Dobbs-O-Nomics: Minimum Wage Hikes and Lettuce Patch Fascism

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CNN
anchor Lou Dobbs

major raison d’tre these days is the issue of “illegal” immigration,
as well as that of self-appointed champion of America’s shrinking
middle class. While I may not support every one of his opinions
(and indeed, I have
a few
of my own on immigration),
I will give him credit for placing such issues – and the government’s
lame response – squarely in the face of the public. He has
grown a very focused and loyal viewer base, and from the sound of
their comments, they intend to be a thorn in the sides of their
elected representatives this year. That is always a good thing,
and again, I’ll give Dobbs the props he deserves for getting voters
mobilized.

But there are
some places where I feel he glosses over a topic in exchange for
a good sound bite. The two cases in point regard his views on a
proposed minimum wage increase and the overall economics of illegal
immigration.

In a recent op-ed,
Dobbs claimed that an increase of the minimum wage to $7.15 an hour
is long overdue, will help bring people out of poverty, and will
not hurt overall unemployment statistics:

“The myth
that raising the minimum wage will lead to job cuts is just that:
a myth. In fact, research suggests just the opposite. According
to the Fiscal Policy Institute, since 1998, states with higher
minimum wages experienced better job growth than states paying
only the federal minimum wage. Among small retail businesses in
those higher minimum-wage states, job growth was double the rest
of the country.”

What does one
have to do with the other?? The vast majority of jobs in this country
already pay more than the minimum wage. We need to look at the general
economic picture of those states before we jump to any conclusions.
What kind of jobs are they talking about, and who is doing them?
A hot local job market will demand higher wages across the board,
regardless of what the mandated minimum wages are.

Here are some
other pesky facts that Dobbs failed to mention in his op-ed:

  • According
    to the Bureau
    of Labor Statistics 2002 report
    , of the 72.7 million hourly-wage
    workers in the US, only 2.2 million, a mere 3%, received minimum
    wages. While that’s bad for them, it’s not a national crisis.
  • Only 5.3%
    of minimum-wage workers come from families below the poverty line.
  • The highest
    proportion of minimum wage workers were in the retail trade (8%),
    whereas agriculture only claimed 2%.
  • The vast
    majority of minimum wage workers either have second jobs or live
    with other family members and are not sole-source providers of
    income.
  • Minimum
    wages provide artificial barriers to those seeking their first
    job experience. Unemployment among 16–19-year-olds was 17.3%
    in 2005, as opposed to 5.6% overall. When split out by ethnicity,
    Hispanic and black teens had unemployment rates of 25% and
    40% respectively. Analysts have been railing for decades about
    the social effects of youth unemployment, without even considering
    as a potential causative factor the ever-increasing minimum wage
    during all that time.

While the idea
of raising minimum wages may provide a feel-good sound bite, it
does nothing to address economic issues in specific sectors of our
population that are affected most by unemployment. A productive
employee won’t be getting minimum wage for long, as it’s in the
employer’s best interest to retain productive talent, and they know
have to pay more for it or lose it to the competition. And, as many
have argued at Mises.org, Cato, and elsewhere, if minimum wages
were an economic panacea, why stop at $7.15? Why not $12, $20, or
$100?

A Dime-A-Head
Increase for $16/hr?

It also appears
that the minimum wage issue doesn’t affect illegal immigrants,
either.

“Amnesty” proponents
often proclaim that the so-called “undocumenteds” do work that American
citizens either (a) won’t do, period, or (b) won’t do for the kind
of wages and benefits offered by employers, particularly when it
comes to harvesting produce.

Again, according
to Lou Dobbs, “undocumented” lettuce pickers in California earn
an average of $9 an hour. This is significantly higher than
the minimum wage, however, which suggests there is actual competition
for those jobs even among so-called undocumenteds. Nevertheless,
the message is that US citizens fail to show up, and there is an
abundance of illegals willing to work. So the farmers do what they
have to in order to get the crop in – nudge-nudge-wink-wink
– and of course conveniently save a lot of money in wages and
benefits while they’re at it.

