Don`t Raise The Minimum Wage—Lower The Boom On Illegal Immigration!
One consistent theme was voter backlash against the
high cost of cheap labor.
Many of the new winners were what
Jacob Weisberg in Slate calls "
Dobbs Democrats" and
"economic nationalists." The most striking
addition to the Senate, Virginia`s
Jim Webb, war hero and
intellectual, author of
Tom Wolfe considers the finest
Vietnam War novel, pointed out:
"In the age of
outsourcing, and with a vast
underground labor pool from illegal immigration, the
average American worker is seeing a different life and a
troubling future." [Class Struggle | American workers have a chance to be
heard, OpinionJournal.com, November 15, 2006]
In six states, initiatives were on the ballot to
raise the minimum wage. They all passed, by an average
Back in April, a
Pew Research Center poll found that 83 percent of
the public favors raising the minimum to $7.15.
If you`ve taken Econ 101, you probably heard that
minimum wage laws are a
Their impact on consumer prices, however, isn`t an
important objection to minimum wage laws. For instance,
the Open Borders lobby has long put out scare propaganda
how higher wages for stoop laborers will make
broccoli cost $5 per head, in reality, unskilled
labor makes up a trivial part of the
$13 trillion dollar American economy. Even in
industries addicted to illegal alien labor, the cost
savings to consumers are minimal: doubling the
pay of strawberry pickers, for example, would raise
the supermarket price by six pennies per pint.
No, the worst thing about minimum wage laws is their
impact on the people they are supposed to benefit. The
Law of Supply and Demand says that if the government
enforces a minimum above the market wage, some workers
will indeed get paid more, but others won`t have jobs.
The late Milton Friedman observed
many years ago:
"Many well-meaning people
favor legal minimum wage rates in the mistaken belief
that they help the poor. It has always been a mystery to
me why a youngster is better off unemployed at $4.75 an
hour than employed at $4.25.“
Yet, if you are a politician, minimum wage laws make
lots of sense.
First, in many states, the market rate is now well
above the federal minimum of $5.15 per hour, which
hasn`t changed since 1997. In Pelosi`s
ultra-expensive home district in San Francisco, for
example, raising the federal minimum will be one of
those purely symbolic gestures that politicians love.
Second, while lifting the minimum can cost you
campaign contributions from business owners, you
don`t have to worry about losing many votes from people
who are out of work because of it. They are simply
unlikely to figure out the causal relationship between
your vote in Congress and their lack of a job.
Say a business employs two workers at $5.15 an hour.
The minimum wage goes up to $7.25 per hour, so the owner
gives the smarter worker a $2.10 raise and
lays off the dumber one. The smarter guy might
remember to vote for his Congressman in gratitude. But
is the guy who got fired because he wasn`t worth the new
minimum wage (remember, he
probably didn`t major in econ at the U. of Chicago)
going to understand he`s out on the street because
Congress lifted the minimum? Is he going to look up how
his Congressman voted? Is he going to remember to vote
against his Representative the following year? Is he
even going to remember that the first Tuesday in
November is Election Day?
Then, consider all the businesses that would have
hired new workers at the old minimum wage, but now can`t
afford it. How likely is the unemployed guy who would
have been hired in the alternative universe where the
minimum stayed $5.15 per hour even going to notice that
he`s still out of work due to the higher minimum?
Yet, misguided as it may be, raising the minimum wage
is at least some kind of response to the genuine problem
of employers of cheap labor
privatizing profits while socializing costs.
Americans don`t let other residents of America live on
$5.15 per hour. Instead, we massively subsidize them. We
to educate their children in
public schools, give them
free medical care at
emergency rooms, and
police their neighborhoods.
A minimum wage above the market wage treats the
symptom, not the underlying problem, which is that the
balance of supply and demand doesn`t provide a high
enough market wage. While treating the symptom will help
the more productive, it will keep the less productive
(who are often
young and black and likely to cause trouble when
they aren`t honestly employed) from finding jobs at
Of course, the reason the market wage is so low these
days is the enormous supply of illegal aliens.
Moreover, raising the minimum above the market
encourages employers to cheat by paying an illegally low
wage. And which kind of workers are most likely to
keep their mouths shut about
making less than the minimum?
Raising the minimum without cracking down on illegal
immigration is pointless.
Ironically, the same liberals who claim that the
immigration laws can`t be enforced simply assume that
the minimum wage laws could be enforced. Even if all the
current illegal aliens were "put
on the path to citizenship," a high minimum wage
would just attract new ones who would work for less
than the legal limit.
The far more practical solution is to drive up the
market wage by rectifying the balance of supply and
demand for unskilled labor. How? By
closing the borders.
I`m always amused that so many
free market economists think that Neal Stephenson`s
1992 dystopian sci-fi novel
was heavily influenced by Jean Raspail`s
Camp Of The Saints)
a globalized America where "the Invisible Hand has
taken all those historical inequities and smeared them
out into a broad global layer of what a Pakistani
bricklayer would consider to be prosperity" is
actually a utopian book.
need to realize that their beloved Open Borders
inevitably lead to a political backlash in favor of
laws, like Nancy Pelosi`s minimum wage boost, that
meddle with the economy. Why? Because American voters
won`t put up with a completely globalized labor market.
The simplest way to make
libertarian economics more politically feasible in
America is to insulate our labor market through better
border controls. "Libertarianism
in one country" is possible but there is
staggeringly too much inequality in the world for
America`s love affair with capitalism to
survive importing massive amounts of it.