The Unintended Consequences of "Living" Minimum Wages
The presumption behind minimum wages is simple: business owners will refuse to pay “living wages” to unskilled workers unless compelled to do so. Of course, if you buy into that theory, you also must agree that every worker is entitled to a “living wage.” The problem with these presumptions is that neither is true. Unless compelled otherwise, a business owner will pay an employee whatever it takes to retain that employee in a free market. The jobs requiring the least skill attract the broadest number of potential workers, increasing competition for the position, hence pressuring wages. And no job guarantees a “living wage.” In fact, the term “living wage” is vague which might make it a useful political term but otherwise it is of little practical use. It is yet another political conflation of entitlement, charity and earnings that can be used to bludgeon free market conservatives.
However, the minimum wage and minimum wage laws do have their unintended consequences. While most Americans view minimum wages as barely worthy of effort, immigrants from many countries see these wages as a coveted opportunity to break free of crushing poverty. Unskilled workers from many countries, especially Central and South America, risk everything to flock here illegally to take minimum wage positions. Many of the jobs taken by illegal immigrants were once the entry level jobs taken by unskilled Americans, many of them teenagers and part-time workers. All of us who’ve raised children understand any reluctance to hire teens. And we can also appreciate the difficulty associated with juggling a schedule of part-time workers. So for those jobs requiring little skill and interaction, it is no wonder that employers prefer highly motivated immigrants willing to work full-time.
However, within the overall economy, immigrant labor is costly. Incomes for teens and part-time workers are generally supplemental; their needs for housing, food, transportation, healthcare are primarily the responsibility of other family members. Illegal immigrants making minimum wages, however, and their families, need other services – education, food stamps, housing assistance, unemployment compensation, healthcare assistance. These things are not affordable for one working at minimum wages so they must be provided as government assistance. The “living wage” argument for minimum wages has thus become a self-justifying argument.
Though it is politically incorrect to do so, it is important to point out that the immigrant community is very, very good at identifying and utilizing benefits programs available to them. The rise in the rate of children born to unwed mothers, especially in the Latino community, can in great part be attributable to the availability of benefits for unwed mothers. Public assistance in housing, food assistance, health care and general welfare may be jeopardized if a husband or father is acknowledged in the US. So enterprising immigrant “husbands” and “wives” remain technically unattached, at least as far as the government is concerned, so that their families may qualify for additional benefits.
On the other hand, it has become increasingly difficult for American young adults and teens to find gainful part or full-time employment. Unemployment rates among the young remain staggeringly high. And while the lessons to be learned in entry level, low-skill, part-time work may be difficult and though teens may not be the best of workers, this kind of training is no less essential in teaching young Americans the value of being presentable, reliable, honest, on time and industrious in exchange for wages. This is the most basic American contract, the key to independence. I’m afraid that many children today will never experience that humbling series of first jobs. Many may never appreciate the fact that washing dishes or working a flat grill is hard, worthy work but not something that necessarily makes for a comfortable middle class life.
To conclude, minimum wage laws have displaced traditional entry level workers with immigrant workers, many of whom are in the US illegally. These inflated wages provide the incentive for illegal workers to come here, however even “living” minimum wages are insufficient to support a family. Hence, immigrant workers must take full advantage of government programs for the “working poor;” healthcare, housing, food, childcare and other assistance programs. This has led to an insidious increase in the number of children born to unwed mothers, especially in the Latino community, where acknowledgement of a “spouse” in the US might jeopardize benefits. In the meantime, American teens and other young adults are crowded out of entry level positions and are deprived of the important lessons associated with such employment: the value of all hard work and the need to develop drive, good work habits and real marketable skills if one is become a self-sufficient, successful citizen.