Showing posts with label Wages. Show all posts
Showing posts with label Wages. Show all posts

Thursday, March 13, 2014

Five Things The Cato Institute Got Wrong About E-Verify

To see the Cato Institute's Policy Analysis, click here.

1. The only reason labor-intensive farming exists is because there are migrants willing to work for low wages.

Especially in the era of NAFTA. What happens is a company, say, Milwaukee Tools, relocates to Mexico, taking the jobs with them. There, they hire Mexican nationals who either already possess some, albeit, rudimentary skills, or are deemed capable of assimilating said skills quickly.

While this is happening, the U.S. Federal government is subsidizing corporate grain producers in the U.S., making it cheaper for the Mexican government to import (duty free) grain from the U.S., undercutting their own farmers.

Those farmers, being forced off the farm in their own country, lack sufficient skills to get hired by the recently relocated U.S. manufacturers, flee to the U.S. in order to find work, displacing U.S. citizens due to the immigrants' willingness to work for less.

This becomes self-fulfilling. The farmer (and by ‘farmer’ I mean the large corporate farms) knows that migrants (especially illegal migrants) will work the fields for a lower wage than a non-immigrant will. This has always been the case, but since the advent of NAFTA, its never been more true.

The farmer decides that he will only hire illegal immigrants, in many case knowing they are illegal, and at times blatantly hiring them even while being audited by ICE.[1].

These unsavory employers don’t even try to recruit legal workers.The Cato Institute would have you believe that farming would cease if it weren’t for illegal immigrants.

2. E-Verify is too expensive and should be abandoned.

In its ‘Policy Analysis’, which is more marketing than analysis, Cato asserts that E-Verify can cost as much as $147 to the employer. If there are employers who spend that much to administrate a free program, then there are some people running businesses that are not very good at it.

Here, Cato uses a very old tactic: taking the most inefficient employer's costs and labeling them as standard. The tactic has been used in minimum-wage issues, regulations, etc.

Since E-Verify is provided free[2] from the federal government, the costs mentioned in the Cato analysis are “internal costs"[3] which are entirely in the control of the employer. Besides, there are always some costs in hiring that employers will temporarily shoulder – temporary because as we all know, costs are passed on to the customer.

3. Unauthorized immigrants lift everyone’s wage.

In fact, the opposite is true. In a study by George Borjas, a Harvard economist, immigration (and that would include illegal immigration) drives down the average annual wages of native workers by 4%, and by those native workers without a high school diploma, by 7.4%.[4,5]

While making this claim, Cato engages in bald-faced stereotyping racism:

“Natives have a comparative advantage in jobs that require communication, while low-skilled immigrants have a comparative advantage in brawn…”[6]

Hmmm. The statement speaks for itself.

4. E-Verify drives illegal workers to break the law.

The paper’s author claims that E-verify forces illegal workers to steal legal workers identities in order to gain work or to work ‘under the table’.

That’s like saying that drugs laws force drug dealers to lie about where their income comes from.When an illegal immigrant commits further crime, in this case identity theft, in order to earn money while here illegally, that simply reinforces the fact that illegal workers aren’t necessarily just ‘trying to better their lives’. They may be trying exactly that, but that’s not ‘all’ they’re doing.

Stealing the identity from someone who is legally employable only makes it harder for that legally employable person to work. And that may take food off their table or force them into homelessness, or to accept any low-paying job they can get, squaring the circle...

E-Verify doesn’t compel someone to steal someone else’s identity. It does, however, incentivize an illegal worker to commit more crime, thus proving that illegal workers aren’t too awfully concerned about our laws to begin with.

But, we already knew that.

5. If, in fact, all the claims made by CATO were true, then why would many U.S. companies voluntarily use E-Verify? 


Put a fair market wage on the job, an honest day's pay for an honest day's work, and there will be plenty of native born workers willing to do the job.

The only logical reason for the resistance to nationally mandated E-Verify is to provide a mechanism for unsavory business people to exploit illegal workers for their own financial gain.

It’s not about opportunity, it’s not about being unable to find native workers willing to do the work.

It's about greed.

The Cato Institute would have you think that E-Verify will destroy business and cripple the economy. It won't, but crying 'the sky is falling' is the last tool left for unscrupulous employers who feel they have a right to game the system.




[1] http://www.ice.gov/news/releases/1205/120501seattle.htm
[2] http://www.uscis.gov/e-verify
[3]Cost Per Hire, American National Standard. Society for Human Resource Management. http://www.shrm.org/hrstandards/publishedstandards/documents/110096%20hr%20standards%20booklet_web_revised.pdf
[4] http://ksghome.harvard.edu/~GBorjas/Papers/QJE2003.pdf
[5]Steven Camarota 1998. "The Wages of Immigration: The Effect on the Low-Skilled Labor Market," Washington D.C.: Center for Immigration Studies. Camarota, Steven A. 1997. "The Effect of Immigrants on the Earnings of Low-skilled Native Workers: Evidence from the June 1991 Current Population Survey," Social Science Quarterly, Vol. 78.

Thursday, March 6, 2014

People Expect Better From Leaders...

Walmart once again tops the list of Wisconsin employers who consistently abrogate their responsibility to pay their employees a living wage so they don’t have to rely on public assistance.

In years past, if you worked for Walmart and only worked part time, you didn’t qualify for the company’s health insurance plan, or it was prohibitively expensive. That forced many people who worked for such companies (Walmart is only one of many) to seek help elsewhere to acquire insurance, etc. for themselves and their children.

As the chart shows, in part because of the economic meltdown, and in part because of the company’s well-known practice of paying below-market-value wages, BadgerCare enrollment was steadily increasing but by the 4th quarter of 2009 (point ‘A’ on the chart) had leveled off and stayed that way until the 4th quarter of 2011 (point ‘B’), when Walmart began increasing the hours provided to associates, throwing many off BadgerCare, due to a policy change in the state’s health insurance plan.

At first glance this doesn’t seem like it’s a problem, until you consider that the increase in hours worked (at below-market-value wage) isn’t enough to make up for the increase in insurance premiums. So, the workers get squeezed even further.

Perhaps the worst of all this is that this company, maybe more than most, is in a position to demonstrate genuine leadership and lead the way away from survival wages to wages that provide the means for families to thrive, and prosper.

I’d like to think that there are many folks in management positions who’ve been lobbying for exactly this kind of change. Think about this for a second: remove all the negativity associated with low wages and what is left?

You’re left with a very well-run organization – there’s no disputing that Walmart is the leader when it comes to world-class distribution practices, having invented many industry benchmarks over the years.

If you’ve ever seen the inside of one of their distribution centers then I’m sure you’ve marveled at how this company can keep track of the thousands of products they sell, keeping their inventories and sell prices as low as possible while still meeting market demands. Additionally, who could dispute their forecasting techniques? In these respects, there is no better company on the planet.

The company’s top leadership should set the example with respect to employee compensation - and be the paradigm in this area as well. Granted, changing corporate culture is often a very difficult thing to accomplish. Walmart is a great company – except in this area.

In fact, it is exactly that lack of ‘push’ from top management that turns public opinion against Walmart. The company could be the ideal of American employers, yet sadly, so far has chosen not to.

Yet, given the company’s performance in the technical areas of meeting consumer demand while realizing very good profits, there’s no doubt whatsoever that they can be successful in this effort – all it takes the political will to do so, and that must come from the very top.

Just think of the respect this company could garner by resetting the terms of its implicit social contract. It would earn this company greater profits than what they experience currently. Americans love success stories, and in every aspect of conducting business, Walmart is a great success story – except for one.