Minimum wage is one of those policies that usually works on a political level but makes absolutely no sense on a policy level. Anyone can demagogue about poor folks making enough to make a living wage and immediately raise the minimum wage by a dollar an hour if not more.
Of course, in reality, if you look at any statistics you will see that almost everyone on minimum wage is not raising a family. In fact, mostly what minimum wage does is price out high school students and retirees out of jobs. I know the only time I worked minimum wage was my first job, at 13, at McDonald's. . I know that at the time I was not terribly concerned about how much I was paid hourly, but rather just being able to work. Minimum wage is a failing policy because any artificial floor always goes against all good free market fundamentals. That said, for the most part, I am not terribly bothered by minimum wage because it is so inconsequential to the overall economy. That said, I don't like it when a politician uses minimum wage as some sort of proof that they care about the little guy.
Where minimum wage may have a great effect is in the area of illegal immigration. Most employers hire illegals because they can pay them less than minimum wage. Now, many liberals will say that rather than focusing on sealing the border, the right way to slow down illegal immigration is by going after employers that hire illegals. Now, many proponents of drug legalization will tell you that legalizing drugs will allow law enforcement to focus on other more serious crimes. Removing minimum wage would work in much the same way. By removing a great incentive to hire illegals, enforcement will be less necessary. Many of these same employers would simply hire legal American workers for whatever wage they find is appropriate. All the minimum wage does, with regard to this, is offer an extra incentive to a corrupt, cost conscience, to hire an illegal.
Now, cynics will say that illegals do the work that Americans won't do. That maybe true but it may not. The fact is that it is significantly more difficult to hire an American for less than minimum wage. By removing minimum wage, that will likely dry up much of the market for illegal immigrant workers. This rather worthless piece of policy is, in my opinion, is contributing to bringing in more illegal immigrants. Getting rid of minimum wage will do plenty to slow down the scourge of illegal immigration. Given that it is a counter productive policy, it makes all the sense in the world to remove it.
However, even if minimum wage was removed, you might see many Americans (who are used to the prospect of a minimum payment)decline lower-paid labor. I think, due to the fact that many illegal immigrants come to America with an intense desire to work, and a need to raise whatever money possible, that they would still end up working for lower wages. However, this time it would likely be competitive with Americans who are in entry level positions, and I think that Americans would walk away from a low wage faster than an illegal would. Possibly (and this is pure speculation) the competition between workers wages would result in a constantly decreasing wage, and would ultimately result in a larger polarization between rich and poor. I think a similar thing happened during the dust bowl, when migrant workers fought for wages that kept dropping due to the high numbers of potential workers willing to work for lower wages than the other man.
ReplyDeletemore simply put, if the American and the Illegal are competing for the same job, I strongly beleive that the illegal will be willing to work for a lower eage than the American would be willing to work for.
I don't doubt everything you say is true. I am not saying that removing minimum wage will eliminate illegal immigration, however it will help.
ReplyDeleteI think a monolithic view of illegals, Americans, etc. is simplistic. I agree in some cases what you say is true, and in other cases, that same job will go to an American.
All I am saying is that removing minimum wage will remove much of the motivation for illegal immigration. It is not an end all, but given how poor a policy it is already, this will also help reduce illegal immigration.
Over the past thirty years, as illegal immigration has increased, we've seen for the most part low levels of unemployment. So I'm not sure who's supposed to benefit having Americans fill less-skilled jobs. If illegal immigrants are taking less-skilled jobs, and unemployment has for the most part not gone up, than our economy is creating better-skilled better-paying jobs for Americans.
ReplyDeleteEliminating the minimum wage might have some effect on the use of illegal immigrants in some jobs, but, the market seems to keep the price of most physically difficult and/or otherwise unpleasant jobs above the minimum.
ReplyDeleteThe effect of illegals here is just to push wages down. For example, 15 years ago a construction laborer might have earned $15./hour-- equivalent to perhaps $20. today, yet today many such jobs pay under $10.
The same can be said for jobs in slaughterhouses; these jobs mostly still pay above minimum, but they pay dramatically less than they would without the present massive illegal immigration.
I don't doubt that reducing employment opportunities for illegal immigrants would not only reduce the flow, but might well reverse it. However, I'd need more evidence before I'd believe that eliminating the min. wage would have a significant effect.
The one principle that practically all economists will agree on is that people respond to incentives-- and, clearly, sufficient incentives exist to attract illegal immigrants.
I don't disagree with anything anyone has said, however the minimum wage is in and of itself a waste as a tool of economics, and on top of it, I believe it contributes to the problem of illegal immigration.
ReplyDeleteI don't mean to make it sound as though this is a magic bullet. There is no one magic bullet as far as illegal immigration, however I firmly believe this is a good tool as part of an overall comprehensive policy to battle illegal immigration.
wow, that has to be the most convoluted piece of non-logic I've seen in a while
ReplyDeletefact is, minimum wage has NOTHING to do with illegal immigration, they are not even on that radar.
if you want to solve the illegal problem, sanction, fine and jail employers who hire them
my state passed employer penalties (including jail time for repeats) and guess what... we have solved most of our illegal immigrant problem.
