October 4, 2011

On the minimum wage and immigration

There have been lots of good comments on Ron Unz's proposal to raise wages to lower unskilled immigration. An old friend emails:
Ron Unz has the right of this. Raise the minimum wage and the vast majority of businesses will obey. The more contentious issue is how much a higher MW will curb immigration. Ron clearly thinks it will have a large effect. I am less sure, but still in favor of the change. However, there are strong positive aspects to raising the MW even if it doesn't have as big an effect on immigration as Ron hopes.

Minimum Wage Enforcement

As we both know, some Federal laws are well enforced and others are not. Try buying explosives in this country. It is essentially impossible without an appropriate license and a legitimate use. Virtually no black market in explosives exists. As a consequence, America's internal terrorists have been forced to make their own. Sadly that is possible. America's very tough and well enforced explosives laws are a product of a wave of terrorism 100 years ago (predictably tied to immigration).

However, a better analogy is Social Security payroll taxes. Plenty of companies are tempted to cheat on payroll taxes. However, you really can't get away with it. If you try, the IRS will come after you. Significantly, directors and officers are personally liable for unpaid payroll taxes. As a consequence, they tend to favor strict compliance with the law. There is also criminal enforcement. See here and here. The U.S. has been averaging 70 indictments per year with a 80% incarceration rate in recent years.

In other words, the Federal government has been able to enforce our payroll tax laws by sentencing roughly 60 people a year to jail for roughly 24 months each. Of course, there are other enforcement actions as well. Still, you can see the point. A fairly minimal enforcement effort is quite sufficient. This also demonstrates how little effort has been made to enforce our immigration laws.

Could minimum wage enforcement work as well? Actually, it should work even better. Why? Workers have no immediate interest in payroll tax collection. If their employer fails to make the required deposits, they rarely even know and don't suffer any ill effects. The same can be said for the minimum wage. If the minimum wage is supposed to be $10 and hour and you get $8, that's pretty obvious. Beyond that, low wage workers probably don't generally understand the payroll tax. They are quite aware of the minimum wage.

As a consequence, the minimum wage can be made almost entirely self-enforcing with an 800 number and modest rewards to workers who turn in their employers. Every business in America is required to display certain labor law posters (see here). Just add the 800 number and some minimal reward information to the posters.

I would even argue that the 800 number and rewards, while desirable, aren't necessary. Why? Because we seem to be able to enforce the minimum wage now without them. The bottom line is that minimum wage enforcement isn't politically contentious. No one really tries to interfere with minimum wage enforcement. Raising the minimum wage, even for reasons related to immigration, won't change that.

Minimum Wage Effects

I am far less confident that raising the minimum wage will have as much impact on immigration as Ron Unz believes. It will assuredly reduce the demand for low wage labor (a good thing) and stimulate innovation in several industries including agriculture, food service, food processing, hospitality, construction, etc. That's desirable as well.

However, at $10 an hour, an illegal may still be more attractive than a native or legal immigrant. Indeed, higher wages should make these jobs even more attractive to illegals. The converse, is that natives and legal immigrants will also want them more. Essentially, Ron appears to be arguing that making these jobs more attractive will induce natives and legal immigrants to fight harder for these jobs and force illegals out. Maybe, is as far as I would go.

The big picture macro effect will assuredly be fewer low wage jobs. At $10 an hour, the number of lost jobs is likely to be small. At $15 an hour, the number could be material. You can argue that natives and legal immigrants will suffer the jobs losses and that raising the minimum wage will accelerate the displacement of legal workers by illegal. That's a stretch, but not inconceivable. A more likely outcome is that a shrinking supply of unskilled jobs will (eventually) make the U.S. a less desirable place to enter (legally or otherwise).

A more subtle point is that a higher minimum wage makes low-skilled immigration less attractive to higher income workers. In other words, at $10-15 hour low-skilled immigrants can't provide cheap lawns and meals but still impose almost all of the same social and tax costs. The average middle-class American hasn't done a detailed cost benefit analysis of unskilled immigration. However, most folks do seem aware that low-skill immigrants make dry cleaning cheaper and are also a taxpayer burden. Raising the minimum wage shifts that calculation.

Why it's a Good Idea

A sensible country rewards work and minimizes dependency. Raising the minimum wage does both. For decades the U.S. has steadily reduced the rewards for unskilled labor and tried to compensate by relentlessly expanded the welfare state (food stamps, WIC, Medicaid, public housing, EITC, etc.). Only one of those programs (the EITC) is tied to work. The rest are either independent of labor force participation or discriminate against working (you lose benefits via employment).

The results have been disastrous, to say the least. Time to change direction.

