Lately, there's been a lot of talk about strengthening the southern border between the U.S. and Mexico to prevent the continued mass influx of illegal immigrants. Proponents of "open borders" claim that…

1.) Immigrants perform work that Americans don't want to perform (such as manual labor, agricultural work, janitorial services, etc.). This is not a very valid argument, in my opinion.

2.) Immigrants help keep the price of goods lower. Since the employer is not required to pay minimum wage, he can pass on this "cost savings" to the consumer, in the form of lower prices.

The main attraction for immigrants is a better standard of living for themselves and their families in the U.S. (achieved as a result of higher wages). We would not have an "illegal immigration problem" if U.S. employers refused to hire illegal immigrants. So, at first glance, the problem appears to be employers…employers who are ignoring the rules against hiring illegal immigrants.

But the more important question is "Why are U.S. employers circumventing (or deliberately ignoring) the laws that restrict hiring illegal workers?"

Answer: The root cause of illegal Mexican immigration is the mandatory minimum wage law. The minimum wage law forces employers to pay more than "fair market value" for wages.

If an employer has to pay more than "fair market value" for wages, then he is less competitive in the marketplace, and he is forced to charge higher prices to his customers (to compensate for the increased cost of labor). Increased cost of labor sharply cuts into business revenue. It is difficult to turn a profit when the government enacts legislation mandating what you can pay for labor…especially when the marketplace of laborers is willing to work for less than the mandated minimum wage.

Problems with the Minimum Wage Law

The minimum wage law puts forced price controls on the economy, so that a black market develops to circumvent that forced control (similar to prohibition laws in the 1920's). Basically, the minimum wage law unfairly manipulates supply and demand and creates an artificial price floor. A "fair wage" is the intersection of supply and demand. The minimum wage law ignores supply and demand and attempts to regulate the economy by forced mandate. Which, of course, fails miserably, and leads to an illegal "black market" for immigrants who will work for less.

There are countless other economic problems created by the federal minimum wage law; one of the biggest is a higher rate of unemployment. Countries with minimum wage laws have higher unemployment rates than countries without such laws.

This can be seen with the following example: If the minimum wage is $6/hour, then an employer will only offer somone a job when the value of his work exceeds $6/hour. So, only people who's value to a company exceeds $6/hour will find employment. All others will face unemployment (or the option to work illegally for less).

Additionally, the minimum wage law reinforces dependence and an "entitlement" mentality. Many new workers (i.e. teenagers) and unskilled laborers feel they are "entitled" to a certain amount regardless of the value they provide to a company, and regardless of prevailing market conditions (supply and demand). This has disastrous social implications and further reinforces the "welfare state" mentality.

Many argue that without minimum wage laws, workers would be exploited and could not maintain a decent standard of living. However, this is not true. As Mark Tier points out in his article Jobs for Everyone*, "[In] any labor market where there are no restrictions on the employment of labor, employees know their own worth, their market value, and if you don’t pay them what they are worth, they’ll quickly find someone who will." The free market will make sure that workers are paid a fair wage that is commensurate with their skills, abilities, and the value they provide to a company.

* Mark Tier's article clearly explains the link between the minimum wage law and unemployment. Highly recommended reading.

How to Get Rid of Illegal Immigration

Stationing more federal troops at the Mexican border will not solve the illegal immigration problem. Determined immigrants will find a way to sneak past border patrols. The only way to permanently solve the problem is to eliminate the root cause…no jobs for illegals means no massive influx of illegals.

Threatening U.S. employers with fines/lawsuits and imposing additional regulation (and monitoring) of the workers they hire will not solve the problem. The government must create a financial incentive for U.S. employers to refuse to hire illegal immigrants. The best way to do so is to repeal the federal minimum wage law.

If the minimum wage law were repealed, U.S. employers could begin hiring U.S. residents (many of whom are on unemployment) to complete the jobs that the illegal immigrants previously handled. Once this is done, supply and demand will resolve the border problem naturally.

Less supply of jobs for illlegals equals less demand (desire) to cross the U.S. border.