I had one client who told me that they had trouble hiring Americans to do the job. I said, well perhaps that's a function of workplace conditions, low pay and not acknowledging market conditions for AMERICAN workers. Guess what, 6 months later, .... they have American workers.. paying them $1.00 more per hour, giving them 2 15 minute breaks and a 30 minute lunch and offering some health care... people are standing in line now
so what a load of crap, there are Americans willing to work, the problem is the neo-cons think being a slave wage is an acceptable way of life...
and to further that agenda, they have placed an incredibly heavy hand on the employment market place in this country and it went completely out of control in 2000 with GWBs sanction and actions that threw our borders wide open
One of the most convoluted arguments ever!!! How exactly do you measure that?
ReplyDeleteAre you saying that illegals don't work here for less than minimum wage? Are you saying that if there was no minimum wage that some Americans wouldn't work for whatever is the going rate for any job? Are you saying that wouldn't create competition for some or even many of the jobs that illegals get now? Which part of my argument is so convoluted then.
I am not saying that getting rid of minimum wage will fix the illegal immigration crisis. There is no magic bullet. I am saying that the minimum wage is a counter productive economic tool already and furthermore it hurts in the fight against illegal immigration. In other words, there is absolutely no reason to have it.
Mike Volpe for President!
ReplyDeleteBut seriously, he's made some really good points. We have to realistic about the possible effects of removing a minimum wage, but the drawbacks are obvious and many.
Linda Wade, you're way off. Employers will continue to hire and illegals will continue to fill the jobs regardless of the law and possible penalties. Just look at traffic laws - people take the risk all the time because chances are more likely they will NOT be caught than that they will.
I say enforce the laws that penalize those who hire illegals (traffic laws), and remove minimum wage laws. Do both of those and you may find that employers really would be less willing to hire illegal immigrants. The high competition, aforementioned, would be reduced and everyone would be happier.
Again, as Mike has said, this is no magic bullet, but we can't sit idle and do nothing. This would be better than if we continue to encourage illegal immigration.
As for the polarization of rich and poor, I'm not incredibly concerned about it. The poor are not getting "poorer." The rich are simply getting richer because they are making better decisions and investing what they have. I could belabor this point much, much more, but I won't. Suffice it to say that no one in America lives a lifestyle they have not chosen for themselves.
I'm hearing alot of stupid rhetoric about how even if you got rid of the minimum wage people wouldn't take these jobs. But no one takes into account the lowered cost to employers and thus the ability that the employers would have to compete on price for their goods and services. If minimum wage is abolished then the cost of living would decrease due to the ability of employers to compete with their prices. As well, we could possibly see more manufacturers move back to the U.S.
ReplyDeleteAnother point I might add is the fact that there is a minimum level at which any worker illegal or not can afford to take a job. If an illegals individual cost of living is higher than his wages he too will be forced to quit the job. There is a level at which working for an employer costs you more than it is worth and at that point anyone would quit.
For Linda Wade:
ReplyDeleteJust because a bunch of people in your state pass a law doesn't mean that it is smart or that it will even work.
As well, how does illegal immigration and minimum wage have nothing to do with each other? Illegal immigrants come here for jobs that pay wages right. They're also willing to work for less than minimum wage because they are illegal and want the job to send money back to their country. So, how does minimum wage not play into illegal immigration. Apparently you have never taken a class in Economics in your life or you would know about "price floors" and "price ceilings". Minimum wage is a "price floor" and apparently the "market wage" for their labor exists beneath the "price floor". That is why they come here and that is why they are in demand. Take a course in Macroeconomics and then comment.
Penalizing businesses for hire illegals will give further incentive for businesses to move their operations overseas. Eradicate the minimum wage and then make sure that all workers are legal. What would be the outcome? Massive reduction in illegal immigration.
ReplyDeleteP.S. Also reform immigration laws to allow for more documented workers to exist.
Minimum wage is there because for American who are money to live, that is the minimum about (that the government thinks) they can live on. No minimum wage means a bidding process. You go into an interview, and the employer asks you "what is the lowest you are willing to work for" so even if you say $3.00/hr, an illegal may say $2.0 an hour. and eventually the employer will be able to hire 20 workers for the price of one.
ReplyDeleteIf you really want to stop illegal immigration, a federal law requiring that illegal immigrants be paid $40/hr. would definatly remove any desire to hire illegal immigrants. And to make things even better, an illegal immigrant who is paid less than that, can sue for 3 times the value they we cheated. And any contract stating otherwise between an employer and an illegal immigrant would be voided.
then of course raise the minimum wage to $10.00/hr for citizens, that way we can actually afford to live, without working 80 hrs a week.
One problem is these small liberal companies that are dependent on government aid to compete with profitable companies.They not only take work away from reputable companies by lowering standards and selling their product at a reduced subsidized price. They pay far less in taxes so they end up costing the rest of us in the long run.
ReplyDeleteThen they complain and want the government to pay for training employees because they cant get skilled workers at the low wages they pay.