Tuesday, February 11, 2014

Don't Raise the Minimum Wage

Raise the minimum wage has been a mantra for the left over the last year. It has even been adopted by idosyncratic thinkers like Ron Unz and within our realm, Randall Parker. It will insprie innovation and automation. True. It will help shift burden to employers that the government picked up with social welfare. Possibly. It will be good for immigration. Hold it. Stop. This will not do a damn thing about immigration. This is a Pied Piper policy being pushed by a smart but out of touch brainiac who formerly opposed the last chance to save California, Prop 187. For anyone living in the real world, this will only lead to greater problems.

Of course the left wants to raise the minimum wage. The left is funded by and returns the favor back to union groups. Many unions have negotiated within their collective bargaining agreements automatic kickers that maintain a employee's relationship to minimum wage. Any increase to minimum wage bumps their pay without any negotiations. Unions have been failing their labor clients for decades now, so this is a negotiating win for them without any work. That is the straight political play. Middle and small employers are already squeezed right now. The problem with US employment hiring has been big business who did not join in the last couple of "recoveries". They took advantage of their size and capital to shift manufacturing out of the country. This move would screw smaller businesses.

Raising the minimum wage will most likely lead to greater automation for firms that employ simple yet lighter duty jobs that can be automated (think fast food, warehousing, inventory control and clerking). This is only true if employers see positive demand growth, because right now capital expenditures and investment are down. Everyone has one foot out the door in case demand collapses. Raising the minimum wage will not only kick more people out of jobs but raise the bar on what it takes for skills and abilities to gain employment. It will not do a single thing about stopping the flow of illegal and legal immigration into a nation that is in the middle of a depression with no end in sight. Workers will get squeezed. What do you do with those people, Ron? Where do you put them, Randall? Sorry, Ron Unz has enough money to escape the terrible sections of the Latin American republic that California has become. He is not driving south of Main Street in San Diego. He is not handcuffing himself overnight in any barrio. Randall will tell you to move to "super zipcodes". That is terrific if you can afford the economic hurdle that is housing costs (try red states, tough luck in overpriced blue states). There are millions of average people who cannot advance or cannot afford those super zipcodes, and you are sentencing them to living in the maw or the coming American favelas. Get over your brainiac elitism and snobbery.

Here is the dirty secret to raising the minimum wage that the blinders wearing Unz does not want to admit. Raising the minimum wage actually gives employers a greater ceiling for paying employees cash under the table as illegals. It gives them breathing room. In California, there is state mandated disability that employers are required to pay for their workers. Raise wages, raise employer costs. There is more incentive now to hire illegals. I do not see Unz proposing a fine for employes of $20,000 for each illegal they are found employing, which would act as a disincentive since it would be a 40 hour work week cost for a minimum wage ee (at $10.10/hour). Shhh, I know manufacturing firms that partner with special Spanish speaking temp agencies for low skilled floor labor that most likely use fake social security numbers and rig the pay to kick more money to the temp agency.

Unz is a brilliant writer on other topics, but anyone who fought Prop 187 has zero credibility in my eyes on immigration. That was in 1994. We have twenty years to look back and debate who was right. Is California better or worse now compared to 1994 and for whom? The wealthy who live in enclaves? If Unz can look at the changes since 1994 with pride, then he must love fairy tales. I have looked at immigration numbers, and the middle class voted with their feet as they left California in droves in the '90s. Unz calls the raising of the minimum wage a bit of subterfuge to get what you want in immigration reform. That is exactly what the federal judge (Carter appointee) called the Prop 187 laws, which she said did not interfere with federal duties but were a roundabout way to make immigrants leave. Governing with trickery only can be applied when it pushes progressive policies and goals.

Illegal immigrants are a drain on an already bankrupt country. There are also assimilation issues Unz does not consider. To investigate those issues, maybe he should ask Compton how immigration has affected the natives? Here is a rather far out proposal for the idiosyncratic Unz that will more effectively deal with immigration. Hire able bodied but unemployed college graduates. Send them through a boot camp and perform a modern day Operation Wetback (Eisenhower's policy) in every state. It is not just the Southwest, but many other states have problems with illegals. Watch employers raise wages to pull in workers. Watch some neighborhoods clear out and then clean up. Watch automation and innovation occur if capital does not want to pay natives and trusts demand. I do not just want to here a policy about immigration that does nothing to stem the tide of entry. I want to hear from these fools' mouths what they want to do when these low skilled adults are on the dole and consistently being goaded by the media to be angry. Follow Unz and Parker and keep getting advanced degrees for your spot in the high rise condo right next to the sprawl of American favelas. It is the smart way forward for America!

1 comment:

Anonymous said...

"Raising the minimum wage actually gives employers a greater ceiling for paying employees cash under the table as illegals."

I am a Spanish-speaking lawyer and I can assure you that this is not true for any firm larger than a one-time day laborer.

I refer many people with no papers to employment lawyers when they tell me they have been paid less than minimum wage or worked more than 40 hours. The employer is required to reimburse them and pay all attorney's fees which are usually way more than the $ 20k Ron Unz suggested. The employees need no evidence beyond their word, the employer has to rebut their accusation with documents recording their pay.

Unz is right on this one. It rewards the working poor and creates disincentives for very cheap labor and the externalities it causes.

We already have a law that, in my opinion, is the perfect deterrent to illegal immigration. It's 287(g), it allows local police officers to perform immigration functions. It was defanged in 2009 but for a few years it was deporting huge numbers.