Silicon Valley millionaire Republican Ron Unz wants a higher minimum wage but not for the right reasons. He believes that if the minimum wage rises enough that immigrants will lose their jobs and not continue to stay in the U.S. This will then discourage immigrants to even come to the U.S. in the first place. Which could then decrease welfare expenditures in the long run. His anti-immigrant perspective is under scrutiny, but he does have some valid points that are supported. For example the government pays billions to low-wage employees who are not able to get by on full-time salaries, passing the bill would decrease the money spent on these programs. He told the New York Times "doesn't it make more sense for employers to pay their workers than the government?"
http://america.aljazeera.com/opinions/2014/1/unz-california-minimumwagehike.html
6 comments:
If the minimum wage rises, I don't think most immigrants will lose their jobs. One, immigrants, if they are not educated, work illegally at another immigrant's business and therefore, the rise or fall of minimum wage does not matter as much. Second, if immigrants are educated, they would acquire higher paying jobs. The problem that raising minimum wage can cause is the increase in commodity prices as businesses will have to pay more to hire basic workers. There may be labor layoffs as businesses find ways to reduce labor cost. The end result might not necessarily be that immigrants going back to their home countries, but that more people losing their jobs.
The Federal Reserve Bank of Dallas actually did a case study on the effect of Minimum Wage Hikes on Immigrants. I think you would be surprised to hear the results. Teens, young adults and immigrants account for a large share of those who would be affected due to their less formal education, limited English proficiency and lack of institutional knowledge. BUT in their analysis, they identified that higher minimum wages benefited adult migrant workers with no adversely negative effects. You can read more of the details here: http://economistsview.typepad.com/economistsview/2008/05/the-effect-of-m.html .
Thank you for the link, Lidia. I went back to the Federal Reserve Bank of Dallas website and found Orrenius and Zavodny's research paper in pdf. In their paper, the authors focused on three groups of people: less-educated adult natives, less-educated adult immigrants, and all teens (ages 16-19). Their findings indicated that higher minimum wage boosted average hourly earnings among adult immigrants. Moreover, they did not find any evidence of adverse employment or hours effects among this group. However, they did find that among teens, with a difference by gender, there was a decline in employment due to higher minimum wage. Their explanation was that because teens are inexperienced and unskilled, they are replaced by adult immigrants or adult natives who are more efficient at work. In that way, employers could reduce their labor cost. The authors also stated that "increases in the minimum wage might have no effect on undocumented immigrants if their employers do not obey minimum wage laws" (pg. 19). But the results are not concrete as the undocumented immigrant population may have been largely underrepresented in the surveys. Here's the link to the study pdf. http://www.dallasfed.org/assets/documents/research/papers/2008/wp0805.pdf
Raising the minimum wage would actually increase the incentive for immigrants to come work in America because immigrants would now see an even bigger increase in wages from their country to ours. I doubt this would lead to a decrease in immigrant jobs because one we have laws that restrict discriminatory hiring and firing and two most immigrants are good workers.
In my opinion, higher minimum wage will bring more immigrants to work in America, not discouraging to work in America. Possibly, some immigrants can lose jobs because one of the reasons that firms/factories hire immigrants is cheap labor. Higher minimum wage can increase unemployment rate of immigrants but it will bring more immigrant labor forces into America.
An increase in the minimum wage would actually increase the supply of immigrant workers in the United States. As it stands, low-skill immigrant workers have the highest potential income increase in the United States compared to their original country. I do agree that the United States needs to decrease welfare expenditures in the long run and raising the minimum wage could achieve that goal if done the right way.
For example, Ohio's minimum wage in 2014 is $7.95 and if a person works 40 hour weeks they make $318 a week. Per year, that person's gross income would be $16,536. That is not a living wage in the United States, so a person needs additional assistance through government welfare programs. If the minimum wage is increased to a living wage, then the person might not need governmental assistance and could possibly decrease welfare expenditures.
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