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No, No, Destroying Jobs is a Feature, Not a Bug!

July 25th, 2006 · No Comments

If a libertarian had written this New York Times op-ed as a piece of Swiftian satire, I can only assume it would have been regarded as ham-handed and over-the-top. But barring some recent and little-publicized reversal of ideological polarity, I’ve got to suppose quondam presidential aspirant Mike Dukakis and UCLA prof Daniel Mitchell are in earnest. Their core idea:

If we are really serious about turning back the tide of illegal immigration, we should start by raising the minimum wage from $5.15 per hour to something closer to $8.

Following this modest proposal, we’re treated to an unnecessarily long rehash of the argument that it’s a canard to talk about “jobs Americans won’t do” when, after all, Americans will do most anything at some wage. This is, of course, an obtuse response, though I lay the blame for its familiarity with the immigration advocates who provoked it by crafting their talking points for an audience brighter than the average toaster. The obvious rejoinder is that very, very many of those jobs simply wouldn’t exist at the wage levels necessary to fill them purely domestically, unless we assume that the demand for landscaping is totally inelastic.

But don’t worry, Dukakis and Mitchell have anticipated that objection. In fact, it’s the crux of their case! You see:

If we raise the minimum wage, it’s possible some low-end jobs may be lost; but more Americans would also be willing to work in such jobs, thereby denying them to people who aren’t supposed to be here in the first place.

Again, but for that byline, I’d read the satirist’s ironic understatement here: It’s not possible that a minimum wage hike would destroy jobs, it is—notwithstanding the hoary progressive tradition of insistence to the contrary—the crucial presumption underlying their plan. Because Dukakis and Mitchell reject, for eminently sound reasons, schemes to seal the borders with fences or create intrusive national ID systems and verification requirements for employers. So in effect we’re being promised that raising the minimum wage will entail “turning back the tide of illegal immigration” as a purely economic consquence.

But gosh, since “[m]illions of illegal immigrants work for minimum and even sub-minimum wages,” wouldn’t pumping up the minimum hourly wage by a few dollars entice still more workers over the borders? Well, no, not if you assume that whatever incentive is provided by the higher wage gets washed out by such dramatic job shrinkage that the expected value of hoofing north drops despite the significant income boost for those lucky enough to find a job. (And add the assumption that you don’t just drive that many more into the illicit economy paying those “sub-minimum” wages.)

I’m guessing any conservative economist who predicted employment contraction of that magnitude following a $3 hike in the minimum wage would get roundly blasted as an alarmist wingnut and shill for business. I’m morbidly curious to see whether Michael Dukakis can get away with it, as long as the mojados are supposed to bear the brunt of the losses.

Tags: Economics