Friday, May 2, 2014

The Simple Thing Democrats Can Do To Raise Wages

President Obama and many Democrats are frustrated that efforts to raise the federal minimum wage have been stalling in the Senate for years.  There frustration is completely understandable.

Earlier this week news broke that for the first time in history the median income in Canada has surpassed the that of the U.S.  At the same time, the gap between average wage of employees and CEOs continues to grow while food and energy prices continue to soar, leaving many Americans struggling to make ends meet.

The plan to raise the minimum wage seems to be a needed and noble one.  Unfortunately, it is being created by the conflicting desires of of several Democrat constituencies.

First, America's low-skilled workforce is hurting and Democrats and many Republicans want to help them by increasing wages.  At the same time, Hispanics, who make up the largest group of illegal immigrants by far, are demanding amnesty and an increased flow of legal immigration.  Democrats and some Republicans are pandering to those desires in a hopes that it will score them long term political points with the group.

Raising the minimum wage is the Democrats attempt to reconcile those two polar opposite policy goals.

What we know to be true is that the massive influx of illegal and legal low-skilled immigrants is the very reason low-skilled workers are struggling, of which black workers are being hit the hardest.  Illegal immigration puts massive amounts of downward pressure on low-skilled wages, to the tune of $402 billion annually according to George Borjas of Harvard University.

The combined increase to America's available workforce from both legal and illegal immigration exacerbate the problem.  With more than a report 15 million illegal aliens already living and working in the country and a million to a million and a half new low skilled immigrants legally entering the country each year, America's low-skilled workers are finding it more and more difficult to compete for the few available jobs they are qualified to do.

According to a 2013 report by the American Enterprise Institute, more than half of America's low-skilled jobs are held by immigrants.  Perhaps this explains why nearly 1 million unemployed workers gave up on finding a job last month.

The solution to the labor and wage woes created by mass legal and illegal immigration is not raising the minimum wage.  It is well documented that raises to the minimum wage result in fewer low-skilled jobs and reduces the rate of growth for new ones.  Both of which worsen the prospects for America's low-skilled workers.

It's a solution that sounds good, but in reality creates an endless cycle of policy conflicts by requiring the passing of new bills to repeatedly raise the minimum wage to keep pace.

There is a solution that can work long term, one that will raise wages and opportunity for all, and one that is so simple it confounds the mind that no one in Washington has bothered proposing it.

That solution is to let the forces of supply and demand work in the labor market as they do in all other markets.  To do that America simply needs to fully enforce its existing laws on hiring illegal immigrants and to enact sound immigration policies that are designed to attract skilled immigrants that can benefit, rather than harm, America's standard of living.

Democrats once understood this.

Before Carlos Slim Helu, Mexico's and the world's richest man, bailed them out, NY Times understood it.
Amnesty would undermine the integrity of the country's immigration laws and would depress the wages of its lowest-paid native-born workers... It is also unfair to unskilled workers already in the United States. Between about 1980 and 1995, the gap between the wages of high school dropouts and all other workers widened substantially. Prof. George Borjas of Harvard estimates that almost half of this trend can be traced to immigration of unskilled workers. Illegal immigration of unskilled workers induced by another amnesty would make matters worse.
Hero of the migrant farm worker, Cesar Chavez, understood it.
[W]hen the farm workers strike and their strike is successful, the employers go to Mexico and have unlimited, unrestricted use of illegal alien strikebreakers to break the strike. And, for over 30 years, the Immigration and Naturalization Service has looked the other way and assisted in the strikebreaking. I do not remember one single instance in 30 years where the Immigration service has removed strikebreakers. ... The employers use professional smugglers to recruit and transport human contraband across the Mexican border for the specific act of strikebreaking.
Since Democrats turned away from this most basic understanding of the effect of mass legal and illegal immigration the disparity between America's low-skilled and skilled workforce has dramatically worsened.

It's time Democrats stop playing politics and start doing what is right for Americans.

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