Sunday, February 25, 2007
Immigration and Minimum Wage Issues
In a memo I came across on the interent, Alan Krueger, the Bendheim Professor of Economics and Public Policy at Princeton argued that increased immigration has little impact on wages for low income domestic workers. He goes on further to argue for raising the minimum wage, if we want to be serious about helping low income workers. It is strange to hear an economist that is arguing pro minimum wage laws, but that is exactly what he does. Im sure he is aware that minimum wage laws and increases often cause an increase in structural unemployment. The equilibrium wage is lower than the policy set market wage, and will result in less positions of employment demanded. So in the end, instead of helping a portion of low income workers by raising their wage, they are confronted with unemployment. Raising minimum wages will only take away more jobs from domestic workers, since they are the ones which the new laws will affect. Illegal immigrants are often paid under the table, and immigrant work is more like a black market for labor. The black market price for immigrant workers will not rise like that of the legal domestic worker who would be entitled to a higher wage under the new law. This will in turn put more strain on domestic workers looking for employment in low-skill industires. Krueger goes on to say how we must protect the rights of illegal immigrants and should prevent the exploitation of immigrant and domsetic workers. I believe we should protect peoples rights, but saying that we are going to prevent exploitation is just silly. Exploitation is one of the keys of capitalism, without exploitation there would be no profit. In actuality every worker regardless of wage is exploited in a capitalist economy.