apus or Changs in it like cordwood with work visas, and sell their programming services for $20k/year/programmer at a time when the market was rising through the $40 - 50k range and up.How can they charge so little for the "same" work done ?
Easy ! Unlike the "average" American household , (1 generation under the roof ) they usually live together with multiple generations .
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Living like this allows them to pool their money so the living expenses goes down and allows them money to send home .
In doing this , they wind up destroying the market for the rest of us who don't want to live with ALL of our relatives or work 3 jobs to make the same amount of money we used to make working one job .
It's what's known as a competitive advantage, and in this case it's a cultural competitive advantage. As a result of their culture, they don't mind being crammed into places to live. 5 people to a bedroom in America is still better than the houses they probably came from. We have a cultural disadvantage in that most Americans want some elbow room, and the "nuclear family" household is our cultural standard nowadays. So our COGS is considerably higher than a competing immigrant worker, and our price for labor is as well.
We therefore have to find other ways to distinguish ourselves in the field of competitors. I did it by offering demonstrably better work, easier communication (since English is my first language), and a higher standard of quality. As a result I was able to maintain the lifestyle to which I'm culturally inclined, instead of moving into the modern equivalent of a boarding house. Cheap foreign labor forced me to become better at what I do.
Maybe there isn't enough room for differentiating one tile job from another to make that kind of distinction; I don't know, I'm not a tile guy. But I've seen some good tile jobs and some really really awful ones, so I'm inclined to believe that if Jose and Jorge are doing top-end work, maybe their prices more accurately reflect what the job is worth. If they're not, then there is room for differentiation.
Just to be clear, when I address this, I am not talking about their advantages that result from working illegally, only their cultural advantages. I'm in full agreement that the tax situation should be the same all around.