Ron Unz writes in the NYT:
Raise the Minimum Wage to $12 an Hour
Ron Unz, a software developer and publisher of The Unz Review, is the chairman of the Higher Wages Alliance, which is sponsoring a California ballot initiative next year to raise the state minimum wage to $12 per hour.
DECEMBER 4, 2013
Tens of millions of low-wage workers in the United States are trapped in lives of poverty. Many suggestions have been put forth to improve their difficult situation, ranging from new social welfare programs to enhanced adult education to greater unionization. But I think the easiest solution is also the simplest: just raise their wages.
The current federal minimum wage is $7.25 per hour and hiking it to $12 would solve many of our economic problems at a single stroke.
A $12 minimum wage is hardly extreme or ridiculous. At the 1968 height of our post-war economic prosperity, the American minimum wage was over$10.50 in current dollars, and setting the rate at $12 today would represent a real rise of merely 11 percent over a 45-year period, which seems reasonable since worker productivity has grown by over 115 percent during the same period.
The minimum wage in France is almost $13 while Australian workers benefit from an hourly minimum wage of around $15, together withunemployment of just 5.7 percent.
Walmart is America’s largest private employer and 300,000 of its workers haveaverage wages of just $8.75 per hour, forcing many of them to receive food stamps and other government welfare benefits to survive. But if a minimum wage hike boosted their pay to at least $12 per hour, Walmart could cover the costs by a one-time price rise of just 1.1 percent, and the average Walmart shopper would only pay an extra $12.50 per year. Meanwhile, a $12 minimum wage would increase the incomes of America’s lower-wage work force by a total of over $150 billion each year, shifting those huge sums from the pockets of the sort of people who don’t shop at Walmart to those who do. A minimum wage of $12 per hour would be very good for Walmart’s business.
And not just Walmart. America’s low-wage families tend to spend every dollar they earn, so a large minimum wage hike would constitute an enormous, permanent economic stimulus package, but one funded entirely by the private sector. Since wages would be rising nationwide, businesses could raise their prices to cover much or most of the added costs. Low-wage workers tend to be employed in the non-tradeable service sector, making their jobs relatively safe from foreign competition or automation. They’d keep their jobs, but their incomes would rise by 30 or 40 percent.
The impact on U.S. households would be enormous and bipartisan. Some 42 percent of American wage-workers would benefit from a $12 minimum wage and their average annual gain would be $5,000 per worker, $10,000 per couple, which is very serious money for a working-poor family. White Southerners are the base of today’s Republican Party, and 40 percent of them would gain, seeing their annual incomes rise by an average $4,500 per worker. If Rush Limbaugh -- who earns over $70 million per year -- denounced the proposal, they’d stop listening to him. Hispanics would gain the most, with 55 percent of their wage-workers getting a big raise and the benefits probably touching the vast majority of Latino families.
Ordinary taxpayers would be the other great beneficiaries, saving many tens of billions of dollars each year in payments for Food Stamps, the Earned Income Tax Credit, housing subsidies, and other social welfare programs. Businesses should pay their own employees rather than quietly shifting the burden to government programs and the American taxpayer. Conservatives and free-market supporters should endorse this simple idea.
The best way to help low-wage workers is to raise their wages.
About a dozen years ago, I started writing an article about why a proposal to raise the minimum wage for workers in Santa Monica's beachfront hotels to something like $10.50 was, logically, a terrible idea. As an old Econ Major, if there was one thing I knew it's that the Minimum Wage is Bad.
But I eventually gave up the project because it started to seem like a pretty good idea. Maids' wages make up a small fraction of the cost of staying on the beach in Santa Monica (much more of the cost of a room is the cost of the land it's on), so it seemed improbable that this law would turn Ocean Blvd. into Desolation Alley with tumbleweeds blowing past shuttered resorts and starving, weeping unemployable ex-workers.
This is not to say that the traditional Econ 101 critique of minimum wage laws is completely wrong. Raising the minimum wage to $100 per hour would destroy the above-ground economy.
What about the converse? It might even be true that cutting the minimum wage to $3 per hour would increase employment. But if so, would then cutting it from $3 to $2 be another slam dunk great idea? From $2 to $1? I don't think so. Diminishing marginal returns set in pretty rapidly.
So, there's a range of plausible minimum wages at which it's not an obviously a bad idea. The delicate part is finding where you can push the envelope without blowing a hole in it.
One way to accomplish that is regionality. High "living wage" minimums in California coastal paradises have worked fine, but that doesn't mean the same number wouldn't cause high unemployment in rural Mississippi. Ron's initiative push for a $12 minimum for all of California sounds pretty sensible for such an expensive state, but could cause big trouble if Congress extended it to low cost of living Oklahoma.
A half century ago, debates over the minimum wage in Congress tended to break down along regional lines. Northern industrial states wanted high national minimum wages to discourage factories from relocating to low wage Southern states.
So a minimum wage works as an internal protectionist measure. My views on protectionism are moderate. I am sympathetic to movement of jobs to cheaper locations in the United States, but I am also sympathetic to some degree of stability and restraint. Statesmanship consists of finding mechanisms that accommodate those contrary goals efficiently. (My views on outsourcing / insourcing across our national border are similarly moderate, which is why I'm considered such an extremist.)
Another issue is how a higher minimum wage would interact with Obamacare's employer mandates. The term "Double Whammy" springs to mind.
A few other thoughts:
A few other thoughts:
Why not a $15 per hour minimum for non-citizens?
Why not a $6 per hour minimum for teenage citizens? And a $9 per hour minimum for 20 to 22 year old citizens?
A high minimum would only seem to work when tied into effective job-site enforcement of immigration laws. But, put them together and you might really have something.
Of course, the worst solution would be the inverse result where huge numbers of currently employed American citizens get squeezed out by a higher minimum wage and get replaced by new illegal aliens working off the books for less than the nominal minimum.
A high minimum would only seem to work when tied into effective job-site enforcement of immigration laws. But, put them together and you might really have something.
Of course, the worst solution would be the inverse result where huge numbers of currently employed American citizens get squeezed out by a higher minimum wage and get replaced by new illegal aliens working off the books for less than the nominal minimum.
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72 comments:
Min wage is irrelevant. Chipotles and Walmarts labor force seems to be 50% illegals paid about $5 an hour. Most carwashes too.
