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May 31, 2006

A different angle on minimum wage laws

Dale Amon finds an interesting aspect of both minimum wage laws and illegal immigration:

I realized this morning there is a way in which politicians can hide much of the pain [of minimum-wage induced inflation] indefinitely: illegal immigration. Think it through. Raise the minimum wage in an environment where there is cheap, willing labour, undocumented and outside the system. What is the rational employer response? Raise wages for legal employees and export the costs to the undocumented workers. Illegal immigrants are not voters so this is a win-win situation to both the ruling class and those who keep them there. The voters get a higher real wage and living standard because the inflationary cost has been shifted. The pain has been exported outside the political game.

Statist politicians cannot do anything about illegal immigration because if they stop it, the deferred inflation will cause prices to rise enough to erase the excess income of their constituents. Employers will have to either drop low end jobs or else raise prices to support them. Voters will not be happy and it is well known the wallet is a bigger determinate of election outcomes than just about anything else. So, QED, illegal immigration is now a structural requirement of the centralized Western bureaucratic state.

That's a connection I'd never thought of myself: I wonder how close to the truth it is . . . especially in the United States, where the illegal immigrant debate is generating such huge amounts of heat.

Posted by Nicholas at May 31, 2006 12:15 PM
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