Guest Post by Joe Guzzardi
Democratic presidential candidates have unanimously embraced the $15 federal minimum wage. House Speaker Nancy Pelosi threw her support behind the wage hike that would more than double the current $7.25 rate. Pelosi claims that not only would the wage increase give Americans more money in their paycheck, but would also boost the gross domestic product. When people have more purchasing power, they’ll spend more, and, predicted Pelosi, the GDP will therefore rise.
But a far more credible economic source than Pelosi made the opposite calculation. The Congressional Budget Office calculated that overall the $15 hourly wage would “would reduce the nation’s output slightly.” The CBO found that as many as 27 million workers, assuming they remained employed, could benefit. On the other hand, up to 3.7 million workers might lose their jobs as employers respond to higher overhead. Goods and services costs to consumers would inevitably rise.
That’s the thing about the $15 minimum wage hype – only one side of the story is told. A wage increase won’t be effective if employers don’t hire or if they dramatically reduce their hourly payrolls to adjust for the steep bump.
Moreover, the $15 wage is an artificial solution to increasing Americans’ paychecks. The lasting correction is to tighten the labor pool. The federal government can tighten the employment market in two ways: first, reduce the 1 million-plus legal immigrants who, as employment-authorized lawful permanent residents, enter the labor force annually. Further, the government could reduce the roughly 750,000 temporary guest workers that come to the U.S. to perform an assortment of jobs that, for the most part, Americans would do, assuming a fair wage. The second tightening variable, and more immediate way to drive up wages, is to use E-Verify, the online program that ensures only legally authorized workers hold U.S. jobs.
To analyze how large influxes of immigrant workers, in this case, construction workers, impact the market, the Los Angeles Timesstudied the Southern California building trade. The Times wrote that over a few decades, construction workers went from being majority union, and majority U.S.-born, to majority immigrant. In the article conclusion, journalist Natalie Kitroeff wrote, “Nonunion shops made aggressive inroads into home building with workers who had less experience. The result: Today slightly more than 1 in 10 construction workers are in a union, compared with 4 in 10 in the 1970s….an influx of immigrants who would work for less made it easier for builders to quickly shift to a nonunion labor force…” A footnote: in a relatively short time, immigration played a leading role in eliminating solid, blue-collar United Brotherhood of Carpenters jobs that paid middle-class wages, offered health care, paid vacations and pensions.
But since major immigration reductions are not in the immediate future, the government could help by passing mandatory E-Verify. If passed, the program that would prevent unscrupulous employers from hiring illegal aliens and slow the flow of unlawful job-seeking foreign nationals, once the word was out. A tighter labor market results in an increase in wages for U.S. workers.
E-Verify has the overwhelming support of Americans and of companies like Costco that have used it for years. Early this year, a Houston Chronicle editorial made the interesting point that E-Verify would not only help legally present workers keep jobs, but also would protect exploited illegal immigrant workers from low pay and harsh conditions that, because of deportation fears, they’re afraid to report. With E-Verify, the onus is on employers to hire only legal workers.
For all the ballyhoo about the $15 minimum wage, nothing is ever said about tightening the labor market through lower immigration or mandating E-Verify, two solutions that would help the U.S. pay rate, still stuck at 1970 levels, to increase through normal market functions.
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Wanna solve the problem?
1) enforce the laws that already exist re fining employers that hire illegals
2) cut welfare to zilch
The outflow of illegals would be a stampede, and the increase in participation rate would be huge. In fact, the published unemployment rate would skyrocket to 20% as those nonparticipants suddenly begin looking for work.
Whenever hear that a problem is too complex for an easy resolution, I scoff. Most complex social issues have easy solutions. There simply does not exist the will to implement the easy solution.
Take the drug problem for example. If you really want to solve the drug problem, start dropping addicts and dealers and corrupt doctors and such publicly through a woodchipper. End of problem within a very few days. But there is no will to implement that type solution. I am not willing to do that either, by the way. But an easy solution exists to the problem.
Perp walk a high profile CEO for hiring illegals and the hiring of illegals would stop very quickly.
Cutting welfare would include for individuals and corporations.
I’ve thought we should banish some of those CEO types, if they want to hire Guatemalans in the meat packing plants send them to Guatemala.
i want legal immigration so that we know who is here but we need much of the low skilled immigrants–
most americans who are worth a damn are working & there’s a good % of those who would be knocked off welfare that you don’t want watching your kids,cooking your food,etc.–