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Minimum wage encourages inefficiency, illegal immigration

In the debate now raging in Washington about how to deal with illegal immigration, too much it focuses on trying to treat the symptoms rather than the disease – and the progress of a piece of legislation in the Louisiana Legislature shows it does no better.

Why is there an illegal immigration problem in the U.S.? It’s not because there are too many Mexicans or too few Americans wanting to work or employers are skinflints or there’s not enough border enforcement or too little effort in monitoring noncitizens and punishing miscreant employers. It’s because there’s too much regulation involved in running a business which makes inviting the hiring of illegal aliens despite legal sanctions.

The more regulation that is required, the greater the costs will be. An entirely unregulated labor marketplace is unrealistic, but clearly the labor marketplace in America today is over-regulated. One way in which that is the case is with the artificial minimum wage.

Essentially, will hurt, not benefit, workers. For a host of reasons, valid economic thought demonstrates that the marketplace will set the appropriate wage level and that artificially inflating it brings suffering to both employers and employees.a minimum wage prices the benefit conveyed by the performance of that labor at higher level than its actual contribution to society. This removes resources that could be used for more productive purposes from the economy and places it where they are less useful. As a result, contrary to the simplistic assertions of some, it will hurt, not benefit, workers. For a host of reasons, valid economic thought demonstrates that the marketplace will set the appropriate wage level and that artificially inflating it brings suffering to both employers and employees.

The minimum wage is an example of a form of regulation that encourages illegal immigration. Employers are rational (and some apparently willing to flout the law) in trying to find properly-priced labor not inflated by a minimum wage. (Note also that the presence of it also artificially pushes up labor priced close to, but not far above, that wage level.) You can’t legally achieve that by hiring a citizen or documented worker. Thus, demand is created to hire illegal aliens. Getting rid of minimum wage statutes won’t end the allure of illegal immigration for both employers and aliens, but it will reduce it and therefore the magnitude of the problem.

But in Louisiana, instead the backwards approach of raising the minimum wage is being considered. Even if amendments to SB 700 have reduced its scope, its passage would raise the minimum wage for some, hurting employers, employees, and exacerbating the illegal immigration problem that even New Orleans Mayor Ray Nagin noticed. Other such obnoxious legislation also floats around the Capitol, such as a House committee hearing today the similar HB 194.

So if Louisiana’s government is serious about promoting economic growth and curbing illegal immigration, one step is to see that these bad bills go no further in the process.


Anonymous said...

Your assertions are laughable. The mouthing of tired, simplistic right wing ideology masquerading as argument. Do you really work for a taxpayer-supported university?

An honest discussion of the impact of minimum wage laws might include some review of economic data collected after the numerous times that the minimum wage has been increased nationally and in the states such as Oregon which have higher minimum wage standards. Did employment actually drop? No. Did we slip into some kind of socialist depression? Not hardly. Perhaps your "valid econmomic thought" could explain why much more regulated societies than ours (Europe Japan, Canada)enjoy higher standards of living than we do. Canada, for example, currently runs a healthy national budget surplus while providing universal health care and many other benefits that we can only dream about. How come?

I suppose the examination of actual data might allow too much "reality" to intrude and wreck that little ideological buzz of yours.

Every developed, civilized country has labor laws designed to protect its citizens from exploitation. A much more plausable explanation for the dramatic increase in employment of illegal workers in recent years is the almost complete absense, particularly under the Bush administration, of enforcement of federal laws against the employment of illegals. Its not that difficult to actually check this out you know. (Hint: you could compare the number of cases brought against employers over the last 5 years with other periods of time.)

I feel sorry for your students.

Jeff Sadow said...

Sounds like you're in desperate need of some education here: don't worry, that's what I do for a living.

Check out the Heritage Foundation's Labor issue research area for a start, but these results are replicated far and wide. I see you need help on health care, too; Heritage also has got that covered, as well.

(As an interesting side note, if you want to watch a movie at the intersection of the folly of minimum wage and the crisis of health care in Canada, see "The Barbarian Invasions." There, greedy unions have sent wages and conditions so high a hospital has to close an entire wing because to doesn't have the money to operate it. Meanwhile, patients suffer and die. A wealthy man must go in and buy off the union in order to open up the wing for his father to get proper care.)

It takes courage to shed ignorance and enbrace the truth; hopefully, I've given you a helpful shove here.