Can a $12 Minimum Wage Reform Welfare?

Low end jobs aren't going anywhere.


The biggest thing for anyone on the left or the right to beware of is the assumption that if we push Lever X, people will predictably do Task Y.

The entire Great Society disaster and every liberal proposal afterward has been a master class in demonstrating that trying to manipulate people often produces entirely unexpected results, despite a supposedly reliable system of incentives.

And that's the problem here.

A nationwide minimum wage of $12 per hour would shrink government, aid families, curb illegal immigration, spur high-tech investment, and boost GOP support among working-class voters, says Ron Unz, the California libertarian entrepreneur who wiped out his state’s Spanish-only K-12 classes.

The $12 wage would slash the huge taxpayer subsidies now given to companies that hire low-wage immigrants, and move tens of millions of Americans into the middle class and sharply reduce the 47 percent of the population who are now completely or partly dependent on federal handouts, Unz told The Daily Caller.

The plan is also likely to get traction because it offers the public a good-news alternative to the business-backed campaign to triple the inflow of low-skill immigrant labor during the next decade. If implemented, the $12 alternative plan would instead flood American businesses with Americans who have dropped out of the workforce, and also push low-skilled illegals to the sidelines and eventually south of the border, he says.

It's an interesting 'out of the box' proposal and I believe that Republicans do need to do a much better job of engaging lower income voters, though less so in California than in Pennsylvania or Ohio, but plans like these produce less predictable results.

It's not as if we have a surplus of jobs to begin with. Yes there are too many people illegitimately claiming benefits or just dropping out of the workforce, but it's not 1994. The economy is terrible and we don't have nearly enough jobs.

An expanded minimum wage will mean businesses cutting jobs, instead of creating new ones. The argument that an expanded minimum wage will boost businesses that are operating with minimum wage workers and catering to low income consumers because they will have more to spend is debatable. There's only so many cheeseburgers or 99 cent store products that people are going to  buy. And we're seeing people saving more in this economy, instead of spending. And those who don't save are not going to compensate for the extra cost of doing business in time to keep businesses from firing employees setting off a new spiral.

The people already hiring illegals to avoid paying them minimum wage and benefits will go on doing it and their numbers will grow. Furthermore in my experience, a lot of the people hiring Mexican illegals prefer them to American workers because they like the deference and the obedience. They don't like American workers and they don't want to hire them. It's a problem that we're not going to solve except through enforcement.

Finally, an expanded minimum wage may push some people off benefits, but it's more likely to lead to workers giving up jobs instead of giving up benefits.

This minimum wage argument is gaining ground among conservatives. This week, for example, conservative icon Phyllis Schlafly, called for an increase in the minimum wage. “Legislation to raise the minimum wage would elevate many low-wage earners above the income threshold that qualifies them for benefits and should result in reduced welfare spending,” said Schalfly, who earned the undying hatred of progressives in 1977 by blocking the Equal Rights Amendment.

“That’s a tradeoff Republicans could support,” she added.

It should, mechanistically speaking, but given a choice, especially in California, a lot of those workers will give up jobs instead of giving up welfare.

The phenomenon has been seen before.

Some of the companies who employ illegals “are competing on price with Bangladesh and India, and the only reason those companies are viable is that they are receiving massive subsidies from the U.S. taxpayer,” Unz said.

“Not only are they driving down the wage of native-born Americans, they’re also drawing much more money from the government than they’re providing in taxes,” he said.

But if the minimum wage is $12, executives won’t be able to build their business on cheap labor, and they’ll be forced to focus on higher-quality, high-tech, higher-productivity jobs don’t drain money from other Americans’ pockets, Unz said.

Except a $12 minimum wage won't do any of that. There's a reason why American Apparel is pushing Legalize LA. A lot of the garment industry workers are already illegal. The same goes for meatpacking and agriculture.

A minimum wage won't affect them unless the employers choose to pay it. Cheap labor will still go on being illegal labor.

And service industries, like fast food joints, which can't be outsourced, will also feel the burn.

Finally Unz's idea about high jobs is nonsense. A country the size of the United States can't live off high tech jobs. It doesn't work. And plenty of high tech companies find ways to drain money from taxpayers.

Low end jobs aren't going anywhere. Only enforcement can prevent the flow of illegal aliens. And deregulation can make it cheaper for lower end businesses to do business.