Without a legal minimum, employers who pay their workers minimum wage would have to compete with each other in order to attract labor. Let's say there's a small town where every resturaunt pays their workers the same relative wage. In order to compete with these resturaunts in labor, an entrepreneur starting a new resturaunt offers to pay his employees maybe a dollar or two more an hour than his competitors. This encourages the workers in the current joints to seek jobs at his own establishment, which avoids having to train a completely new staff from scratch. If the resturaunts that already exist want to keep their workers instead of having to train their new ones, they would have to raise the pay of their workers, or offer other incentives like health plans in the case of large franchises.
In any case, the pay gravitates towards how much wealth is being generated by the workers. As it is, with a minimum standard, in many cases employers are either forced to pay more than their labor is worth, which hurts overall employment, or they're paying their labor worth less because there is a national standard for unskilled labor that neophytes will easily accept.
In many cases, the jobs that illegals perform are jobs that Americans absolutely can't do, because the value of their labor doesn't even come close to justifying paying them a minimum wage. They're jobs that Americans
legally cannot do. If there was no minimum wage, then the illegals would have to compete with those jobs with the Americans that need them most, being high school and college students, retirees, and national minorities (American blacks, hispanics, etc.,). Would the contractors rebuilding New Orleans have used illegal labor if the unemployed blacks in New Orleans could work for the same rates?
Here's something any doubters should consider about the political nature of minimum wage:
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Quote:
http://www.mises.org/story/2377
Last year Wal-Mart called for an increase in the minimum wage in spite of research on how the minimum wage affects labor markets. This might benefit Wal-Mart for a couple of reasons.
First, Wal-Mart wages are well above the federal minimum, but an increase in the minimum wage would reduce potential competition. This would make it effectively illegal for some people to compete with Wal-Mart.
Second, an increase in the minimum wage would benefit some low-income workers and hurt others; regardless, it might increase demand for Wal-Mart's goods.
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I was speaking idiomatically.