28 September 2010

Minimum wage arguments, immigration, some other stuff

EconLog | David Henderson | Caplan On Immigration

I pointed out here that ironically, the way the minimum wage law is enforced is what gives illegal immigrants (who would no longer be illegal under Bryan's preferred policy) an advantage in the competition for jobs. Illegal immigrants can credibly commit not to turning in a minimum wage violating employer. Legal immigrants can't credibly commit.
For evidence:
Marginal Revolution | Tyler Cowen | The high rate of employment for Mexicans in New York
In a time of widespread joblessness, Mexicans in New York have proved unusually adept at finding and keeping work. Of the city’s 10 largest immigrant groups, they have the highest rate of employment and are more likely to hold a job than New York’s native-born population, according to an analysis of the most recently available census data. They are even employed at a greater rate than Mexicans nationwide.

And as they have filled the city’s restaurant kitchens and building sites, they have acquired a reputation for an extraordinary work ethic.
There is more here. There are interesting implications for whether current unemployment is all about demand and whether marginal productivities justify the expected costs of hiring (some groups of) non-Mexicans:
One reason Mexicans have found work in such numbers, experts say, is that many are illegal immigrants, and less likely to report workplace abuses to the authorities for fear of deportation.

“Illegal immigrants are very convenient,” said Demetrios Papademetriou, president of the Migration Policy Institute, a nonpartisan research group in Washington. “Employers are quite interested in employing people who are willing to work and to overlook some labor laws.”

...Across the country, immigrants in general are more likely to be employed than the American-born. They tend to be more willing to move in pursuit of jobs and to take any job they can find, especially if they lack access to unemployment benefits.
Note there is also some self-selection going on here.  Only those most willing to work will bother to uproot themselves.

As well as:
Marginal Revolution | Alex Tabarrok | Structural Unemployment in South Africa

Unemployment in South Africa is now running at 24% overall with significantly higher rates for blacks. A shift away from low-skill labor combined with minimum wages and strong trade unions, however, has meant that it is very difficult to lower wages and reduce unemployment. From a very good piece in the NYTimes:
The sheriff arrived at the factory here to shut it down, part of a national enforcement drive against clothing manufacturers who violate the minimum wage. But women working on the factory floor — the supposed beneficiaries of the crackdown — clambered atop cutting tables and ironing boards to raise anguished cries against it...
Finally, you can also consult Jacob Grier's post today about minimum wage and other labor laws as they relate to service workers in Oregon and DC.

Getting back to Henderson's post:
Bryan's other error is to suggest that enforcing a minimum for native-born people but not for immigrants would help the native-born. No way. Would United Airlines want a pricing restriction that doesn't let it cut fares but lets Southwest do so?
I think this is correct, but irrelevant. Almost no voters think of the minimum wage as a floor on the price they get to charge for their services. I wish they would, because that's obviously what it is. But no one thinks of a minimum wage law as a prohibition on discounting their own labor.

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