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I’ve not wanted to weigh in on the new Arizona immigration law. But the law got me thinking in general about labor market discrimination. Some low-wage Americans bring suit against their employer on the grounds that discrimination by the employer is keeping their wages below what they otherwise “should” be.

Two points – one unrelated to immigration.

  1. Is it not odd that employers who actually hired these workers, albeit at lower wages than they feel they deserved, are the targets of lawsuits? After all, are not the the low wages of these workers caused by other employers choosing to NOT offer jobs to these same people?
  2. American employers who end up hiring illegal immigrants and are subsequently caught face severe penalties for doing so.

In either case, employers in industries where wages and skills are low face very costly risks when they hire either American workers at low wages or illegal foreign workers at low wages. Whether they choose to hire at all is an interesting question. Even if they do hire, it is not clear which worker employers would prefer to hire. If we assume the same productivity levels of each worker – and if we assume that you pay each worker the same, whether you hire an illegal or not is a function of what the expected costs of getting caught with an illegal as compared to the expected costs of being investigated for discriminating. Add to the costs of hiring American workers payroll taxes and the uncertainty of government policy which may impose additional costs and penalties upon you for not offering health benefits or certain working conditions, and it seems that the balance is tilted in favor of immigrant hiring even if the money wages paid to each group were identical.

I had one more thought. Think about the humanity of all this. In one case, employers are vilified because they seem to not be doing enough to help a low-skill (native) worker. In another case, in what could very well be the same exact job paying the same exact wage, employers are vilified because they are doing too-much to help a low-skill (non-native) workers. I don’t want to hear about the “legality” of immigration – I just want to point out the absurd position employers often find themselves in. There’s a good reason why I wimped out and am working “for the man.”

One Response to “Immigration and Labor Market Discrimination”

  1. Harry says:

    During my time as a Productivity Specialist, I have had two clients, one known to many, and one known to a good many, both of whom sold products consumed in the summer.

    The big one employed legal Mexicans for their major producing season, which ran roughly from September through March. I believe they were set up where they were, from the start, to take advantage of their geography to produce a product that was made by a workforce that was willing to work hard six or seven months a year, and go back to Monterrey.

    I never thought twice about the justice of this situation, because here was a company that offered good jobs that others would not take. How many UAW types want to work for eight months and be laid off, after all?

    Whoops, I forgot about the Jobs Bank. Have to rephrase the question: How many ordinary Texan free men and women would prefer a seven-day per week twelve-hour shift for six months over a five-day per week eight hour shift all year? Some may like it, but it is much easier to fill your plant with Mexicans.

    Now, I think it is wrong, unwise, foolish, stupid, and morally wrong to allow the Mexicans to come to the U.S. and have babies and expect U.S. citizens to grant them lavish benefits, like a free life and the privelege to vote for people who want to give everyone who votes for them a free life. Somehow therein is the problem, and it is not about immigration policy.

    Few of our relatives came over on the Mayflower, and few of our relatives are distant American Indians. (I wish I had at least one. I would open a casino.) However far back our pedigrees go, our ancestors came here to do free business, not to be taken care of. This is the reason why our country has had open arms to immigrants.

    We should welcome them, but we should not promise them or anybody else that they will get free $25,000 a year health care benefits, plus free school for all their kids, including 6X$50,000X4 at the University of California, plus unemployment compensation, plus an occasional $1000 stimulus check, plus child tax credits, plus $6000 for buying a Prius, plus $8000 as a first-time home buyer with no money down, financed by FNMA. If that’s why they are here, screw ’em.

    Surely Professor Wintercow will find this reasonable.

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