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Tuesday, 28 November 2006 14:15 |
 | | Carl S. Milsted, Jr. |
The Democrats have taken over Congress; sunlight is to be shed on the earmarks and corruption; George Bush is reined in. Hurrah!
But what about the rest of the Democratic agenda? What about the promised hike in the federal minimum wage?
The Democrats claim it will help restore the American middle class, by boosting wages for workers. Indeed, if this works as advertised, it could reduce welfare payments by reducing the number of people who qualify for Food Stamps, Medicare and public housing. Increased payroll taxes could shore up Social Security and reduce the deficit.
The
standard economist answer is that mandating higher wage levels is like
commanding that the tide stay out, that you cannot undo economic forces
by fiat. Yes, a higher minimum wage would increase wages for some, but
others will lose their jobs. Businesses will opt to employ fewer
people, some businesses will close, and individuals will opt to do it
themselves instead of hiring someone else.
So, who is right?
The answer is: both could be right ÇƒÓ depending on whether we look at just American citizens, or all American workers.
Many of the
lower-paying jobs today are going to illegal immigrants. Since dollars
go further in many poorer countries, the current minimum wage is very
attractive to many non-citizens. And since the only way to catch all
these non-citizens would be a fascistic program of checking everyoneës
papers periodically, employers and foreign workers get away with it.
At the current
minimum wage, many hard jobs are uninteresting to the native born, so
they go to immigrants, legal and illegal. But if the minimum wage were
raised sufficiently ÇƒÏ and enforced ÇƒÏ then many of these jobs would be
of interest to the native born. Employers would likely favor the native
born since illegal immigrant labor comes with the risk of prosecution,
a risk worth bearing only if there is a significant saving in wages.
(Illegal immigrants who currently make more than the new minimum wage would be unaffected.)
So, despite the
higher-sounding rhetoric, the Democratic Party may well be the bigger
know-nothing party. Followers of Perot and Buchanan can rejoice.
So, is this progressive?
ï
Carl Milsted Jr. is chairman of the Libertarian Party of Buncombe County.
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