Thank you

P.S. The above are serious arguments. A less impressive point, is that raising the minimum wage to reduce immigration will make all of the Open Borders Libertarians crazy. Steven Landsburg will have a nervous breakdown. Matt Yglesias will go insane trying to decide if he should support or oppose such a scheme. 
P.S.S. Middle-class American appear oblivious to the impact of immigration on housing costs, but are acutely aware of the impact on schools.

Okay, but my experience serving on a jury in 2006 was that the state of California has trouble even putting immigrant used car dealers in jail for blatant sales tax fraud. I was the only juror to vote to convict the president and CEO of a used car dealership that had embezzled $2 million in sales taxes owed Sacramento.

Farm employers in California have lots of experience using Farm Laborer Contractors as middlemen to shield them from getting in trouble for violating various laws that are supposed to protect migrant workers. 

59 comments:

IHTG said...

What are the chances that immigrants will keep coming in even if they can't get jobs? That's how it is with the Third World cohort in Europe.

Anonymous said...

Interesting that no one appears to have referenced this chart:

http://www.financialarmageddon.com/2011/09/under-siege.html

I wonder if they pay the minimum wage....

creeping Jude Wanniskism said...

Exactly--there might be fewer low-wage U.S. jobs after this, but the place will still be an enticing option for hanging out and soaking up the sun.

This Leninist "heighten the contradictions" proposal from Unz will not constrain the welfare leviathan one bit, + chance of heavy short-term damage to the private sector remnant. But hey, the guys slavering about how all this will really put Ezra Klein in a jam have their psychological requirements that must be met too

Polynices said...

How could it possibly be a good idea to massively increase youth and unskilled (citizen) unemployment? You'll greatly reduce the incentive to hire the least skilled Americans (i.e. NAMs and teens). I can't see how this harm is outweighed by the benefit of maybe driving out illegals.

Q said...

As a consequence, the minimum wage can be made almost entirely self-enforcing with an 800 number and modest rewards to workers who turn in their employers.


The assumption here is that all the workers are legal workers. An illegal alien is not going to file a complaint with the government. Is Unz proposing a blanket amnesty to go with the MW increase?

Another problem is that increasing the minimum wage makes it even more desirable than it is at present for illegals to sneak into this country, and even more desirable than it is at present for employers to hire them off the books.

This whole proposal sounds like the same old amnesty bait-and switch. We're promised that employers will finally be forced to stop employing illegals, in return for something else.

JeremiahJohnbalaya said...

Ah, for the good old days when Senators and future Presidents advocated minimum wage laws explicitly to adversely affect minorities.

I wonder if Unz would go for the OccupyWallStreet demands for (among other loony things) $20/hr minimum wage

ATBOTL said...

My understanding is that illegals already take below minimum wage jobs in some cases. Korean grocery stores in NYC got in trouble a few years ago for keeping Guatemalans in slave like conditions making $3 an hour.

ZZ said...

As I noted before, you don't need government authorities to enforce wage laws. Private contingency fee attorneys already do so. 60 payroll tax convictions a year? Just in CA that many wage cases are filed by private attorneys in an average day.

Of course they won't bother with a $2000 case, but a single large restaurant with 40 part time employees each losing $2000 a year, time three years, plus interest, and suddenly there is a $300,000 case worth filing.

ZZ said...

Lots of illegals make far more than the minimum.

In the nice parts of CA, there are lots of relatively pleasant jobs, like receptionist in an AC'd office or barista, that pay the minimum and are all legal. They pay the minimum and hire natives because there is a lot of demand for these types of respectable and pleasant jobs.

Meanwhile dirty and dangerous jobs are done by illegals for much more than the minimum around here. The impact of illegal immigration is to reduce the wage premium that used to exist for these jobs. Rather than a meat processor making an extra $12/hr, now it might be an extra $5.

Anonymous said...

With a higher minimum wage, how long would it be before we started seeing high school kids taking "internships" at McDonalds, movie theater chains, and amusement parks?

--Discordiax

Anonymous said...

I saw this story in the front page of USA Today, here's a link from the the Tucson Citizen:
http://tucsoncitizen.com/usa-today-news/2011/10/03/economic-misery-pervasive-online/

"“Hungry” is the headline on a Craigslist post from Phoenix. In Boise: “I NEED WORK!!!” In Chicago: “Laid off vet needs to pay rent.” In Little Rock: “Please help us!!!” In Richmond, Va.: “Need a miracle.” In Oklahoma City: “Broke girl needs help fast.”

3 points here.
-It would be difficult with these economic circumstances to enforce MW laws.
-The vast legions of illegals compete with these people and drive down wages.
-It seems Americans are doings jobs they won't do according to the MSM.

Frank C

Eric said...

My understanding is that illegals already take below minimum wage jobs in some cases. Korean grocery stores in NYC got in trouble a few years ago for keeping Guatemalans in slave like conditions making $3 an hour.