$12? Why not $11? Or 13. But why a round number at all-why not 14.31?
Other than the fact that $12 is lower than France, I see no reason for that number.
I may chuckle at dummies who buy books that pick lucky lottery numbers, but it apparently requires someone with a 200+ IQ to manage social policy in the US by picking a number off the top of his head.
Hispanics would gain the most, with 55 percent of their wage-workers getting a big raise and the benefits probably touching the vast majority of Latino families
Wouldn't a high minimum wage help curtail the hiring of illegals, which would then hurt Hispanics given that such a high number are illegal?
Currently an illegal can fake papers and the employer can play dumb if caught. But if there were a federal minimum wage of $15/hr, then the employer would have to pay that rate, and if caught, could not feign ignorance. In effect the higher minimum wage would price illegals out of the market.
Of course if we mandated e-verify, then the employers should not be able to skirt the issue. But since Congress won't force e-verify, the minimum wage might be our next, best tool.
If I am correct in believing that a higher minimum wage would cut down on the employment of illegals, then it will be fun watching Nancy Pelosi et al arguing against it with as much vigor as a GOPer.
In November, NJ had a ballot question in regards to the minimum wage. I voted yes. But, my reasoning was far different than most people.
No political party is willing to tackle immigration or send them back, and no political party is willing to put immigration reform on a ballot either. We literally have no direct action methods to get our point of view out there.
So why not use minimum wage increases to put pressure on employers and the businesses who use illegal and legal immigrant labor. Why not put them out of business and destroy their margins? The ballot box and raising the minimum wage may be one of our only direct action methods or curtailing immigration.
Higher minimum wage encourages the replacement of low-skilled labor with automation or outsourcing. Add targeted import tariffs to discourage prison labor, sweatshops, etc. and you have a winner. Low-skilled illegal aliens need not apply.
If an area has few workers available at $7.50 per hour, employers will raise the wages to $8 per hour, or decide they can do without the labor. Many high cost locales have entry level jobs that pay more than the minimum wage. When the minimum wage is set below the market clearing price, it doesn't have an impact.
While salaries of minimum wage workers aren't usually a big chunk of many budgets, raising the minimum wage will cause substitutes to be used. For some, this will be illegal immigrant labor, under the table (sometimes through an intermediary firm like hiring a cleaning company to clean the building, but not really concerned where they get their labor).
For many jobs, though, automation can start taking jobs. In Europe, where wages are high (partly due to higher minimum wage laws), about 1/5 of the lawnmowers sold are automatic lawnmowers -- kind of like the Roomba vacuum. We're not really there for a lot of things, but it's coming somewhat. In the US, there's not as much of an impetus to develop this type of technology because we have a lot of Mexicans willing to work for not much.
If you raise minimum wages, and have strict immigration enforcement, you'll start to see more automatic lawnmowers. Instead of rotting in the fields, vegetables will be harvested with automatic picking machines. Robotics will do more in factories. Sure, you can't automate everything, but there's a lot you could potentially automate, or force to a more self service model.
Grocery stores, Home Depot, and many other stores have self service check outs, which requires less labor (but requires a society where there's at least a minimal level of trust. I doubt ghetto groceries have self check outs, but I don't know, since I don't go there). In my town, a frozen yogurt place called Peachwave opened. On the wall are 30 vats of yogurt. You pull the handle and yogurt comes into your cup. You put the toppings on. Then you put it on a scale and the minimum wage cashier takes your money. There's probably some guy in the back to keep the vats filled, refill the toppings (chocolate chips and stuff), and mop the floor when a six year old spills the stuff. But a very minimal staffing level is required -- way less than Baskin Robbins.
In Japan, which has very expensive wages, there are automated vending machines that can dispense hundreds of items.
So if you push the wages up, you'll drive a lot of employers to shift to automation, and that trend is only going to get worse.
You have to realize that to the employer, minimum wage is the cost of the wage, plus social security match plus unemployment insurance plus health care plus vacation time. That all adds up.
If I am willing to work for less than minimum wage (for whatever reason) and an employer is willing to hire me, what business is it of yours?
What gives you the right to interfere?
Mind your own damned business.
$12 an hour would equate to $24K per year - which would put the poor over the Medicaid minimum of $17K (dunno if that is Federal or just my state).
Just saying. I happen to think this is a great idea, as long as they can get cheap medical insurance in some form or fashion.
And of course with strict immigration controls.
In other words: dream on. This country is very very fugged.
And why do we need a minimum wage at all?
So why not use minimum wage increases to put pressure on employers and the businesses who use illegal and legal immigrant labor. Why not put them out of business and destroy their margins? The ballot box and raising the minimum wage may be one of our only direct action methods of curtailing immigration.
I'm tired of customer service jobs being staffed by low-paid immigrants and knuckle-draggers. Replace them with a combination of higher-paid, higher-skilled workers and automation and customer satisfaction levels will go through the roof.
wait, are we now pretending that the USA is not run solely for the benefit of rich investors?
Oh, wait, we are always pretending that....never mind....
Is "Steve in Greenboro" going to be collecting food stamps, earned income credit, subsidized lunch and daycare for his kids, and free E.R. care because the best he can negotiate is $7.55 an hour? That's proven to be the case with low wage workers across the country. You bet it's society's business.
Agree with everyone who wrote that a higher minimum wage will decrease the demand for illegals. If an employer has to pay $12/hr, they're going to automate or otherwise increase productivity so that some jobs go away. There's going to be a lot less need to take the risk of hiring a non-legal employee.
Silly Americans.
If one of the goals of minimum wage is to discourage immigrant labour, I will assure you it won't work. The employers and immigrant workers will simply work out a deal where the workers kickback a fraction of their earnings back to the employer in exchange for having a job.
End result? Still cheap labour. The minimum wage just appears correct on the books.
'Let's enforce it more strictly!' - I can already hear this comment. Well, if we can't do it in Singapore, you know, death penalty Singapore, offenses are punished with caning Singapore, nobody can.
http://www.transitioning.org/2012/02/16/eight-reasons-why-foreign-workers-are-preferred-over-local-ones/
If you want to restrict immigration, then RESTRICT immigration directly. Don't resort to indirect means - it won't work.
