Why Liberalism Routinely Fails

Just about a year ago, Immigration and Customs Enforcement (ICE) officers conducted a raid on the Fresh Del Monte Produce plant and arrested about 165 workers who faced deportation based on allegations relating to a lack of valid Social Security Numbers. At the same time, a raid was conducted at the offices of American Staffing Resources as the agency providing the illegal immigrants. It was front page news and while most public officials were critical of American Staffing and Fresh Del Monte for their conduct, the City of Portland, led by its mayor, Tom Potter, instead criticized ICE and other federal agencies for their temerity in enforcing the nation’s laws.

To put an exclamation point on the city’s disdain for enforcing the nation’s laws relating to illegal immigration, the City of Portland has now opened two taxpayer funded “day labor centers” designed, primarily, to cater to Oregon’s significant illegal immigrant population. Much has been said and heard in protest of Portland’s flouting of the law and, in all probability, lawsuits will be brought to try to halt the use of taxpayer money to fund such an obvious breach of federal law.

But the real story is in the continuing disregard of market forces in pursuit of their belief that “if liberal politicians say it, it must be so.”

The federal minimum wage increased to $6.55 per hour on July 1. The federal minimum wage has driven factory production jobs off shore where the labor rates are so low that it is profitable to ship the materials overseas to where the laborers are and the finished goods back to America for consumption. The result has been that America has lost most of its “piece rate” jobs, such as shoes, clothing, toys and electronic assemblies. Even call centers and after sale product servicing centers have been “outsourced” to Southeast Asia because of low wage standards.

Oregon’s minimum wage increased to $7.95 per hour on January 1. This 20% premium over federal minimum wage standards is one of the primary reasons that Oregon’s unemployment rates are routinely 0.5 to 1.0 percentage points above the national average. It is also one of the reasons that assembly jobs have been migrating to Arizona, New Mexico and Utah for years. Oregon’s supercilious political leaders may sneer that Oregon is “focused” on producing “living wage” jobs — not minimum wage jobs — but the continuing shrinkage in high tech, manufacturing and construction jobs and the continuing growth “service industry” (cooks, waiters, maids, laundry workers, etc.) suggest that the results are at odds with the focus. (The only job growth sector with superior wages continues to be government employment.)

But Portland’s liberal elites never have been much on economics or market forces. In addition to the federal minimum wage and the state minimum wage, Portland has adopted the “family/living wage” which currently exceeds $10.00 per hour. And when Portland opened its “day labor center” for illegal immigrants it imposed a rate of $10 per hour to hire those day laborers. It can be argued that Portland’s liberal elites have their hearts in the right place in demanding a higher wage for unskilled labor. It can also be argued that Portland’s liberal elites are simply continuing a long line of efforts designed to make people dependent on the government and, thereby, ensuring that the liberal elites remain in power and control.

Regardless of the reason, the mission will fail because of market forces.

Employers have been recruiting illegal immigrants as “day laborers” for over a decade because the most they will have to pay is the minimum wage. Often times they will pay less either by using a lower wage rate, using a burdensome piece rate, or forcing them to work overtime without overtime compensation. The hiring of illegal immigrants has always been about extracting labor at a rate below what a rational market would allow. The term “rational market” connotes a situation in which there is a balance between what employers are willing to pay and what employees are willing to accept. A “rational market” does not include a “gray labor” element in which employees are forced to accept lower wages because of a fear of governmental action — arrest and deportation — if the employee protests.

So here’s the point, if employers, searching for the lowest cost labor, can pay the federal minimum wage rate of $6.55 per hour, why would they pay $10.00 per hour to use Portland’s day labor center? If employers can pay the state minimum wage rate of $7.95 per hour, why would they pay $10.00 per hour to use Portland’s day labor center? They won’t. In a private market, Portland’s day labor center would be out of business overnight. However, this is government in all of its glory and it will continue to provide this aberration, not because it is needed, or justified, but rather because it can.

Several of Oregon’s talk show hosts have suggested that citizens take photos of the employers who use a day labor center designed primarily to assist illegal immigrants. They have suggested that the names and pictures of those employers be posted so that others will know whom to boycott for aiding in the violation of America’s immigration laws. Frankly, I would rather have the names and pictures of those using the service so we would all know who is dumb enough to pay $10.00 for a $7.95 product.

And those pictures should be posted right next to the pictures of the Portland city commissioners who are dumb enough to think they have solved a problem. While there will be a trickle of employees and employers using the city day labor center, those employees who want the best chance at getting a job that day will return to the street corners where they will earn less per hour but will have a significantly better chance at getting a job and getting more hours.

What sounds like a great deal for employees — ten dollars per hour vs. $7.95 per hour — will turn out to be another empty promise by well intentioned liberals.