Where I live in California the minimum wage laws are routinely flouted. I realize part of the proposal is a draconian punishment regime we don't have today, but if we can't even bring ourselves to punish blatant lawbreaking on immigration, what are the odds the average guy is going to support a no-tolerance legal approach to minimum wage?

This is how things go down in the real world:

1) Minimum wage is raised by some large amount, causing businesses all over to fire marginal unskilled labor (I hope you like self checkout at the grocery store).
2) Tough sanctions for employers getting caught paying sub-minimum are proposed but then watered down by business interests. Even further watered down after media firestorm over "average" people getting thrown in jail for underpaying the babysitter.
3) As a consequence all unskilled labor is done by illegal aliens working for illegal alien contractors at sub-minimum wages. Desperate unskilled citizens trying to get a job, any job, can't get one because they don't speak Spanish and the boss is afraid to hire anyone who isn't from his hometown in Mexico.
4) People pointing out the system is now rigged even more lopsidedly against native-born left-halfers are accused of being heartless racists when they say the solution is better enforcement of minimum wage laws.

Anonymous said...

I didn't read all the comments on the first 2 posts but yeah, it IS sort of a nettlesome point that a chunk of illegals are making above the min already. Of course the law of supply vs. demand isn't some esoteric incantation that only Bill Gross and Meredith Whitney are privvy to. Even the guys outside Home Depot will have their own bilingual negotiator to determine the wage threshold. So I guess if we gut the fast food and retail jobs in the country we will, perversely, shift the proportions of immigrants away from the kind primarily interested in a semi-honest day's work. Have they prepared training audio cassettes in Lagos and Guatemala City for this eventuality?

ZZ said...

I'm happy to see my fellow paleocons gradually realize that the mainstream business-elite GOP positions are horrible for 99% of the citizens of this country, and paleo-left economic ideas like the minimum wage and tariffs have a lot of merit.

Unz, Steve, Paul Craig Roberts and HalfSigma are way ahead of the curve, as evidenced by the stream of uncomprehending negative comments they get when they deviate from the plutocrat line.

ZZ said...

"Even further watered down after media firestorm over "average" people getting thrown in jail for underpaying the babysitter."

Link to this happening, anywhere in the USA, any time in history?

"As a consequence all unskilled labor is done by illegal aliens working for illegal alien contractors at sub-minimum wages."

I would love to pay someone the $8 minimum wage to do handyman and garden work for me. Unfortunately none are to be found here, legal or otherwise.

When I had my deck expanded, my white contractor told me he paid his two Mexican helpers $10 and $16/hr.

I assume the Mexicans were legal because they never spoke Spanish to each other and their English was unaccented, or to be more precise had a more muted version of the Cheech native-MexAm accent.

Anonymous said...

I'm with Polynices @2:12pm.

It's easy to be dismissive that "maybe the economy will lose a few jobs" after an enforced MW hike, as Sailer was. Unless, of course, you or your loved ones/dependents are the ones losing the chance of employment.

Teenagers and NAMs in particular will not be helped by the govt pricing them out of the labor market.

The solution to this is *still* to regain control of the borders. Enforce the existing laws, and stop subisiding Big Business with porous borders and cheap guest workers.

Anonymous said...

The backdrop to all this is the fact that e-Verify works. The system has been perfected and passed all the legal challenges so we will continue to see more and more states adopt laws like Alabama's. You really cannot underestimate the impact that this will have not only on wages but immigration. The ethnic and business lobby is like a duck. On the top they are trying to look cool and calm but below the surface they are paddling like hell. They know better than anyone what workplace enforcement will do.

On a related note, PPAGA (aka Obama Care) has a provision to require businesses with over 50 employees to either provide health insurance for its employees or pay $2,000 per head in taxes beginning 2014. If the company has over 200 employees it will be $3,000. They way they intend on enforcing the new law are by getting the IRS to check payroll records. This is a radical break because up until now these laws have been primarily policed by the State’s Dept. of Insurance and the EEOC. Many who have resisted workplace enforcement have disingenuously claimed that the Social Security Administration and the IRS are not ICE and that it is a violation of our privacy. All the while, those same progressives are giddy about using SS #s to collect taxes for the welfare state. This is just one more nail in that coffin.

Prof. Woland

Anonymous said...

What are the chances that immigrants will keep coming in even if they can't get jobs?

Excellent, the chances, that is. I sit as I type in a town 20 minutes north of Fresno, CA, agricultural center of the Valley. No matter where I go, I can identify the illegals; the town is loaded with them, and guess what? They can and do collect welfare. Not hard to do. They don't have to work.

Thripshaw said...

Pure B.S.