The minimum wage, like most economic regulation, should NOT be legislated at the Federal level. The ability for Congress to interfere in so many ways at so many levels in the economic affairs of Americans reveals one of the greatest weakness of the Constitution. Much stronger restraints on the Federal Government on such mingling and interference should have been imposed.
If the minimum wage went to 15 an hour, wouldn't that raise the quality of employee in a lot of fast food restaurants?
Hell, I'd quit my part-time pizza job and be a Whopper flopper for 15 bucks an hour. Beats trying not to get killed on US 19 everyday. And I'd be so good at it, too!
The big hangup with any minimum wage is the fact that enforcing it going forward will be all the more difficult, because it will have a "disparate impact" on Hispanics.
Personally, the better idea than an arbitrary price floor is to restrict the supply of labor, through real immigration control and some other internal labor market control mechanisms. But if we are to have a minimum wage, there should be different minimum wages for legal immigrants (higher than that for citizens), and among citizens, the minimum wage for adults with dependent children should be higher than the MW for adults who don't have dependent children, which in turn should be higher than the MW for teenagers and young adults.
Unz writes:
Meanwhile, a $12 minimum wage would increase the incomes of America’s lower-wage work force by a total of over $150 billion each year, shifting those huge sums from the pockets of the sort of people who don’t shop at Walmart to those who do. A minimum wage of $12 per hour would be very good for Walmart’s business.
He apparently thinks that Walmart will not respond by raising prices, and that the extra salary expenditure is going to come straight off the bottom line. That's obviously false.
My problem with the minimum wage is that I think it functions principally as a wealth transfer within the bottom 2/3 of the SES distribution. Raising the minimum wage in effect transfers income from construction workers to burger flippers. The former suddenly has to pay $8 for his Big Mac while McDonald's shareholders are hardly affected. The goods and services produced by minimum wage earners are consumed mainly by the middle class and working class, and they absorb companies' higher labor costs via price hikes.
It seems to me that a better idea is increasing the EITC and funding it by raising taxes on capital gains. That would amount to a wealth transfer from hedge fund managers to burger flippers, which I think is what most people want, and it boosts people's incentive to work.
$3, $2, ... minim wage.
Doesn't every $ added to the money supply make the min. wage less relevant?
Print a billion here, Borrow a trillion there ... pretty soon you don't have a min. wage. If there was a limit, a penny would be worth more than its copper.
Which is also why they don't use copper in pennies anymore.
If one of the goals of minimum wage is to discourage immigrant labour, I will assure you it won't work. The employers and immigrant workers will simply work out a deal where the workers kickback a fraction of their earnings back to the employer in exchange for having a job.
That's an even bigger risk to the employer than the current system. With the current system, the employer can claim ignorance that Juan's papers were forged. With a high minimum wage, he can't. And if Juan is paying the employer a kickback under the table, the employer risks the ultimate crime that has brought down everyone from Al Capone to Leona Helmsly, tax evasion.
For the employer to do what you suggest would require him to take payments from his workers, AND not declare that as income. Maybe the feds aren't eager to make raids looking for illegals, but the IRS has a hard on for tax fraud.
Since we know we cannot enforce the border because Hispanics are too large a group to offend, and we know the Feds don't like doing workplace raids for the same reason, increasing the minimum wage seems to be a relatively good way to put the squeeze on those who profit off illegals. Plus this would be seen by the public as a measure to help people, so the open-borders supporters would have a much harder time opposing it than they do with enforcement measures that focus on the illegals.
Maybe it will lead to employers automating, and thus reducing the demand for labor as suggested by Econ 101. So what? If those jobs weren't going to go to Americans anyway, why have them? I'd rather not have them, then have them staffed by illegals in my country.
In North Carolina, labor laws are very strict around hiring kids still in school. If school is in session, there is a $10,000 per incident fine for either working a kid more than fours per school day, more than four hours without a break on weekends, or more than 20 hours per week.
A restaurant owner explained these rules to me two years ago, so I believe my memory is accurate.
As a result, nearly the only companies that are willing to hire high schoolers are large franchises (McDonalds, etc) or small businesses hiring family members.
Most businesses refuse to hire high schoolers. It is far too risky if caught violating the rules above.
They will hire illegals with obviously fake documents. The penalties are minor if anything.
Why not a $15 per hour minimum for non-citizens?
You're thinking too small, Steve. Randall Burns suggested at Vdare.com 5 or 6 years ago that we add a ca. $3 surcharge to the non-citizen minimum, and now, years later, you add the same $3. This is not progress!
Mitt said only 53% paid any income tax at all. We have to price green-carders at least high enough to meet that threshold. And how much of that 53% pays enough to cover the per capita costs incurred by an average household? Maybe half?
The non-citizen wage, then, has to be jacked up to around the 75th percentile. According to this site, that starts at $85,811 anually.
That's $42.91 per hour.
Now add to that full health benefits for everyone in his household, whether or not he or his family qualifies for any other program, public or private.
So each prospective citizen will have to be worth at least $100,000 to his employer each year, for the three, five, seven or however many years it takes for him to naturalize. That will take care of substandard immigration!
Oh, and don't wait for Congress. Get it on your state or city's ballot the next eligible election.
I love it.
At that level, automation is much more attractive.
Let the good times roll!
The minimum wage in France is almost $13 while Australian workers benefit from an hourly minimum wage of around $15, together withunemployment of just 5.7 percent.
France has a youth unemployment rate five percentage points higher than the US, and Australia can only get away with its high minimum because they won't let you in if that's your skill set. Also, things in Australia are Very Damned Expensive compared to the US, so the difference isn't as much as it looks.
So long as our Dear Rulers continue to insist on massive legal and illegal immigration and on refusing to deport illegal aliens, Mr. Unz's proposal will not work. A $12 minimum wage would form a powerful incentive to foreigners to immigrate, legally or illegally.
Unz: "A large minimum wage hike would constitute an enormous, permanent economic stimulus package, but one funded entirely by the private sector."
Riiiight.
I live in a small town in Michigan, 10 years ago there were no landscaping companies, now their are at least 3.One company got caught a few years ago paying the workers $2 an hour.They had to pay a small fine, but that was about it.
Many agricultural products can be harvested by machines, but the farmers would rather use cheap labor than modernize.The Aussie's for example developed a new way of growing grapes which doubled their yield and require much less manpower to pick.Why should the US do this when we have all this cheap labor.