But what Dobbs
recommends as a remedy is something out of Engels. He claimed that
if growers raised the price of a head of lettuce by only ten
cents, they could afford to pay the harvesters Dobbs’ idea of
a “living wage” of $16 per hour. This sea change, combined with
tough enforcement of laws banning the hiring of illegals, would
somehow attract heretofore recalcitrant US workers. Seeing the opportunities
dry up in the face of newly inspired domestic competition, the undocumented
Mexicans would drift back over the border of their own accord, and
that would be that.

There are several
problems with this idea:

  • In the
    first place, I can see them trying to jack up the price a dime
    a head and even forcing employers to pay more – but they’ll
    never combine that with strict enforcement of labor laws, which
    would leave the US more attractive to undocumented workers than
    ever. Think it’s bad now? Try doubling the wages and watch the
    Mexican flood come in.
  • According
    to Safeway, the price this
    week for a head of iceberg lettuce is $1.49. So raising it a dime
    makes it 1.59. If you eat two heads a week, that’s a $10.40/annum
    increase. Now multiply that times all the other fruits
    and veggies you and your family would like to consume in a year
    – it adds up quickly. If you are at the low end of the economic
    scale, the pinch is even tighter, and you may end up being unable
    to purchase all the nourishing food you require, settling for
    either reduced quality, or alternatives that aren’t as nutritious,
    which could impact your long term health.
  • The last
    time I checked, there wasn’t a veggie-grower cartel in
    this country, involved in uniform price-fixing. Perhaps if there
    were, Dobbs’ plan could be carried out via some sort of egregious
    federal legislation – and you could count on the Congress
    to do it, if it would placate enough voters. There are still –
    albeit subsidized – independent growers of produce in this
    country, who remain at least nominally in competition. Even if
    some growers were convinced to raise their prices and pay their
    workers more, they would be under increased economic pressure
    and risk losing significant market share, as others would not
    see the need for change. Ergo, unless everyone agreed, or were
    forced to by law, it simply will not happen.
  • If such
    a plan was legislated by Congress, we would all pay a high price
    for it. The agricultural lobby is powerful, their clients having
    received subsidies for seven decades or longer. You can bet such
    a bill wouldn’t be passed unless those subsidies were increased,
    as well. Of course, as it costs the government thirty cents or
    so to deliver every dime’s worth of “benefit”, the increased costs
    to taxpayers for that “living wage” head of lettuce could really
    add up.
  • But wait,
    the nightmare isn’t over. Now we have lettuce growers being forced
    by government fiat (and increased subsidies) to pay $16/hr and
    “hire American”. Where will they find the workers they need if
    they can’t hire illegals? I can visualize this flood of unemployed
    youth from South Central L.A. spreading out into the central California
    countryside and trying to harvest vegetables for the first time
    in their lives. A sudden, dramatic increase in wages might indeed
    attract more homegrown workers, but are they the workers the farmers
    need? Will they actually bring some coordination and a good work
    ethic to the job? Presumably not. So the farmers, despite their
    subsidies, now have to contend with a bunch of overpriced, inexperienced,
    attitude-challenged workers to bring in their crops. Expect reduced
    productivity and a lot more waste – and I would also expect
    the cost of a head of lettuce to go up a lot higher than a dime.
    Say what you will about “living wages”, but those new-hire’s skills
    would not be worth $16/hr. They’re probably not worth $9. It will
    be an economic disaster for all involved, and the growers (and
    their customers) will be pining for the “illegal” Mexicans to
    return and restore stability.

One could not
pass legislation enforcing this without violating the rights of
farmers, farm workers, taxpayers, and Americans of more modest means
who can’t afford higher grocery bills.

Conclusion

The
minimum wage pseudo-debate is a typical election-year red herring,
and Lou Dobbs should have known better than to fall for it. Our
present immigration situation is the price Americans are willing
to accept, whether they’ll admit it or not, to have low-cost, plentiful
and nourishing food on their tables, not to mention a lot of other
services they don’t want to pay a king’s ransom to obtain. Dobbs’
economic notions in both these debates are simply unsupported by
political and economic reality, and would engender a social and
economic nightmare to implement, but with no discernible long-term
benefit.

June
23, 2006

Thomas Andrew
Olson [send him mail]
is a New York-based writer and speaker, whose topics range from
technology and the future to politics and policy. Here is his blog.

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