The point about minimum wage laws (and all fair labor laws) is that they have been de facto repealed by the huge illegal alien presence. I worked part time as a delivery driver for several take out restaurants in central NJ over the past few years. They are all staffed almost entirely by an illegal workforce. The typical employee works 12+ hour days (with no breaks) 6 or 7 days a week for a couple hundred bucks in cash. There is no way that any restaurant will comply with any labor laws, and many businesses besides restaurants operate this way.

They are completely dependent on an illegal labor force to turn a profit. The very idea of compliance with fair labor laws is absurd.

Gladys P said...

I work for a certain green and yellow agricultural equipment company in the Midwest. They pretty much stopped hiring American IT professionals about 5-10 years ago. They hire through Indian/Paki bodyshops who import straight from Poona and Bangalore. It is the oddest thing: managers are pressured to meet diversity goals throughout the company, and yet no one even comments on the fact that the most grotesquely overrepresented racial group is Indians--way more than white guys. It is as though "diversity" means "get rid of white guys". I can't figure out why the local EEOC hasn't managed to notice that the bodyshops located in the Quad Cities are not able to find local programmers, let alone Illinois programmers, let alone US programmers, let alone European programmers. The only programmers they are able to find are on the other side of the planet! Apparently "disparate impact" is completely nonexistent if the employer wears a turban. Nothin Ron Unz has proposed will change any of this.

anony-mouse said...

Can't get around minimum wage laws?

www.theamericanconservative.com/blog/2011/08/15/intern-at-tac-2/

Do as I...

Default User said...

Ron Unz's minimum wage gambit sounds much like the virtual fence gambit from a few years ago. It is something designed not to work but to look like "we took action.".

An immigration pause legal and illegal (the last by building a real barrier) could also raise the effective minimum wage by reducing the labor pool. With unemployment high raising wages and the labor pool at the same time does not seem like a good idea.

The Unz proposal is more of the same Wall Street Journal/Chamber of Commerce solution, which is to increase immigration regardless of the question.

Paul Mendez said...

The assumption here is that all the workers are legal workers. An illegal alien is not going to file a complaint with the government.

Sure they will. They do it every day. An army of legal aid lawyers exist to assist them.

In fact, while employers like illegals because they can pay them lower wages, few dare pay them sub-minimum wages.

Hail said...

Steve Sailer wrote:
"I was the only juror to vote to convict the [immigrant] president and CEO of a used car dealership that had embezzled $2 million in sales taxes owed Sacramento."

More on that, for those who missed it:

"Several of the jurors were immigrants themselves, and the most energetic spokesman for the defendant, a Bulgarian immigrant, turned out to be a used car dealer himself! He seemed to take the whole case rather personally."

The white jurors, it seems -- except Mr. S -- were lazy and allowed themselves to be pushed around by the vocal minority. Same old.

Was that 2006 trial a microcosm of the entire USA these past few decades?

Anonymous said...

"How could it possibly be a good idea to massively increase youth and unskilled (citizen) unemployment? You'll greatly reduce the incentive to hire the least skilled Americans (i.e. NAMs and teens). I can't see how this harm is outweighed by the benefit of maybe driving out illegals."

Youth employment is positively correlated with all sorts of things that pay dividends later on(scholastic performance and such). Likewise Americans don't remit money to foreign countries at anywhere near the rate that foreign nationals do. Finally labor scarcity drives wage growth and capital investment, both good and positive things.

Anonymous said...

I don't see why kids' having even fewer jobs is going to solve anything.

Anonymous said...

"Try buying explosives in this country. It is essentially impossible without an appropriate license and a legitimate use. Virtually no black market in explosives exists."

That's because there is no demand sufficient to support a black market in explosives. If a lot of people wanted explosives and didn't want to deal with the government paperwork, the black market would appear. A handful of wannabe domestic terrorists isn't sufficient to create a black market.

A better comparison is guns. Lots of people, not just criminals but ordinary people, want guns for various reasons, and will buy them on the black market if government regulations are too strict. This has been proven again and again in various countries and eras.

There's a demand for black market guns from otherwise honest, law abiding people because self-defense is an extremely high priority for most people living in dangerous situations. Whereas, most people really don't have any real desire to own high explosives as they have no use for it. Ergo, no black market.

Since the motivation for violating minimum wage laws grows the more you raise the minimum wage, the better analogy here is guns, not explosives. There's lots of financial motivation to avoid minimum wage laws, especially when off-the-books illegals are easily available for hire.

beowulf said...

They are completely dependent on an illegal labor force to turn a profit. The very idea of compliance with fair labor laws is absurd.

This is one subject where the AFL-CIO is on the side of the angels, advocating for "wage theft" laws that benefit only non-union labor (since a union shop can already raise hell if an employer cheated its workers out of a dollar).
http://stopwagetheft.org/

NOTA said...