That's an even bigger risk to the employer than the current system. With the current system, the employer can claim ignorance that Juan's papers were forged. With a high minimum wage, he can't.
Why wouldn't he be able to claim ignorance?
The real issue here is immigration control.
Wage arte are, and always have been, purely market-driven, unerlined by the iron law of supply and demand. Basically, an individual is paid what he is worth in maintaining a comapny's profitability, with the proviso that competition from other similarly qualified candidates - who can step into his job tomorrow - beats that wage down to the lowest level the employer is willing to pay before only absolute duffers are available for the job.
That is the fact, the reality, the cast-iron unmoveable, unshakeable fact of a cpaitalist, market-driven economy. Don't let anyone, least of all an economist, try to lie or deceive you into thinking anything else.
Of course, the lowest wages pertaining right now for American labor are a damn sight higher, (in purely cash terms), than anything pertaining in Bangladesh, for example. Hence it is economically rational for a Bangladeshi to move in on America, purely for the cash advantage. The wages obtainable in Papua New Guinea are probably even lower than those in Bangladesh, so if ass-hole economists had their way, the way to go would br to replace all American workers with Bangladeshis, and once the Bangladeshis ahve been exconced, replace them with Papuans. Repeat and rinse with an naionality evn poorer and more wretched.
Asshole economists scream that this is all 'good', 'rational' and 'wealth producing', but anyone with a brain just *knows* it's all a load of shit. And it is a load of shit. Basically it's all a game of 'beggar my neighbor' -incidentally the charge economists throw at anyone who questions 'free trade'. All that you are doing is grinding down wages to damn zero. As we all know wages are the converse of 'production'.
The ultimate of this game of 'beggar my neighbor' is of course slavery. I've absolutely no doubt that the Nigerians of today could be persuaded, with hard cash, to sell some of their starving bretheren to western capitalists to works as 'indentured laborers'. Now, what a jolly wheeze, now you won't have to pay your workforce *at all*!
Why isn't Caplan singing the praises of this model, jumping up and down extolling its virtues and posing silly essay head titles about it?
Isn't it Capaln's ideal,by golly?
Why wouldn't he be able to claim ignorance?
Because ignorance of the law is not an excuse. If you are in business, you have to abide by labor laws, or face penalties. Thus, if you don't pay minimum wage, you are in violation of a labor law, and will face fines.
This is my frustration with establishment conservatives and libertarians. Yes, we'd all love to let the market dictate wages. But that won't happen if employers can bypass the labour market and hire foreigners. (This is leaving aside all the subsidies provided in welfare, education, healthcare etc., to both immigrants and their "American" desendents.)
This is usually angrily countered by libertarian claims that, hey, they want to dismantle the welfare state. Awesome - destroy the free market and then the only thing keeping people off the breadline. And we're not letting people die, so let that one go and accept some form of assistance. The only thing to do to make welfare wither is to severely restrict the supply of cheap labour, so that - whisper it - welfare isn't needed, at least not as much. But then low skilled workers might get great wages and bennies without handouts, and that sticks in a lot of craws.
I've seen establishment conservative types complain that all the talk of inequality is simply to distract from clusterfraks like Obamacare. Fair enough, but it wouldn't be so effective if they couldn't be trusted to (1) completely miss the point and (2) be utter tools about it. (Both sides are wrong. Only the left is making any pretense of at least trying.)
Because ignorance of the law is not an excuse. If you are in business, you have to abide by labor laws, or face penalties. Thus, if you don't pay minimum wage, you are in violation of a labor law, and will face fines.
My point is that he can similarly hire illegals for the higher minimum wage jobs, provided they can provide the same credible-looking documentation they did before. A higher minimum wage doesn't improve the labor pool - it just cuts down on the people it makes sense to keep on the payroll. He'll just keep the illegals, who really need these jobs, and are willing to work harder than the average American citizen or green card holder.
I live in a small town in Michigan, 10 years ago there were no landscaping companies, now their are at least 3.
Americans won't cut their own grass or trim their own shrubs when there is a Mexican to do it for $2. However, when you are done cutting your own grass you just put the lawnmower in the shed. What do you do with the Mexican when you are done with him?
“At the 1968 height of our post-war economic prosperity, the American minimum wage was over$10.50 in current dollars…”
He means 2013 dollars. And in 1968 we were well on our way to an enduring wage-price spiral that took more than a decade and several recessions to end.
“…setting the rate at $12 today would represent a real rise of merely 11 percent over a 45-year period, which seems reasonable since worker productivity has grown by over 115 percent during the same period.”
What counts for the minimum wage is not the increase in average productivity but the increased productivity of the least skilled workers, which is likely to have risen much less, if at all.
“The minimum wage in France is almost $13 while Australian workers benefit from an hourly minimum wage of around $15, together with unemployment of just 5.7 percent.”
Australia’s minimum wage has exceptions and discounts for young and less experienced workers. Be careful to convert to US$ by purchasing power parity rates, not exchange rates. The correct measure of effect on work is not the unemployment rate but the labor- force participation rate. And Australia, with very large resources per capita and much better demographics than the U.S., has GDP per capita about 20% less than the U.S. About what you would expect according to economists’ criticisms of the minimum wage.
“A minimum wage of $12 per hour would be very good for Walmart’s business.” Oh, some guy who made money in high tech, in which practically everybody has made money in recent years, knows Walmart’s business better than Walmart.
“America’s low-wage families tend to spend every dollar they earn, so a large minimum wage hike would constitute an enormous, permanent economic stimulus package, but one funded entirely by the private sector.” Yeah, and the Townshend Plan would have worked, too. This is Father Coughlin Economics.
“Low-wage workers tend to be employed in the non-tradable service sector, making their jobs relatively safe from foreign competition or automation. They’d keep their jobs, but their incomes would rise by 30 or 40 percent.” Ever heard of demand elasticity?
"What about the converse? It might even be true that cutting the minimum wage to $3 per hour would increase employment. But if so, would then cutting it from $3 to $2 be another slam dunk great idea? From $2 to $1? I don't think so. Diminishing marginal returns set in pretty rapidly."
If you set the minimum wage below the market price it is irrelevant. If you set above it, it generally causes unemployed, except maybe in some very specific circumstances.
