As amnesty becomes Barack Obama’s latest Bright Shiny Political Object, let’s not forget the previous one: hiking the minimum wage. The Obamanomics argument for minimum wage hike is that wealth redistribution creates jobs. Any law that forces money to disperse from The Few to The Many supposedly creates jobs, because The Many run out and spend it like crazy, creating bountiful opportunities for business formation and hiring. The eager recipients of redistributed largess sally forth with wads of government-provided cash in their hands, and businesses rise up to meet their needs, like flowers emerging from fertile ground to drink the spring rain. The fact that this has never, ever worked in practice, either in the United States of the 21st Century or anywhere else, does not diminish the intensity of Obama’s belief that it will start working any day now. The next round of seizure and redistribution will surely do the trick!
In case the point needs clarification: yes, the minimum wage is a form of redistribution. Employers are forced to pay more for labor that has not increased in value. The increased costs are passed along to consumers, often the same people who benefit from the increased minimum wage. A very large number of people who do not benefit from the minimum wage hike also pay these inflated prices. The government’s benevolent hand is highly visible to the beneficiaries, while the grasping hand is completely hidden from those who foot the bill. It’s one of the most perfect redistribution schemes ever devised, with virtually zero cost to the advocates, even when they fail to convince the public that a minimum wage increase is wise policy at the present time. It literally never hurts to try.
So if the minimum wage, like unemployment insurance, is supposed to provide an Obamanomic stimulus to the sluggish economy, on the theory that higher wages = more consumer spending = STIMULUS!, then what’s the deal with handing out millions of work permits to illegal aliens – a policy guaranteed to depress average wages?
A relatively small percentage of the U.S. workforce actually earns the federal minimum wage – about four percent of hourly workers, and only 2.6 percent of the total wage and salary base, according to the Pew Research Center. Half of them are less than 24 years old. The “rising tide” effect of a minimum wage increase doesn’t extend very far above the people who actually earn that wage, which is where the redistribution angle comes in. I’m not aware of a study comparing the number of above-minimum workers who thought they would get more money when the minimum wage was increased, versus the number of people who actually did see an increase in their pay, but that would be interesting to know.
In terms of economic stimulus through consumer spending, it would be more meaningful to consider average wages and purchasing power. Flooding the workforce with a huge number of new employees willing to settle for very low wages is guaranteed to pull the average down. It will also increase the already brutal competition for low-wage work, to the great detriment of young people trying to break into the workforce. The very same economic argument Obama uses to push a minimum-wage increase works against his amnesty proposal. If both policies are enacted, the result will be fewer jobs offered to a considerably larger pool of potential workers, a formula guaranteed to produce greater welfare dependency.
I hope no one remains gullible enough to think amnestied illegals won’t be fully jacked into the welfare state in no time flat – the Secretary of Health and Human Services has recently been musing about the importance of getting illegal aliens into ObamaCare – but since there are evidently still people who think illegal aliens will line up to pay hefty back taxes, I guess nothing should be taken for granted. Speaking of redistribution on a grand scale, wait until a few million imported clients trudge into Medicaid, or heavily-subsidized Affordable Care Act policies, where each low-income healthy participant becomes a cash pipeline from taxpayers to insurance companies. The redistribution of wealth doesn’t always involve robbing the rich and paying the poor.
In a similar vein, I hope no one is expecting the underground economy of illegal labor to disappear because Obama throws out five million work permits. Why would anyone currently taking advantage of alien labor sign up for the full panoply of government regulations and mandates? If anything, the underground market will flourish, because fewer resources will be devoted to policing it, and the existing regime wasn’t exactly doing a bang-up job. There’s not much of an incentive for those who currently employ illegal aliens to move from a cheap cash-under-the-table model to hyper-regulated lawful employment that could cost four or five times as much, when compliance costs and mandatory benefits are factored in. The only real pressure they’re likely to feel will come from current illegal employees who realize that joining Food Stamp Nation is a better deal than working incredibly hard for rogue employers who pay peanuts. That’s not exactly an outcome that will be cheered by American taxpayers, especially when the human waves from chain migration and the lure of future amnesty giveaways come rolling across the border. Last year’s border crisis was a mere warm-up for things to come, once the word gets out that Obama has disabled the U.S. immigration system… and the pressure groups emboldened by amnesty politics will ensure there are no future deportation crackdowns to restore it.
More than ever before, Obamanomics boils down to expecting thanks for increasing the theoretical pay for non-existent jobs. The whole notion of stimulus through redistribution was always silly; the government does not create healthy jobs, and while wise policies can play a role in making healthy job-creating opportunities more accessible, wealth redistribution never qualifies as such a policy. Even the premise of people running out to spend the money bestowed upon them by benevolent government is false – they tend to be more interested in paying down debt, and they certainly don’t use their “free money” to make investments.
An honest Big Government enthusiast should be appalled by illegal immigration, because it represents forced entry into a carefully balanced system. Nothing about the rationale for the New Deal or Great Society is compatible with mass immigration, especially when it is conducted in defiance of the law. Generous welfare states and open borders are impossible to reconcile, either as a matter of principle or in practice. It’s even harder to make open borders fit with an ideology that views employers as a transmission system for Big Government, serving as both tax collectors and benefit dispensers. We’re constantly told that we have to make ever-larger “investments” in education to build a better workforce, as though unemployment were more a result of poor worker quality than a lack of opportunities that can be exploited for a profit. How can that “invest in education” rhetoric be squared with a massive influx of teenagers and adults who were not educated in the American system, and sometimes don’t speak the dominant language very well?
None of it makes much sense, but it’s probably a mistake to assume that the people who push these ideas truly believe in them. Obamanomics is really all about expanding the wealth and power of government, an effort supported by increasing the regulatory burden on business, choking off the supply of full-time jobs, and introducing a new population of voters favorably disposed towards bigger government. From that perspective, amnesty and the minimum wage don’t seem like strange bedfellows at all.