Driving Down Wages

Immigration and our Borders Forum

There are two separate factors that make the labor of an illegal immigrant distressed labor. The first is that the wage base in the home country is much lower than it is in the U.S., so there is a great motivation to seek the higher wages. The second factor is that an undocumented worker is at a disadvantage because of the illegal status. A potential employer knows that somebody who takes the risk of breaking the law to find work is highly motivated, and has no bargaining power whatsoever.

Indeed the undocumented worker is at the mercy of the employer to uphold the complicity surrounding the undocumented status in order to avoid deportation. The employer knows the undocumented worker has no choice but to accept sub-standard wages. The employer knows he has the illegal immigrant over a barrel.

Under the remedy of a guest worker program, both of the two factors that make illegal immigrants' labor distressed will disappear. Under the guest worker status, an illegal immigrant is no longer illegal. Furthermore, they will no longer be working out of a foreign county with an economically distressed wage base. For all practical purposes, they will be legitimate members of the U.S. society, and will be entitled to the same wages for the same work as any U.S. citizen. Certainly they will demand and receive that kind of wage equity. They are already demonstrating and bargaining like a labor union with their demand for amnesty and other rights. I doubt that they are going to stand for working right alongside of American citizens for one-third the wage.

The disappearance of both of the distress factors will greatly increase the motivation for foreigners to seek work in the U.S. under a guest worker program. After all, if they were willing to take the risk of coming here illegally to work for slave wages, think how much more attractive it would be to come here legally and work for much higher wages.

But with this dramatic increase in the motive to seek work, there comes a corresponding decrease in the motive to hire them. Without low wages, what is the advantage to the employer? So, rather than bringing in twelve million outsiders to do the jobs that Americans won’t do, why not just increase the pay enough for those jobs so that Americans will do them? Otherwise, we will be paying that amount for those jobs to the outsiders anyway, once the twelve million of them are legitimized as guest workers. Furthermore, if we bring in twelve million outsiders and pay them the same wages as citizens, we will have twelve million surplus workers in our labor pool, which will drive wages down for everybody who was working before the twelve million were added.

I disagree that the employer of an undocumented alien holds all the cards. An employer who is not paying minimum wage is paying an illegal wage and can be taken to court and forced to pay back wages regardless of the status of the employee. There are additionally fines that can be imposed on an employer.
Failing to report the income earned on the labor of the illegal worker sets an employer up for tax evasion charges so the employer must declare income. The employer cannot reduce that income by the illegal wages so the employer must pay more taxes. Illegal documents are big business because employers want to be able to hire with the defense of not knowing their employees are illegal.
There may be some illegals who are working for less than minimum wage for employers who are willing to lose their business if caught. Thee are those who under-report income to avoid paying their alimony or child support. They would be paying employees under-the-table whatever their citizenship status. This will not disappear under immigration reform.
There are current constitutional protections that force employers to pay illegal workers the same wage as others. You cannot legally pay someone less because they are Mexican, regardless of whether you suspect their legal papers are phony. If you create a new working class with immigration reform and pay them less because of their guest worker status regardless of race, ethnicity and religion it goes to the courts to decide if guest worker status is protected. Maybe that is what business and Bush is pushing for, a legal loophole to avoid paying minimum wage legally.
In these days of "enemy combatants" not being considered prisoners of war and "SUV's" not having to meet car mpg rules I am not surprised by the term "guest workers" being pushed.

whisperpoint,

I agree that the employer does not hold all of the cards in the deal. I would be quite surprised if the guest worker plan allows a lower wage than what is legal now. I would think that if the illegal immigrants are legitimized, they will have more leverage in the bargain to get their wages raised.

I have always heard that Mexico has no middle class; that they have a very small class of very wealthy and a huge underclass of poor. Why does Mexico have such a screwed up economy? They have natural resources, and they have been around for enough time to develop into a prosperous nation. What is wrong there?

The Main Problem is the Mexican Government. Mexico has the resources to be one of the most prosperous countries in the world if it wasn't for the corrupt government which protects the rich. (sorta like here ) I heard that Mexico has more millionaires than Germany and Switzerland, yet half its population is supported by traditional low technology industry and agriculture.

To what extent is the Mexican goverment socialist?

EUCLID said: "To what extent is the Mexican government socialist?"

Where does Socialism come in to play?
The government doesn't care about all of its people. The government is run by a rich upper class that believes that the Mexican Indians are inferior to the "aristocratic" Spanish ancestry. I can usually tell the difference between the European and the Indian Mexicans and I can tell you that a huge majority of illegal aliens are the poor and forgotten Mexicans of Indian ancestry.

(you may have detected my socialist leanings but I certainly would never describe Mexico as even a tiny wee bit socialist.)

EUCLID said: "Wouldn't the people at the top get even richer if they would invest in their labor pool with capital and make everybody more productive? Even China has figured that out.

good point EUCLID, but I don't believe that the point in keeping the masses fed, healthy and educated is because it makes the rich richer, but the reason the rich should do what they can to keep the masses happy is so that they don't revolt and end up with a nonfunctional communist government. (China did finally figure out that a country's economy must be international and cannot be run from the presidential palace but must be allowed to flow freely).