So I don't follow why Sailer thinks that a minimum wage for the whole of California will be a good idea. Why would demand not decrease when price is increased?? Sure, it may react very little if the increase in the minimum wage is small, but that doesn't mean we shouldn't care about the people who lose. I myself think that scrapping the minimum wage is a very logical and moderate proposal. But it is hard to sell to the electorate.
The department of labor who enforces the minimum wage and labor laws is filled with crazy leftists who will do everything in their power to make sure your workers whether legal of illegal are paid minimum wage.
I've dealt with them and I can tell you they leave no stone unturned. Some states even allow the DOL to enter your premises and make inspections without subpoena. So if no other government agencies are able to enforce immigration laws, why not shift the burden on to the DOL who will inspect an ancillary topic, wages?
Raising the minimum wage will tend to destroy those jobs that are sucking in the illegals. It will also force employers to pay a minimum of $12 an hour to its guest workers which will lower the demand for unskilled guest workers.
The existence of SNAP and welfare largess justifies the continued employment of a lot of bureaucrats and social workers who definitely don't make minimum wage. For a smart guy Unz is pretty stupid when it comes to seeing for exactly whose benefit the existing system functions.
Having a different minimum for teenagers is what was done in New Zealand for a long time. After the distinction was abolished, teenage unemployment jumped.
"shifting those huge sums from the pockets of the sort of people who don’t shop at Walmart to those who do"
I don't understand that bit. If Wal-Mart increased prices to cover the increased wages, which is what Ron seemed to be assuming before, the shift will come from the pockets of those who DO shop at Wal-Mart. People who shop at places that already pay above the new minimum won't pay anything extra.
That's an even bigger risk to the employer than the current system. With the current system, the employer can claim ignorance that Juan's papers were forged. With a high minimum wage, he can't.
Why not?
Why wouldn't he be able to claim ignorance?
Because ignorance of the law is not an excuse.
It's not ignorance of the law, it's ignorance of the facts. Fraud by the hire is a defense.
RKU said . . .
For the employer to [take kickbacks from illegals] would require him to take payments from his workers, AND not declare that as income. Maybe the feds aren't eager to make raids looking for illegals, but the IRS has a hard on for tax fraud.
This is reasoning worthy of a tax protestor. There is no fix for anything if the people in charge don't want a fix. The writing on some piece of paper in some law book is nothing against the will of the enforcers of that law.
If it became necessary for the IRS to lose interest in this particular form of tax evasion, then the IRS would lose interest in this particular form of tax evasion. Personnel is policy. And the corollary, policy is not policy.
The case against immigration or for working class whites has to be explicit and overt. The politicians chosen have to have plausible, ongoing working class white roots. That is the only way there is even a chance of getting people in charge who actually are interested in restricting immigration and/or improving the lot of working class whites.
Once such people are in charge, the details of the law are largely irrelevant. The same selective enforcement which, today, de facto favors employers of illegals could, tomorrow, punish them. There don't even have to be laws against employing illegals. If the guys in charge of the IRS, OSHA, etc decide to take a real close look at each company which employs illegals, companies will quickly glom onto the fact that employing illegals is a good way to go out of business.
"If Rush Limbaugh -- who earns over $70 million per year -- denounced the proposal, they’d stop listening to him"
No; I agree with the principle but $12 is too high for the poor heartland bits of white America, and would cause Walmart to lay off workers. Costs (excluding health) and wages are incredibly low in swathes of the US, not like Australia. People in my wife's home town in the South would rather be employed at say $9 than unemployed at $12.
Steve said . . .
[High minimum wages for hotel maids] started to seem like a pretty good idea. Maids' wages make up a small fraction of the cost of staying on the beach in Santa Monica (much more of the cost of a room is the cost of the land it's on), so it seemed improbable that this law would turn Ocean Blvd. into Desolation Alley with tumbleweeds blowing past shuttered resorts and starving, weeping unemployable ex-workers.
If anyone cares, the technical term for this kind of thing is Ramsey Pricing or optimal taxation. Basically, you get the smallest economic distortions from taxing things (or otherwise distorting the price of things) which have low price elasticities of demand. The lower the elasticity, the more the tax is just a transfer.
This exact thing crops up in the minimum wage debate all the time. Anti minimum wage types claim low skill labor demand is elastic (c.f. all the stories they tell about automation and making the soda fountain self-serve) while pro minimum wage types claim low skill labor demand is inelastic, like Steve is doing above.
Steve, this is very discouraging, for evaluating the rest of your opinions. How long did it take you to realize that Econ 101 is just a bunch of Ayn Rand fairytales dressed up with question-begging "common sense." "Logically"?
Dean Baker:
The counter-argument against raising the minimum wage is that it would actually hurt the people we are trying to help by reducing employment. There is little basis for this claim. The impact of the minimum wage on employment is one of the most heavily researched topics in economics.
Most recent research finds that it has no impact on employment.
The rest here:
http://www.huffingtonpost.com/dean-baker/raising-the-minimum-wage_b_1696177.html
There's a huge informal cash economy out there comprised of both illegals and born-here citizens. Lots of citizens with skills in the trades such as plumbing and carpentry work off the books for individual homeowners in return for a negotiated price to be paid in cash. They hook up through word of mouth. Home repair and improvement sometimes have mixed teams, the leaders being citizens who pick up a few illegals at the local pickup for the grunt work. Illegals tend to work a rung down in the lesser skilled areas such as cooking and cleaning, labor, gardening, you name it. There's countless numbers of small restaurants and bars out there as well as millions of homes that need painting, plastering, concrete work, roofing, etc, all of which provide pay in cash. It's everywhere. The cash payout is generally what's considered fair between both parties based on level of skill involved and if demand is slack or brisk. Pay can be lower due to it being invisible income and thus messy things like taxes can be sidestepped. Minimum wage laws wouldn't seem to have much effect on all this except to raise expectations on the part of the cash workers. Just do some eyeball research and walk around; every smaller restaurant and bar one walks past might have some illegals working there out of sight, every lawn tended, every house or apartment painted may have involved illegals.
This city is a 'sanctuary' city so that says something about the willingness of the political class to actually implement the laws they're supposed to uphold. If the leadership thumbs it's nose at the law then why should the average person hold it in any higher regard?
The strategy of the establishment is to drag out the debate as long as possible, all the while allowing the situation on the ground to change. Whatever happened to the "virtual fence", by the way? We're in at least the 20th year of this ongoing national debate; it's all just delay delay delay and then it'll be said that nothing can be done, that the changes that have taken place are irreversible, it's too late, etc.
