05 November 2011

Cheap Labor Is Not The Solution

The only significant impact that immigrants have on the labor market is to increase the supply of labor, which tends to put downward pressure on wages. Everything else equal, the only way an immigrant will be hired over a native worker is if he is willing to accept lower wages. In order to maximize profits, business owners look to pay the lowest wage possible without affecting marginal productivity. If an immigrant is willing to work for less, and he is productive enough, it only makes sense to choose the lower-cost labor. Billions of people the world over make this same decision on a daily basis while shopping for goods and services — it's called bargain hunting.

Here’s the problem:  the government mandates a minimum wage for citizens.  The government requires that people be paid a certain amount of money per hour, and the government also mandates payroll taxes, some of which the employer must match.  Toss in regulatory compliance for employers, and the cost of employment has a somewhat high floor.

Now, illegal immigrants, who can offer their labor under the table, are more than able to compete with this price because employers don’t have to pay them a minimum wage.  Citizens are prevented by law from competing with illegal labor on price.  As such, increasing the size of the labor market will have the adverse effect of causing citizens to be in a position where they will lose their jobs because they are forced to keep their wages high.

The proper solution to this problem, then, is the deregulation of the labor market.  Allowing an increase in the labor market without allowing citizens to compete on price is cruel and unjust, and therefore migrant workers should be prevented from coming to the United States until the federal government has removed the fetters binding American labor.

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