President Obama would like to legalize the vast majority of immigrants who came into this nation illegally. Indeed, his commitment is so strong that he appears to be considering suspending deportation and giving work authorization to a large number of them this fall. But the President’s immigration policy is in tension with his economic policy. Labor market restrictions and other burdens on companies – imposed and proposed – make it less likely that these immigrants, most of whom are relatively unskilled, will be able to find steady work. As a result, they are less likely to be assimilated into American society—a harmful result not only for immigrants but also for the rest of us.
For instance, raising the minimum wage makes it harder for the least skilled workers to find jobs, particularly in age when it is increasingly possible to substitute technology for unskilled labor. The President’s advocacy of a much higher national minimum wage is especially harmful. Many of the immigrants live in low cost jurisdictions, like Texas, where the distorting effects of a high minimum wage are the likely to be greatest. The disproportionate effect on low-cost-of-living states is no accident. The President was elected largely by states with higher costs of living, where the additional costs often stem from onerous regulations. These states want a national minimum wage to stem competition from lower cost jurisdictions.
Other policies, such as Obamacare, which requires most companies to offer costly health insurance, also make companies less likely to employ the low skilled. Other proposals of the Obama administration, like paid sick leave, would further add to the cost of employing workers. Moreover, practices that make it harder to fire workers, like unionization, make employers less likely to hire employees perceived to be risky. Non-English speaking immigrants who have entered the United States illegally are likely to be perceived as riskier, on average, because, among other things, they will have a less documented employment and educational record.
We see the results of inflexible labor markets on immigrants in Europe. In France, for instance, unemployment among immigrants reaches more than twenty percent and it is even higher among young immigrants. The result is large scale alienation and intermittent rioting in the banlieues where many immigrants live. Without the affiliations provided by work, the problems of alienation are potentially worse in nations like the United States and France where a large number of immigrants hail from a particular region of the world. This shared foreign culture reduces their need to integrate with the rest of the country.
The United States employment structure is not yet nearly as bad as that of France. But legalizing large numbers of immigrants would highlight the need for policies that advance rather than retard integration. Nothing assimilates people better than consistent participation in the legal labor market. That has been in large part the way the way that past immigrants have thrived. The President’s economic polices undermine the free market alchemy that can make Americans from the citizens of nations around the world.