If one of the goals of minimum wage is to discourage immigrant labour, I will assure you it won't work. The employers and immigrant workers will simply work out a deal where the workers kickback a fraction of their earnings back to the employer in exchange for having a job.
What color is the sky on your planet?
Here, on Planet Earth, one of the illegals being squeezed for a kickback will eventually rat the employer out to the local immigrants' rights group. That organization will deploy a bunch of young, earnest lawyers to sue the employer's ass off for "unlawful wage deductions." Then, the state's Dept of Labor will come down on the employer like a ton of bricks for violating fair wage standards. Finally, the state and the IRS will audit the employer as far back as they can go.
I've learned that while interior immigration enforcement may not exist, the state is still very eager to enforce labor laws, income taxes, and business licensing requirements.
Mr. Sailer, you seem to be confusing a minimum wage with a maximum wage. If the minimum wage were dropped to $2/h it doesn't mean that anyone MUST be paid only $2/h, so it would be largely irrelevant.
And though you hint at it, even if your feel-good reasons for raising the minimum wage were correct, it is the enforcement of the wage that will cause problems. Do we really want the types who understand so little (selectively) investigating and enforcing these things? Quite suddenly and unexpectedly you seem to want, for utilitarian reasons (?) liberal and progressive busybodies auditing businesses to make sure they're ... Well, you get it.
Thus, if you don't pay minimum wage, you are in violation of a labor law, and will face fines.
... unless you are politically connected.
>If I am willing to work for less than minimum wage (for whatever reason) and an employer is willing to hire me, what business is it of yours?
What gives you the right to interfere?
Mind your own damned business.<
If my slaves agreed to work on my plantation for free for whatever reason, and I assure you that all of them like it here (where else can they go, after all?), then what gives you the right to interfere? Mind your own damned business and stop interfering with my liberty.
Libertarianism, the philosophy of Might Makes Right, leads in the real world of real human beings to slavery, not liberty. It was among the biggest philosophical con jobs ever pulled - and its ideas, even in diluted forms ("neoliberalism," et al.), have worked already very well to exploit the labor of most for the benefit of a few. The next Gilded Age, which we are entering, is a Dark Age.
As for the minimum wage, in 2013 dollars the 1968 minimum wage would be about $20 per hour. So there was mass unemployment in 1968? The economic prosperity of the 1960s was unsustainable not because of the Great Society and the Vietnam war, but instead because our parents made enough scratch to afford to buy a house and one or more cars? We should have instead been living then like Bangladeshis, in order that two dozen individuals could have a net worth of n billions or trillions of dollars sooner than they otherwise did? True think tankers will answer forthrightly from the safety of their trust funds: YES.
Why not a $6 per hour minimum for teenage citizens? And a $9 per hour minimum for 20 to 22 year old citizens?
Back in 1974, DC had a minimum wage for those ages 16-17 of $1.65/hr. For those 18 and over, it was $2.10. Those under 18 who wanted a work permit needed a note from their principal that their grades were good enough that working would not cause a problem.
The discussion about illegal labor simply misses the point:
There is no enforcement!!
Got that???
OK????
I've seen this in upstate NY, where there are abundant opportunities for skilled and unskilled labor jobs.
Increase the minimum wage and the laws will simply be flouted.
Add to that the fact that when a people loses the willingness to do manual labor, it's lost.
Manual labor is HARD.
Better let Juan break his back.
And blame Juan for the fact that your kids are lazy fuckers. And blame Juan for the fact that you don't want your kids to soil their delicate little fingers hauling scrap or landscaping. All of these jobs are dangerous, hazardous, and hard. No one would do them if they don't absolutely have to.
Re: comments above about Juan's fake documents and ignorance of the law
Fake documents are cheap and easy to obtain. They look good, not fake. Remember, you are showing them to an employer, not law enforcement (who can check your driver license number.
I see hundreds of police and arrest reports monthly for work. I have never seen one arresting an employer for accepting fake documents.
@Ben Tillman or any attorney - What legal action can one take against employers for hiring illegals?
"High 'living wage' minimums in California coastal paradises have worked fine, but that doesn't mean the same number wouldn't cause high unemployment in rural Mississippi. Ron's initiative push for a $12 minimum for all of California sounds pretty sensible for such an expensive state, but could cause big trouble if Congress extended it to low cost of living Oklahoma."
You're forgetting inland California, where unemployment is as high as 30%; San Bernardino went bankrupt; and Desert Hot Springs is close to it. A $12 minimum wage inland will prove even more devastating, and a boon to illegals who don't care about dumb state laws anyway.
And I wish conservatives wouldn't waste time on liberal ideas like this, which only will cause infighting among conservatives, a movement that long has had a penchant for circular firing squads.
"So why not use minimum wage increases to put pressure on employers and the businesses who use illegal and legal immigrant labor. Why not put them out of business and destroy their margins? The ballot box and raising the minimum wage may be one of our only direct action methods or curtailing immigration."
The problem is that at the lowest sectors of the economy, illegals at any price are still going to be preferred to blacks. If the policy is meant to curtail immigration and also improve employment opportunities for Americans (including said blacks), then there needs to be a punishment attached to the use of illegals.
If I'm some guy that owns a lawn-mowing service or a car wash or whatever, a higher minimum wage will make me find alternatives to the use of labor. It will not make me hire blacks.
I can remember when things were better. It was 1960 and I sat down in my seat in freshman economics at George Mason. The guy in front of me was a little older. His name was Perry. He turned around and said that if you made $5,000 a year and were single man, life was sweet. Perry drove a restored 1930 Model A Ford with a rumble seat. He was unbelievably cool. He gave me my first career goal. I hoped that I too would one day make $5,000.
At that time the minimum wage was $1.00 an hour.
What happened? Well black hearted schemers conspired to debase the currency. They instituted a succession of ever higher minimum wage rates initiating the infamous wage-price spiral.
I bought gas for 17 cents a gallon then. My wonderful 1948 straight eight Packard sedan got poor mileage but it had only cost me $20. A complete breakfast at the local diner cost 43 cents.
I feel like an ancient coot when I report these prices from my youth. But it wasn't that long ago. Kennedy was President and America dominated the globe.