Anon 701 pm:

Yeah, drugs might be an even better example. We certainly put enough people in jail and spend enough money fighting the drug war that it's hard to imagine we'd be more serious about enforcing minimum wage laws than drug laws. And yet, mysteriously, drugs havent become rare....

Anonymous said...

"It will assuredly reduce the demand for low wage labor...."

Can somebody, please, explain the logic of this, because I can't see it. Surely if wages are forced upwards, even more business owners will have even greater incentives to hire people illegally at lower than the minimum wage?

Also, I agree with Polynices: way to lock blacks and other low-IQ workers right out of the job-market! Blacks who have been Americans much longer than Mexicans or other Hispanics. So much for Citizenism.

Closing the border and encouraging current Hispanics immigrants, both legal and illegal, to go home seems like a much more straightforward and foolproof plan.

Anonymous said...

Another copy and paste blog post? Yours,
Acheter vimax en France.2011AVEF

Nordic insider said...

"A sensible country rewards work and minimizes dependency. Raising the minimum wage does both."

In Scandinavia, high minimum wages has increased dependency, because it is more efficient for society to keep not-so-effective workers out of the workplace.

In some areas, 15-20% of working age people receive disability payments. In other parts of the world, they would have low-paying, menial jobs, but we can't afford to pay them here to do that, so we just pay them to stay home.

Mike said...

This is the most breathtakingly stupid idea I have ever read.

Captain Jack Aubrey said...

I argued for higher minimum wages before the recession (see comments by "Mark"), when it might have worked, and still believe it might ultimately do some good, though passage right now would be unlikely.

Critics of a higher MW make a lot of good points, but by reducing the number of jobs created that rely on more cheap labor than America is able to naturally provide, it would slow immigration by the unskilled. Yes, some businesses will get away with breaking the law. So?

But the minimum wage is only part of the solution. If we're going to get better enforcement and reduced legal immigration at some point we'll have to address the issues directly, regardless of how much they may offend Asian and Hispanic voters. Waiting 'til unemployment's back down to 6% and the Hispanic and Asian electorate is even larger would be foolish.

Chalesz Martel said...

I just hired some guys in L.A. to load a moving truck. They were referred to me by the truck rental company, a national chain. They had a stack of flyers in the office, in fact. $20/hr to make and pack cardboard boxes, and wheel them into a truck. Some furniture, too. Others wanted $25/hr (Another national truck rental chain). These are the jobs Americans won't do? I painted an appt. in 9 hours with a helper. Paint and supplies under $200. The job estimate by a Mexican superintendent? $2600. And Americans think Mexicans work cheap? What would these jobs cost in Alabama (Toughest law state on immigration). What will they charge in 6 months?

Captain Jack Aubrey said...

"This is the most breathtakingly stupid idea I have ever read."

So where's your breathtakingly compelling argument against it?

A simple argument for it:

The lower the minimum wage, the more jobs businesses can create that there aren't enough Americans willing or able to do. Where then do they go for the labor? The legal and illegal immigrant pools. Reduce the number of such jobs and you reduce the need for such labor, and therefore reduce immigration.

I am not generally in favor of higher minimum wages, or for any minimum wage at all. Under circumstances where we weren't importing vast quantities of unskilled immigrants I would oppose it. We do not live under those circumstances, however, and have not lived under them for a very long time, and it's foolish to pretend as though we do.

Anonymous said...

Critics of a higher MW make a lot of good points, but by reducing the number of jobs created that rely on more cheap labor than America is able to naturally provide, it would slow immigration by the unskilled.



A higher minimum wage will get rid of a lot of low skill jobs currently occupied by both Americans and illegals, which is one way to cut illegal immigration. But hardly a very efficient way. If we want to stop the illegal immigration of low-skilled workers, why don't we just ... stop the illegal immigration of low-skill workers? Or even better, illegal immigration period?

Anonymous said...

It is as though "diversity" means "get rid of white guys".


That is exactly what "diversity" means.

And your problem exists all across America. Once Indians get into an IT department, they don't hire anybody else but Indians. They might as well hang a "No whites need apply" sign on the door.

Anonymous said...

"A sensible country rewards work and minimizes dependency. Raising the minimum wage does both."


Raising the minimum wage eliminates work, which is an odd way to reward it. And by eliminating work it forces people onto welfare, which means it forces them into dependency.


There are ways to raise wages without introducing the economic distortions which come with MW laws. Curtailing immigration is one such way.

Anonymous said...

The lower the minimum wage, the more jobs businesses can create that there aren't enough Americans willing or able to do. Where then do they go for the labor? The legal and illegal immigrant pools. Reduce the number of such jobs and you reduce the need for such labor, and therefore reduce immigration.


That's a back-asswards way of reducing immigration.

