Government Interference in the Labor Market: The Real Immigation Problem

The "debate" between the major political parties in the U.S. regarding immigration shows that both camps entirely fail to grasp the reasons for the massive influx of recent years. If more people in the U.S. either understood the nature of a free labor market or were free from selfish reasons for wanting to promote its opposite, we would not be having our current immigration debate. Illegal immigration into the U.S. is a natural and expected result of government distortion of the market for labor.

Either through unawareness or deliberate avoidance of this, one major party is proposing, in essence, a maintenance of the status quo (amnesty and eventual citizenship for illegal aliens). The other would take things further, actively encouraging additional immigration in hopes of registering new voters for itself. The unintentionally humorous aspect of this supposed (slight) difference of position is that the mere discussion of the "status quo" option is already encouraging an increase in illegal immigration as aliens rush to enter the U.S. in time to be "grandfathered" by whatever new law is eventually passed. Most of those persons who eventually become U.S. voters can be expected to vote not for the party that proposed the "status quo" option, but for the other party. Regardless of this imbecilic political wrangling, however, it is evident that neither proposed "solution" shows any evidence that its proponents understand what is happening or why.

Whenever the fact that people who are simply trying to make a better life for themselves – to improve their housing, their clothing, their diet, the education of their children — is viewed as a problem, it is relatively certain that the real problem lies in state interference with natural market forces. And so it is with immigration. The problem is not that people want to come to the U.S. The only problems lie in why they want to come to the U.S.

In the immigration context, there are two primary and highly problematic aspects of government interference in the labor market. Addressing these problems would obviate the need to "do something about" immigration.

The first problem is the existence of the welfare state, which creates a disincentive to work among those already able to participate in it (citizens and some non-citizen immigrants already here). As non-workers' needs are met by redistribution of property confiscated from productive workers, the labor pool shrinks. Many find that they can live as well from the work of others as they could live from their own labor and logically, if not admirably, decide not to work. This coerced "charity" likewise attracts new participants to the system. Hence, people from the lower rungs of economically-backward societies are clamoring to be allowed to participate in our welfare system.

The second problem is the massive web of “employment law” (minimum wages, anti-discrimination schemes, statutes that create artificial bargaining advantages for unions, wage-and-hour laws, OSHA regulations, workers compensation laws, mandates on employer-provided insurance coverage, requirements of accommodation for disabilities; etc. etc.) that makes it artificially (i.e., something other than what an unfettered market would achieve without such interference) expensive to hire U.S. citizens.

Both of these methods of interference in the labor market work together to promote illegal immigration.  One type of immigrant comes to access welfare benefits (many of which are available regardless of legal residency status) such as "free" healthcare at emergency rooms in U.S. hospitals. Another comes to sell his labor at a mutually-agreeable (between himself and the employer) rate that is far below the cost to the employer of hiring a U.S. citizen, if the employer could even find a U.S. citizen that would rather take the job than participate in the welfare system. A third type is a mixture of both; a person who comes to work, but who also takes advantage of publicly-funded schools, job training programs, etc., all while working illegally and paying a minimum of taxes in the U.S. (presumably such a person spends a certain amount and thus pays some retail sales tax).

The illegal immigrant who comes to sell his labor can do so more cheaply than any U.S. citizen of comparable ability and skill because his status as an illegal (for the most part) prevents him from invoking U.S. labor laws on his own behalf. The government, in the guise of "protecting" the U.S. worker, has priced him out of the market. So long as an employer can hire illegals and in so doing save more money than he is likely to ever pay in fines for violation of immigration laws, he is likely to do so.

Adding to the illegal immigrant's artificial attractiveness in the labor market is that a significant portion of what would be his competition — the U.S. citizen – is enjoying welfare benefits instead of seeking the same job the immigrant wants.

Take away these distortions of the labor market, and immigration ceases to be a problem.  Without welfare, the first type of immigrant has no reason to come and the second type of immigrant will come only if he can out-compete a U.S. citizen for a job. Without welfare and the artificial expense of employment laws, the immigrant and the U.S. worker are competing on an even playing field. Each can price his labor according to his productivity and find his natural place in the labor market.  If the immigrant wins a job from a "native," we all win, because we get the benefit of his economically more-efficient production.  Thus, without welfare and employment laws, there would be no immigration "problem," only healthy competition for jobs, which drives down labor costs, which drives down the cost of every good and service that everyone wants and needs. Immigration under these circumstances would raise standards of living for both the immigrant and the pre-existing citizen, not lower them for the citizen.

In other words, remove the artificial distortion of the labor market, and everybody wins. Except politicians who must restrict economic activity in every conceivable way in order to have the power to make exceptions to these restrictions as a means of buying votes.

This is why no one in government is talking about the true problems, and dismantling these systems is not being discussed as a solution.  The solution to government interference in the market is never more government interference in the market, but that is the only thing even our “conservative” politicians ever propose. The parasitic class will always put its own, short-term interests ahead of the well-being of the people it purports to represent, and it is busy doing exactly that as each party races to out-pander the other in the vote-buying game that passes for modern statesmanship.

April 15, 2006