Why Upping the Minimum Wage Requires Immigration Reform

Is Obama pushing a new living wage to try and force the issue of undocumented workers?

Immigration reform is dead in the Congress, or so says almost everyone. It was the iceberg that caused Marco Rubio's presidential ambitions to founder and just one more crunching disappointment of Barack Obama's second term. But another change in economic policy may give immigration reform new life: raising the minimum wage.

Rationalizing the nation's immigration rules was always going to be a hard sell. American citizens benefit handily from immigration through lower prices for goods and services, decreased uncertainty in the supply of labor, contributions by future generations of immigrant families to national income, and the arrival of new ideas in the market. Yet these benefits are not always well understood -- even pro-immigration activists do a poor job of assessing the full value of immigrants and their progeny -- and their advocates are not well organized. By contrast, opponents of immigration can rely on visceral prejudices and keenly focused interest groups.

For many employers, a longstanding attraction of immigrant workers has been their willingness to accept lower wages. An increase in the minimum wage for the formal labor force, the subject of Obama's campaigning in early March, may only intensify that attraction. Minimum wages were already rising around the country thanks to legislation by states. Last week, Connecticut's governor signed a bill lifting the wage to $10.10 an hour from $8.70. At the federal level, Obama has asked Congress to increase the rate to $9 from $7.25. In an era in which workers have lost bargaining power through a variety of channels, government has stepped in to bargain for them.

What happens when the minimum wage rises? If the new wage is above the rate set by a given labor market, economic theory suggests that demand for workers will fall, that more workers will enter the labor force, and unemployment will grow. In practice, this does not always happen, and some economists believe that higher wages and incomes will actually boost employment in the long term.

Either way, these macroeconomic predictions obscure the decisions of individual households and businesses. In the short term, a higher minimum wage would undoubtedly cause some of them to seek substitutes for higher-priced workers. And for many, the answer may be undocumented migrants.

Imagine a small business owner who has paid the minimum wage of $7.25 to workers since the last increase in 2009. The owner knows that undocumented migrants will do the same job for $5, but so far has preferred to stick with the formal labor force. A jump to $9 would almost double the gap between the two hourly rates, and that's without considering the taxes and benefits that must be paid on behalf of regular workers. It's hard to believe that no one would make the switch, even cognizant of the penalties that could be incurred for such behavior.

But were this to happen on a widespread basis, there would be no change in the number of jobs in the economy. The production of goods and services might not change much, either. The only difference would be who held the jobs.

As the demand for undocumented workers grew, so would the supply. Evidence from the Great Recession suggests that foreign-born workers -- documented or otherwise -- are very responsive to changes in the demand for labor, despite the best efforts of U.S. Customs and Border Protection. In fact, foreign-born workers even help to smooth out the bumps in the economic cycle, insulating native-born workers from dips in demand. If more employers sought the lower costs associated with undocumented workers, they would probably have no trouble finding them.

In markets where undocumented workers were prominent, a higher minimum wage might actually leave some of the people it was intended to help out of work -- though not for the traditional reasons. But the solution would be simple: Get the undocumented workers into the formal labor force.

Doing this would give the minimum wage the effects it was supposed to have. But it's worth asking whether, by greatly expanding the formal labor force, the combination of a higher minimum wage and immigration reform would also increase the rolls of the unemployed.

Fortunately, that seems unlikely. The reason why foreign-born workers are so responsive to the demand for labor is that many don't want to stay in the United States when there are no jobs. It's not as though the risk of deportation is so severe; in fiscal year 2013, only about 3 percent were sent home. Rather, a significant share of migrants come when work is available and prefer to go back to their families and friends when the job is done. This is especially true as the economic climate improves in their home countries.

Of course, as documented migrants they'll be free to compete on level terms with native-born workers. But they wouldn't have the usual advantage of a lower wage rate. Employers would be choosing between native-born workers who speak English well and are likely to stay in the country for the long term and foreign-born workers who might not.

Immigration reform would be a boon to the United States for many reasons, but it has never had sufficient urgency to overcome the inertia of timid and bigoted politicians. Raising the minimum wage might finally give it the push it needs.

SAUL LOEB/AFP/Getty Images


The New Mayor of Kabul

Why Afghanistan's next president won't succeed without the warlords -- or the Taliban.

Election Day is just around the corner, and once again campaign overload has struck Afghanistan in a riot of colors, candidate mug shots, and election symbols -- democracy at work via visual saturation in a country with one of the world's highest illiteracy rates.

But there's something disconcertingly familiar about the 2014 presidential campaign posters featuring candidates who are promising to lead Afghanistan into the future: They stink of the past.

The giant ones typically feature a triumvirate of presidential candidates flanked by two running mates, reflecting the three-person tickets that have turned these elections into a giant ethnic -bloc game. And it's here that the past is threatening to rudely barge into the future. The warlords are back -- if they ever really left -- with a renewed force.

One such poster seemingly designed to spark fear and loathing among many Afghans proudly displays two familiar turbaned characters with Santa Claus-esque white beards. To the left, gazing past traffic-clogged streets to the distant hills, is presidential candidate Abdul Rassoul Sayyaf, a beefy warlord sometimes called "the man of the mountain" for his hulking frame. Sayyaf is very familiar with the Hindu Kush foothills ringing the Afghan capital. During the mujahidin wars of the 1990s following the Soviet withdrawal, his forces pummeled a Shiite-dominated western Kabul neighborhood, indiscriminately firing into dense, civilian enclaves and committing "numerous acts of murder, pillage and looting," according to a 2005 Human Rights Watch report.

