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May 14, 2018

Let the Market for Domestic Workers Raise the Minimum Wage in the USA

Ever since at least the time of Queen Elisabeth the First, workers have objected to open immigration on the rational economic grounds that “foreign” workers drive down wages. Employers, on the other hand, have always been for open immigration for exactly the same reason. Employees want the protection of a high minimum wage; employers object that, if wages are set by government rather than the marketplace, some of them will find themselves with costs which put them out of business and that a government-set high minimum wage will reduce employment.

We can solve part of both problems at once and call the bluff of both worker groups and employers. All we need is a tweak to the rules for H-2A (agricultural) and H-2B (other temporary seasonal) workers. Currently an employer must demonstrate that it can’t hire American workers, usually by running an ad and not getting responses and prove that “Employing a worker on an H-2B (or H-2A) visa will not negatively affect the pay or conditions of US workers”. The second condition is usually met by saying that no Americans take these jobs so their wages can’t be harmed.

The Trump Administration has been reducing the number of such visas available. There are more applications than visas so would-be employers must enter a lottery. Famers say crops will rot in the fields; crab canners say they can’t can crab; resorts say they will be short-handed this summer.

  1. Let’s take the limits off the number of temporary visas PROVIDED THAT such jobs must pay at least 150% of minimum wage and must be advertised to Americans at that rate. If there are still no American applicants, bring in foreigners who are willing to work and pay them at least 150% of minimum wage. This assures that the “need” for visas is not created by offering the job at below-market rates. This forces these jobs, many of which are very hard work, to compete with fast food jobs. May lead to higher wages in many fields but that wage won’t be legislated – it’ll be market driven. We may have to pay more for crab and fresh vegetables; tough, that’s what it costs to get workers to can the crab and pick the veggies.

BTW, increasing the supply of jobs available at more than minimum wage helps make the case for strengthening the requirement that healthy adults must work to receive welfare benefits except in some cases where they are sole caregivers. The fact that it is often unprofitable to swap benefits for a minimum wage job has led to an increase in voluntary unemployment which is unhealthy both for the economy and the non-workers; we can and should increase job availability and decrease benefits for those who choose not to work.

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