If you want to take Vienna, take Vienna! If you want to stop illegal immigration, stop illegal immigration! Don't attempt these odd triple-bank shots which may or may not stop illegal immigration as a side effect of doing various other things.

The most likely result of raising the minimum wage is that more and more low-skilled Americans will never find work, and that more and more illegals will be hired in America.

Nanonymous said...

To Steve's old friend who assures us that his reasoning "are serious arguments":

Once again, why people who don't want to enforce immigration laws would suddenly want to enforce minimal wage laws? Why not just control borders without going through economic contortions by playing minimal wages laws?

Also, it needs to be kept in mind that raising minimal wage will trigger a domino effect of raising all wages (can't have janitor earning the same as nurse assistant, for example) - and money don't grow on trees.

Unz lives in his own fantasy world. In real life, not only his proposal won't work, it will be very dangerous if implemented.

Skeptical Economist said...

IHTG,

"What are the chances that immigrants will keep coming in even if they can't get jobs? That's how it is with the Third World cohort in Europe."

Valid point. However, it will make legal and illegal immigration drastically less popular than they are now. A large part of the justification for the status quo is "they work, don't they".

Anonymous,

"http://www.financialarmageddon.com/2011/09/under-siege.html"

Very interesting report on cartel activity.

Polynices,

Until the Great Recession, a low minimum wage was enabling the U.S. to create too many unskilled jobs. Immigrants rushed to take these jobs while natives left the labor force. That's a bad combination. A smaller number of unskilled jobs that natives (and legal immigrants) want is a better future for America.

Q,

"An illegal alien is not going to file a complaint with the government."

Sure they will, unless they suspect someone is going to ask about their immigration status. Clearly that is not what Ron Unz has in mind. Of course, an illegal might get a coworker with valid papers to start the process.

"Another problem is that increasing the minimum wage makes it even more desirable than it is at present for illegals to sneak into this country, and even more desirable than it is at present for employers to hire them off the books."

Illegals are willing to work off the books for obvious reasons. However, why wouldn't they also be willing to turn in an employer that underpaid them? These aren't exactly long term jobs.

ATBOBL,

"Korean grocery stores in NYC got in trouble a few years ago for keeping Guatemalans in slave like conditions making $3 an hour."

Note that they got into trouble for worker abuse and wage fraud, not hiring illegals. For better or worse, Ron Unz is correct in asserting that America is more willing to enforce worker abuse and wage laws than immigration laws.

ZZ,


"Just in CA that many wage cases are filed by private attorneys in an average day."

Good point.

Anonymous,

"With a higher minimum wage, how long would it be before we started seeing high school kids taking "internships" at McDonalds, movie theater chains, and amusement parks?"

I agree. However, middle-class kids can afford that kind of thing with the help of their parents. Immigrants can't. The demand for unskilled immigrant labor will decline with a higher minimum wage.

Anonymous,

"It seems Americans are doings jobs they won't do according to the MSM"

And lining up for them in many cases.

Skeptical Economist said...

Eric,

"what are the odds the average guy is going to support a no-tolerance legal approach to minimum wage?"

Who knows? Easier than getting support for a no-tolerance legal approach towards employing illegals. However, the real point is to make the system self-enforcing using the existing minimum wage legal regime. One key addition would be making businesses liable for minimum wage violations of their contractors. That will really put the fear of god in them.

Thripshaw,

"The point about minimum wage laws (and all fair labor laws) is that they have been de facto repealed by the huge illegal alien presence."

No lawyers willing to file wage cases in New Jersey?

Gladys P,

No doubt, America has plenty of other immigration problems as well. H1B abuse is rife.

Default User,

"The Unz proposal is more of the same Wall Street Journal/Chamber of Commerce solution, which is to increase immigration regardless of the question."

I can't predict if the Unz approach will work or not. However, I am sure that the WSJ and the COC will bitterly oppose it.

Paul Mendez,

"In fact, while employers like illegals because they can pay them lower wages, few dare pay them sub-minimum wages."

That's my perception. However, other posters disagree.

Anonymous,

"A better comparison is guns. Lots of people, not just criminals but ordinary people, want guns for various reasons, and will buy them on the black market if government regulations are too strict."

The illegal gun and drug trade exists because of an abundance of willing buyers and sellers. Workers paid less than the minimum wage won't be "willing", at least for long. Once they get the idea they can obtain compensation by turning in their employer, they may well do so. Illegal gun and drug buyers don't have the same incentives.

"There's lots of financial motivation to avoid minimum wage laws, especially when off-the-books illegals are easily available for hire."

True. However, if the illegals have the means and desire to turn you in...

NOTA,

See the comments above on drugs and guns.

Nordic insider,

"In some areas, 15-20% of working age people receive disability payments. In other parts of the world, they would have low-paying, menial jobs, but we can't afford to pay them here to do that, so we just pay them to stay home."

