Mickey Kaus: Let's Magically Raise Wages

From Santiago J. Valenzuela

Mickey Kaus proves that nativism (and really bad economics) is not the sole realm of the right:

The solution is tight labor markets. Get employers bidding for scarce workers and you'll see incomes rise across the board without the need for government aid programs or tax redistribution. A major enemy of tight labor markets at the bottom is also fairly clear: unchecked immigration by undocumented low-skilled workers. It's hard for a day laborer to command $18 an hour in the market if there are illegals hanging out on the corner willing to work for $7. Even experts who claim illegal immigration is good for Americans overall admit that it's not good for Americans at the bottom. In other words, it's not good for income equality.

The idea that government can artificially tighten labor markets and cause a rise in wages, is one that is easily disproved in any Econ 101 course. Businesses do not have an unlimited supply of money in some vault just waiting for a benevolent government worker to tap into for redistribution to the poor, exploited workers. A business has a limited amount of income which is invested in its employees and its growth.

The cost of minimum wage laws is twofold.  First, it slows down economic growth by increasing the cost of doing business, substantially. This is bad for everyone, but even the poor are hurt by such laws, despite the fact that they are enacted for their supposed benefit.

For example, you and your friend are looking for a job. An employer can hire both of you for $10 per hour each, but because the government raises the minimum wage to $20 per hour, he can only afford to hire one of you (and you get to do the work of two men!) While the person who gets the job might appreciate the extra salary, the man who doesn't could care less if someone else gets a higher wage at the expense of him being unemployed. Worse yet, the business may just move its operations overseas where labor is more affordable, and that means neither you nor your friend has a job!

The government, attempting to play master planner with the economy, hurts us all whether we're rich, poor or middle class. Only free markets (or capitalism), can accurately determine supply and demand and set wages and costs.  Business costs are not pulled out of a hat. They reflect economic reality in a competitive marketplace, and raising them will cause economic pain to everyone.

As to those "experts" who claim that immigration hurts America's poor, they should turn in their "expert" credentials and leave the debate to people who can understand basic economics.

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