Thursday, April 06, 2006

Jose, Can't You See?

Jose, I read your recent letter in the Omaha World Herald. [free registration required] For context and clarity, I will post the contents here, before I comment:

I am a Mexican who is here legally and is going to college. Being from another country, I've found it is very hard to fit in, because people sometimes look down on you.

Many Americans see us as people who take their jobs. But the real question is: How many Americans are willing to do the "dirty" jobs? Roofing, field work, construction and meatpacking are all hard jobs.

If Mexicans are not allowed to do those jobs, who will do them?
Jose Vargas, Omaha

Who will do these jobs? Simple: those who legally reside here.

You see, there is nothing inherently "Mexican" about roofing, or any other hard work. I worked on a roofing job when I got out of high school, many years ago. Hot, sweaty labour, but it paid better than other summer jobs at the time. Of course, had the trade been dominated by illegal immigrants back then, working an underground labour market for untaxed, discounted wages, I doubt I would have done it then either. It just would not have been worth it.

You say you are in college now. Good for you. But, I hope you take at least a semester of Economics, preferably two or more. We need educated citizens, who understand how market forces work for us when we don't try to thwart them.

I don't know why, but for some reason people think the simple and immutable laws of supply and demand just don't apply to their particular economic issue. In this case, even ostensibly conservative Republicans imagine the construction, meatpacking and crop-picking trades are simply not subject to market forces.

Of course they are. If there were no illegal aliens offering to pick fruit, the fruit would be picked by Americans, probably for higher wages. Would that spell the end of apples and grapes as we know them? No, but food might be more expensive. Or, growers would innovate and find mechanical labour-free means to harvest crops. It would not be the first time necessity mothered invention.

The laws of Supply and Demand are simply reflections of human nature. Humans everywhere, of every ethnic stripe, respond to economic incentives. This color-blind aspect of our nature has been with us since we came into existence. It will stay with us as long as we are indeed human.

Would it spell the end of the U.S. economy to not have cheap immigrant labour? Not hardly. In fact, I think a pretty sound argument could be made that illegal aliens are driving down average wages in the United States, and this is itself a decidedly unhealthy trend. We prefer our workers to make more money, not less. And to be better educated and more productive, not less so.

I heard one commentator last weekend talk about how we need cheap labour to compete with China. Well, the per capita Gross Domestic Product of China is around $5,000 per year, while for Americans it is around $37,000 per year. To compete with China on wages, we would have to become incredibly poor. Besides which, there more than three Chinese for every American. We want to be wealthier, not poorer.

The only way we can continue to be competitive in the world is to be more productive. Historically, that means workers have to be better educated, and therefore worth higher wages. Bringing in millions of illegals to work for ever lower wages in unskilled trades is simply not a solution, but a growing problem. We have to be smarter than that. Immigrants who are legal-- from India and China, for example-- are typically better educated than average Americans. They add to the economy instead of taking away from it.

Here is how the illegal workers hurt us. Take a look at a house under construction in your own neighborhood. The roofing company's workers are hired as sub-contractors. They show up with fake Social Security cards, and become "contractors" instead of employees. As contractors, they don't have taxes and FICA withheld. Instead, the roofing company pays them gross wages-- with nothing withheld-- and reports this to the IRS against the phony Social Security numbers. As a bonus, the roofing company pays neither payroll tax nor workers compensation premiums on those "contractors".

At the end of the year, the roofing company issues a 1099 form instead of a W-2, which the "contractor" duly ingores. He simply does not file a tax return. The roofing company and the illegal workers all make out with this system, while those of us who obey the law take the tax hit.

With no taxes taken out, the illegal workers can afford to work for discounted wages. Those of us who have to pay taxes now carry a higher burden, and cannot compete with the untaxed workers.

Jose, when you finish college, are you going to cut up cows or roof houses? Somehow, I doubt it. You will find better paying work, and may well make a fortune for yourself and others. As for people looking down on you, that is an illusion. Think better of yourself, and others will see you in a different light. Maybe start thinking of yourself as an American, and others will see you as one of them.

Good for you. Work hard, save your money. Invest.

And welcome to America.

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