I understand your point. Perhaps in Scandinavia, more jobs would mean fewer workers on disability. However, in the U.S. a low minimum wage has led to a steady exodus of natives into the disability sinkhole while the very abundant (before the Great Recession) low wage jobs are taken by immigrants (legal and illegal).

James B. Shearer said...

The main problem with our current laws against hiring illegals isn't that they aren't enforced, it is that don't really ban hiring illegals. As an employer you are required to ask potential workers for proof that they can legally work in the US. In response they can present you with any of a number of documents some of which are easy to forge. Unless the document is an obvious forgery you are basically required to accept it. So complaints about enforcement are misguided the problem is the law itself. Most of the employers currently hiring illegals would stop if the law were changed to make it actually illegal (by for example requiring e-verify or some of method of reliably determining eligibility).

I believe if this were done raising the minimum raise would also help a little by reducing the incentive to break a real law against hiring illegals. If you have to pay a wage which attracts sufficient American workers why risk hiring illegals. And why lobby for open borders. Also minimum wage laws are more self-enforcing than no hiring of illegals laws because the underpaid worker has a strong incentive to turn in his employer.

However making it actually illegal to hire illegals is more important.

Anonymous said...

@NOTA: "Yeah, drugs might be an even better example. We certainly put enough people in jail and spend enough money fighting the drug war that it's hard to imagine we'd be more serious about enforcing minimum wage laws than drug laws. And yet, mysteriously, drugs havent become rare...."

True, but such "failure" isn't the point in the case of the drug war; like the War on Poverty, the War on (some) Drugs isn't intended to eradicate illegal drug use. Success in that sense would be self-defeating; the point is to grow the power of government and the careers and budgets of law enforcement bureaucrats. Therefore the War on Drugs must be perpetual and the solutions offered aren't really intended as cures.

It would be a lot easier to enforce draconian labor laws than draconian drug laws because most employers can't hide everything they are doing from the government (unlike drug users). In other words we could solve our labor problems within the existing legal climate, whereas true drug eradication can't be solved, without resorting to extreme measures like a police state.

I'll take the current Unz minimum wage proposal seriously when I see the government taking labor laws, immigration laws, and border enforcement seriously. Saying "assume we have tough enforcement of minimum wage laws" is like saying "assume we had real border enforcement" or "assume we made a real effort to penalize the hiring of illegal labor". We can't assume that; recent history demonstrates that we can't assume that, because TPTB don't want enforcement.

It's just another bait-and-switch, like the 1986 Amnesty. Prove the government is serious about enforcement, and then maybe we have a valid argument. Otherwise, it's just another "assume we have a can opener" on a desert island scenario.

Anonymous said...

Anonymous said ... "That's a back-asswards way of reducing immigration.

"If you want to take Vienna, take Vienna! If you want to stop illegal immigration, stop illegal immigration! Don't attempt these odd triple-bank shots which may or may not stop illegal immigration as a side effect of doing various other things.

"The most likely result of raising the minimum wage is that more and more low-skilled Americans will never find work, and that more and more illegals will be hired in America."

THAAAAAAAAAANK you!

DanJ said...

Nordic Insider said:

"In Scandinavia, high minimum wages has increased dependency, because it is more efficient for society to keep not-so-efficient workers out of the workplace"

Well, yes and no. Finland, Sweden and Denmark does not have a minimum wage written into law. Wages are set by collective bargaining between unions and employers' representatives. This process includes most workers and employers.

While wages in general are fair, the minimum wage agreed upon can be very low. The lowest wage agreed upon in Finland is abt. 4,40 euro/h, for unskilled summer workers in municipal work (general maintenance, parks, handyman jobs).

Rather, the price of labor is high due to high social security payments, benefits, taxation, and the expense and hassle of getting rid of disinterested or dishonest employees. This is money being handed from the employer to the government, insurance companies, etc. A loyal and healthy worker himself does not benefit much from the high price of labor in the Nordic countries.

You are absolutely right about a part of the workforce being unemployable because they are less than 100% productive, though. If the Scandinavian business owner can not find just the right person for the job he'll rather have none at all. These people instead depend on substantial unemployment benefits that have become their alternative to going to work.

Default User said...

@Skeptical Economist

You are correct. The Wall Street Journal and Chamber of Commerce would prefer increased immigration without the change in minimum wage. They would oppose the Unz plan because of the minimum wage aspect, not the immigration aspect.

Captain Jack Aubrey said...

Get effing real. There's nothing "odd" or "triple bank shot" about using higher minimum wages to slow demand for unskilled labor. Sounds pretty straightforward to me.