Wages are supposed to represent a person's economic value. I pay unskilled day laborers 10 dollars an hour to pull up weeds and sweep up pine needles. I pay my handyman $25 an hour to build staircases and retaining walls. Paying the weed pullers more doesn't help build a better America. They still are too dumb to be trusted with a power tool.
Paying workers more than they are worth is evil and destructive to society. What's up with Unz?
Everyone knows that organized labor lobbies for minimum wage laws so as to protect the higher wage rates of their union members. A union worker is worth perhaps twice that of a non-union worker so they lobby the government to outlaw paying anyone less than half the current union wage rate. That cuts down on employers substituting two cheap under skilled workers for one skilled union worker.
Everyone knows this, just as everyone knows that raising minimum wage rates drives black teenagers out of the labor market.
The civil effects of minimum wage rates are not subtle or obscure. Only a fool would believe that organized labor supports the minimum wage out of their sympathy for the downtrodden. Yet we have to fight this battle endlessly.
When that unemployed black teenager come up behind you and punches you in the face - say 'Thank you Ron Unz'.
Things were better at $1.00 an hour.
Albertosaurus
Albertosaurus,
If life was sweet at $5000 per year, then (assuming a 40-hour work-week) a sweet (relatively high) wage was $2.40 per hour. That is 240% higher than a $1.00 per hour minimum wage.
Now adjust for today's dollars:
Is it unreasonable to say that a sweet income today is $100,000? That's 20 times more than the sweet income of $5000. So today's sweet hourly wage would be $48.00 per hour (20 times 2.4 equals 48).
You can see where I'm going with this.
The equivalent minimum wage would be $20.00 per hour. This means that, in your day, the average soda jerker was getting what, today, would be $20 bucks an hour.
But the current federal minimum wage is $7.25 per hour. The equivalent of that in your day would have been 36 cents per hour, not $1.00 per hour.
And yet you write that "a succession of ever higher minimum wage rates initiating the infamous wage-price spiral" is, along with currency debasement, the root of our economic evils. I've dispensed with the currency debasement point, by adjusting the dollar figures. So now your point is only that people are being paid too damn much...when, in actuality, they are being paid (on the low end of the economy) roughly a third of what they were paid before.
Where did the difference go?
The problem is that at the lowest sectors of the economy, illegals at any price are still going to be preferred to blacks. If the policy is meant to curtail immigration and also improve employment opportunities for Americans (including said blacks), then there needs to be a punishment attached to the use of illegals.
If I'm some guy that owns a lawn-mowing service or a car wash or whatever, a higher minimum wage will make me find alternatives to the use of labor. It will not make me hire blacks.
Precisely. Some have said that Hispanic illegals are docile, servile even. That's true only if you consider the average black employee a stable, well-adjusted individual. The problem with a fair % of black employees, especially at the low end, is a high percentage of destructive, violent and anti-social individuals - individuals who break stuff, stomp random strangers or steal just for thrills.. Small businesses like the average fast food franchise can't afford to have problem employees who are 10% of their headcount. If the minimum wage is raised, these businesses will be even less likely to employ blacks.
The following essay and the accompanying discussion are pretty illuminating:
Minimum Wage Laws Just Keep People Poor
So long as our Dear Rulers continue to insist on massive legal and illegal immigration and on refusing to deport illegal aliens, Mr. Unz's proposal will not work. A $12 minimum wage would form a powerful incentive to foreigners to immigrate, legally or illegally.
12/10/13, 9:53
Guess what state has a lot more illegals, Texas versus Washington. Texas of course, it has only the 7.25 per hr while Washington state has 9.00 per hr. I noticed that California grew faster in illegals when the minimum wage was lower since business people didn't mind paying lower wages to people that didn't attend high school.
Higher minimum wage prevents the Texas factor of low wages and lots of illegal immigrants, number 2 in the US after California. Conservatives wrong again as usual.
Min wage is irrelevant. Chipotles and Walmarts labor force seems to be 50% illegals paid about $5 an hour. Most carwashes too
Must be in Orange County, Walmart you need to know a little English unless you worked in Santa Ana. In the OC minimum would killed about 15 percent of the jobs of illegal immigrants except day labor.
"The discussion about illegal labor simply misses the point:
There is no enforcement!!"
Exactly. If I went over to the police station right now and told them I know that there are illegal aliens working at a dairy farm ten miles from here right this minute (it's the middle of evening milking), and show them video I shot of me chatting with a few of them when I was there on some business just minutes ago, in which they told me where they were from and admitted that they are here illegally....what would the cops do?
Would they quickly organize a raid and call a judge for a search warrant, busting the place before milking time is over in a couple hours? Yeah, stop laughing. They might take down a report, if I'm pushy enough, and pass it on to the ICE office six hours away, where it will be ignored. By mostly they'll tell me to get lost, and go back out on the street to hassle people about seat belts and gather traffic fines to pay their salaries.
By the way, if you visit the ICE web site, you might think you accidentally got the DEA, because they seem most interested in busting drug dealers, especially American citizens trying to bring drugs into the country. If you read their news items, it appears that they would prefer to charge criminals with anything but being here illegally. If they can charge a guy with something like drug running or molestation, they won't even mention whether he's here legally, as if that's not even relevant.
No; I agree with the principle but $12 is too high for the poor heartland bits of white America, and would cause Walmart to lay off workers. Costs (excluding health) and wages are incredibly low in swathes of the US, not like Australia. People in my wife's home town in the South would rather be employed at say $9 than unemployed at $12.
Well, I hate to tell you but some of states with the highest unemployment have the lowest wages like Mississippi. If minimum wage was so bad for the south why is it that the state with the most folks at 7.25 per hr has an unemployment over 8 percent while Washington state has only 7 percent with a minimum of 9 dollars. And its not true poor states like Mississippi with be better off to get rid of cheap wages..
"A $12 minimum wage inland will prove even more devastating, and a boon to illegals who don't care about dumb state laws anyway."
Yeah, I'm still waiting for someone to explain why people who are already breaking the law -- including the current minimum wage law, in many cases -- will be affected by a higher minimum wage. Seems to me it would only give employers more incentive to break the law than before; and put law-abiding employers at a further disadvantage, more likely to go out of business.
What do people think the word "illegal" means?