Most profiles of Sayyaf in the Western press kick off by introducing him as a former mentor of terrorist bigwigs such as Osama bin Laden. The 68-year-old warlord has not denied this, noting that it was during the mujahidin resistance when, "Not only Osama, but thousands of Arab people came during the period of our struggle against the Soviet Union."

Sayyaf is one of the few Pashtun commanders who joined the anti-Taliban Northern Alliance. But he's also known as the man who helped three Tunisians, posing as journalists, get access to Tajik resistance hero Ahmad Shah Massoud in the fall of 2001. The Tunisians turned out to be al Qaeda operatives who proceeded to assassinate Massoud, just two days before the 9/11 attacks.

The "man of the mountain" most likely had no clue they were al Qaeda assassins. But more than a decade after the "Lion of the Panjshir" was killed, his family is still complaining about the Afghan government's failure to investigate the case.

Reckoning with the past has never been a priority for President Hamid Karzai who, lacking any militia or political party, has courted and accommodated the warlords.

Karzai himself is banned from running for a third consecutive term in the 2014 poll, but his legacy of appeasement will live on. Sayyaf's running mate, the second snowy-bearded gentleman on the billboard, is none other than Ismail Khan, Tajik warlord, one-time governor of the western Herat province and minister for water and energy in Karzai's cabinet.

In 2012, the strongman of Herat sent shivers down Afghan spines when he called upon his Tajik supporters to take up arms and defend the country against their traditional enemy, the Taliban. Tajiks -- who make up around 27 percent of the population -- fear a return to the dog days of Taliban rule, and Khan is believed to be enlisting new recruits and building local command structures. Khan has since toned down his rhetoric on the campaign trail. But the Afghan rumor mill has been buzzing with reports of various groups rearming in the lead-up to the international combat-troop withdrawal by the end of 2014.

Indeed, the year 2014 has haunted the collective Afghan mind since 2011, when U.S. President Barack Obama helpfully handed the Taliban a timeline to prepare for their comeback.

"Do hezar-o chardah," Dari for 2014, has turned into "a code word for uncertainty and possible chaos," notes Martine van Bijlert, co-founder of the Afghanistan Analysts Network -- and Afghans don't even use the Gregorian calendar. Not that their own solar Hijri calendar has been any kinder: This year -- 1393 -- kicked off with the brazen and deadly March 20 attack on Kabul's highly-secure Serena Hotel, just as guests were celebrating Nowruz, the Persian New Year. The assault, coming weeks before Election Day, put everyone on edge -- as the Taliban knew it would -- reigniting the worst of do hezar-o chardah anxieties.

It's this kind of fear that drives communities to their ethnic warlords. Most Afghans have no real love for the strongmen who destroyed their country and paved the way for the Taliban. But when it comes to the crunch, they confess that only a warlord can really protect them -- especially if they belong to a minority ethnic group.

The candidates know this, of course, and end up doing the ethnic electoral math when picking their running mates. The most cynical display of vote bank calculation came when Ashraf Ghani, a former Afghan finance minister, picked the controversial Uzbek warlord Abdul Rashid Dostum as his vice presidential choice.

A Columbia University grad, former World Bank official, and Kabul University chancellor, Ghani is the favorite of the educated Afghan elites and has been a champion of democratic accountability. That doesn't count for much, though: He barely secured 3 percent of the vote in 2009.

This time, Afghanistan's Mr. Clean has picked a running-mate warlord whose gruesome past exploits are the stuff of legend. But Dostum will cream the Uzbek vote. During the 2009 presidential election, every single Uzbek I interviewed said he or she had voted for Karzai because Dostum had endorsed the incumbent. "Dostum protects us" and "He is the only man who has done so much for us" were the typical explanations.

The problem, of course, is that Dostum protected his ethnic tribesmen so well in the 1990s that his fighters blasted civilian areas of Kabul with heavy Soviet weapons meant to defend the city's approaches -- not level the city itself. Meanwhile, Sayyaf's Sunni forces, funded by Saudi Arabia, systematically targeted the Shiite Hazaras. That senseless, internecine power struggle between the warlords cost thousands of lives -- the exact figure remains unknown.

On the 2014 campaign trail, probably egged on by Ghani's civil society advisors, Dostum has offered a weak apology for past excesses. But none of the warlords has been held accountable -- and none ever will.

In 2007, the Afghan parliament approved a resolution granting amnesty to the warlords. Those who voted in favor included stalwart warlords such as -- hold your breath -- Sayyaf. But there were plenty of parliamentarians, not to mention ordinary Afghans, who disapproved. So, the warlords and their supporters put up a show of force in favor of the resolution, demonstrating at Kabul's football stadium, where the "man of the mountain" addressed the rally, thundering, "whoever is against the mujahidin is against Islam, and they are the enemies of the country."

With friends like these, who needs enemies? And who even knows who the enemy is anymore? There was a time when the Taliban were the bad guys. But now everyone from Afghan leaders to the international community has jumped on the "talking to the Taliban" bandwagon. Most of the Afghans I've interviewed support the negotiations. "There's no other way. The Taliban are Afghans, they're our fellow countrymen," they explain. Except that the Taliban are probably more Pakistani than Afghan. But never mind.

Foreign powers have always mucked around in Afghanistan -- as have local strongmen, murderers, rapists, and looters. Afghanistan can be very forgiving that way -- as the men with the Santa Claus beards know only too well.