The incessant whining we heard from businesses in the last decade about how they needed all these illegal immigrants to do "jobs Americans won't do" came about because they were able to create millions more $7.25/hour jobs than there were Americans to do them. If you have no legal jobs at those wages then demand would be less. It ain't rocket surgery.

Is a higher MW the best way to reduce immigration, or the most direct way? Nope. Is it the method we should focus on right now? Nope. Could we even pass a higher minimum wage law now, with 9.1% unemployment? Probably not. Right now we're winning, the arguments against immigration are in our favor, and we need to push for policy changes directly impacting immigration.

But when...if...the economy returns to normal, higher minimums would keep us from ever developing an illegal immigration problem again. It would also complement perfectly a reduction in welfare benefits.

Anonymous said...

How did we skip over the fact that construction and farming companies ALREADY FLOUT THE MINIMUM WAGE LAWS WE ALREADY HAVE?!

Dutch Boy said...

Ron Unz is the textbook case of the limited effect of high intelligence on good judgement!

Anonymous said...

Most of the employers currently hiring illegals would stop if the law were changed to make it actually illegal (by for example requiring e-verify or some of method of reliably determining eligibility).


Most of the employers currently hiring are intensely opposed to mandatory E-Verify.

Anonymous said...

"There's lots of financial motivation to avoid minimum wage laws, especially when off-the-books illegals are easily available for hire."

True. However, if the illegals have the means and desire to turn you in...




The illegals will not have that means or that desire. As has already been pointed out, an implicit assumption of the Unz plan is that all the illegals are given amnesty. Otherwise any illegal who files a suit with the government against his employer will wind up getting deported himself.

Q said...

There's nothing "odd" or "triple bank shot" about using higher minimum wages to slow demand for unskilled labor. Sounds pretty straightforward to me.


That's true, there is nothing in the least "odd" or "triple bank shot" about using higher minimum wages "to slow demand for unskilled labor".

What is "odd" and "triple bank shot" is the theory that we can use higher minimum wages to slow illegal immigration.

If you want to stop illegal mmigration, start enforcing the laws currently on the books against it and add new ones if neccessary. Don't write some law which may or may not have the side effect of slowing illegal immigration.

Q said...

The incessant whining we heard from businesses in the last decade about how they needed all these illegal immigrants to do "jobs Americans won't do" came about because they were able to create millions more $7.25/hour jobs than there were Americans to do them.




Now that is crap. There are always sufficient Americans to do whatever work needs doing. You're swallowing the employers propaganda hook, line and sinker in saying that they had to hire illegals to fill all these jobs they created.

Captain Jack Aubrey said...

"If you want to stop illegal mmigration, start enforcing the laws currently on the books against it and add new ones if neccessary." - Q

Yes, but I've made that point - over and over and over again. I want to tackle illegal immigration directly. I think that nothing demonstrates our moment like the fall of guys like Bob Bennett, Chris Cannon, Mike Castle and now Rick Perry. How do you keep missing that? How many times do I have to spell that out? Good grief, whether it's this or the Amanda Knox case, it's like two conversations in a parallel universe.

But along with tackling immigration directly, I believe that raising minimum wages would go a long way to reducing demand for illegals. We hit about 5% unemployment during the last boom. It's rare that we ever get unemployment that low. Businesses were adding millions of jobs that Americans weren't willing to do for just $7 an hour.

Despite all the prognosticating here I suspect there's only one really good way to find out if a higher minimum wage will reduce illegal immigration - raise the minimum wage and find out.

JW Ogden said...

Better a wage subsidy for USA citizens only.

Wandrin said...

"Raise the minimum wage and the vast majority of businesses will obey."

No they won't. The vast majority of businesses will comply on paper but in practise what they'll do is sub-contract minimum wage jobs to agencies and the agencies will employ the illegals.

It's misdirection.

Seal the border first. Until that is done every other policy is distraction and misdirection.

beowulf said...

Sorry Steve, meant to point this out the other day but RL got in the way... The Universal Living Wage group has a diabolically clever idea that'd force metro areas to choice between either a high minimum wage or a low zoning tax-- Ed Glaeser's term for the regulatory cost tacked onto housing prices in (ahem) smart growth jurisdictions. Phase it in over a decade to give (using an extreme example) the Bay Area time to (a) adjust to a $22.90/hr minimum wage or (b) flood the market with new low-income housing or, most likely, something in between.

"We have devised a National formula that is based on each local economy throughout the entire United States. The formula is designed in such a manner that no matter whether you are in Austin, Boston, or L.A., if you are willing and able to work a 40 hour week, you should at least be able to afford a one-bedroom apartment.
* Work a minimum 40 hour week
* Spend no more than 30% of income on housing
* Index the minimum wage to the local cost of housing as set each year by the US Department of HUD (Fair Market Rents)"

http://universallivingwage.org/