Well, some business like fast food and most resturant chains pay the minimum wage or the tip minimum wage. In fact in Whiskey state illegals make 8 per hr plus tips for being a waiter while in Texas they make 2.14 plus tips. Most maid work, car wash, and gardener and janitor is not in the cash economy its usually a contractor or the company direct and they pay in regular money. Merry Maids and the Cheesecake factory and the Marriott Hotel hire more illegals than the most business do in cash. McDonald and Carl's jr also hire a lot of illegal immigrants and pay in regular money not cash.
Also, the Inland Empire's unemployment is no worst than La's. In fact La has lower average income than Riverside county, so not all Coastal Counties are wealthy. In fact why do you opposed rising the minimum wage when Carl's Jr that currently uses illegal immigrants in fast food in the Inland empire would be force to use Kiosks. Most white folks in the Inland empire make more than 12 an hr, so it would have little impact on whites.
Another thing La was once ran by moderate Republican Robert Reardon this was the heyday of sewing sweatshops in Los Angeles. In fact the liberals who wanted not very low wages like 3 an hr around 1990 or lower probably pushed most of the garment work done mainly by illegal immigrants and some legal Asian immigrants out to overseas. LA once had about 160,000 people employed in sewing and so forth in the 1990's but wages and regulation pushed the sweatshops out. Many illegal immigrant women had to switch to fast food, maids or nannies and so forth. Today, the garment industry employees people more at 9 to 13 per hr instead of the subminium wage of the past and a lot less people.
A lot of the economic theory toolbox is great for telling you how, all else being equal, a new policy (minimum wage hike, welfare, budget deficit, greater trade, etc.) will impact the DIRECTION of an economic outcome like unemployment or inflation. Usually the theory doesn't say much about the MAGNITUDE of the change, which always has to be balanced against the gains for the affected parties. If a big raise in the minimum wage pushes up unemployment by a miniscule percentage, as data suggest, then I'm be fine with these workers making more money. Examining these tradeoffs requires being an empiricist rather than deductive logic, but aspergy economists with libertarian tendencies like to close their eyes and imagine a Platonic economy.
39 NORTH CAROLINA 8.0
40 GEORGIA 8.1
41 ARIZONA 8.2
42 KENTUCKY 8.4
42 NEW JERSEY 8.4
42 TENNESSEE 8.4
45 MISSISSIPPI 8.5
46 CALIFORNIA 8.7
47 DISTRICT OF COLUMBIA 8.9
47 ILLINOIS 8.9
49 MICHIGAN 9.0
50 RHODE ISLAND 9.2
51 NEVADA 9.3
At least three of these states don't have a high minimum wage which means the minimum wage doesn't effect much. NOrth Carolina, Mississpi, Tennessee don't have high minimum wages but no Republican brings this up of course. Its kind like the stupid thinking of Joel Konkin that complains that La/Orange lost population 15 and under, most people would be happy about that since Los Angeles/Orange County 15 and under population is more likely to be Mexican than white. In fact Joel argument is so stupid because Los Angeles and Orange County still have slightly more kids in the 18 and under than the US average population because of the heavy hispanic population,both are still far from being West Virginia in lack of kids.
A $12 minimum wage is hardly extreme or ridiculous. At the 1968 height of our post-war economic prosperity, the American minimum wage was over$10.50 in current dollars, and setting the rate at $12 today would represent a real rise of merely 11 percent over a 45-year period, which seems reasonable since worker productivity has grown by over 115 percent during the same period.
Commenters are outraged by the idea of raising the minimun wage to $12 dollars but none of the commenters are outraged by the fact that workers have not benefited from the 115 percent growth in productivity. What ever happened to idea of an honest day's wage for an honest day's work? Nobody is outraged by moneyed interests swindling labor of their just wages.
I'm always surprised that some bright-eyed economist doesn't propose the reintroduction of serfdom, because the belief that low wages for the sake of low wages brings prosperity seems to be some sort of economic Holy Grail.
Then I ponder unpaid internships, and conclude it's already back, sort of.
Anyway, way back when I did menial labor at a store the union contract wage for circa 1986 had a top rate of $12.75, give or take a few pennies. The contract circa 1991 had a top rate of $10.75. The contract circa 1994 was $8.75. The starting wage dropped accordingly.
The problem for the company was that eventually other employers in my area started hiring, and paid more. People left for greener- $$$- pastures. Then the company had to pay new hires more. Whee.
I always thought this was a triumph of the free market- but no.
Our globalist political class defines the free market as the entirety of humanity, all seven billion plus.
Hence as long as Americans are paid more than the inhabitants of Bangladesh the free market must not rest, and must lower American wages.
So we get relentless pressure for open borders, zero enforcement of US law regarding immigration on the one hand, and utter devotion to offshoring on the other.
Everyone is supposed to not notice that this ideology puts boku cash in the pockets of the political class, because free market.
Yeah, we're screwed, as long as this bunch is running the show. Time to change the channel, sort of.
It sort of makes you feel hopeless, doesn't it? If as intelligent a person as Steve believes wages are set, in a largely free capitalistic system, by the whim of powerful people, then there is no hope for the average person to be economically literate.
Steve believes that wages are unrelated to productivity. Obviously wages are not congruent with productivity - a surplus supply of a certain type of worker can push their wages lower than their productivity could support. However, productivity puts an absolute limit on wages. If you had a one man enterprise such as a retail stand in a mall and at the end of the day you had $200 of gross sales and $150 of cost of goods sold plus rent electricity, etc - then you cannot pay the person who mans the stand more than $50 per day. That is all they produce by standing there and ringing up sales and the most you can pay them.
Higher minimum wage for 30 year olds than for 18 year olds? Will the age discrimination statutes apply to enterprises who hire them? I mean for a low skill job I want to hire the 18 year old and pay the lower wage, but is that illegal discrimination against the older worker? If you can pick the younger worker with no fear of legal peril, why do you want to disadvantage the older worker like that - he has less time to get his life together and get on the road to productive employment at higher wages.
Lets have a writers minimum wage. If someone manages to sell articles for money than they should have an enforced hourly rate for the number of hours they devote to writing each week. If they are about to sell one article in December it should be illegal for the purchaser to compensate at an amount less than the number of hours the writer crafted words in December times the minimum hourly writers rate. One penny less and the buyer has to not pay the writer anything and not buy the product.
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