Wednesday, December 14, 2005

How much are we willing to pay for low prices?

A number of business groups are in an uproar over GOP plans to require proof of worker status and increased penalties for those caught hiring illegal workers. Notwithstanding their claims that their objections are motivated by concerns over worker privacy and the imposition of additional paperwork requirements on small businesses, the real issue is that any law that makes it harder to hire illegal workers will raise labor costs on employers (at least those hiring illegals and perhaps others as a ripple effect).... and that employers will either pass on these higher costs to the consumer, or in the event consumers are unwilling to pay higher prices, to absorb those costs and take the hit to their bottom line.

So the question becomes whether the benefits of tightening up on illegal immigration are worth the costs associated with tougher enforcement. In other words, is America willing to pay more for a hamburger at McDonalds or more to get their lawn mowed and their car washed in order to reduce the number of people crossing the border?

It's a debate that is similar to the fight over making companies responsible for working conditions at their overseas suppliers, raising the minimum wage, and whether to force companies such as Wal-Mart to bear more of the costs of providing health insurance for their employees. All of these issues involve imposing higher costs on the American people as a whole in order to attain a supposed benefit as a result.

And almost all of them are issues on which the American people generally comes down on the side of leaving things as they are... we'll take the lower prices and forego whatever social benefit that might accrue from such policies. We don't care enough about the working conditions for youngsters in China. Nor do we care about those trying to raise families on the minimum wage. And we don't much care about whether more Wal-Mart workers get company paid health insurance... at least not enough to be willing to pay the higher prices Wal-Mart would certainly charge as a result.

And, we probably don't care enough - as a group - about the effects of illegal immigration to be willing to pay the higher costs associated with cutting down the supply of dishwashers, mechanics, cropworkers, janitors, engineers who have overstayed their temporary work visas, and the like.

Which makes me think these business groups are missing the point - they're talking about issues America isn't going to go to the barricades over. America won't care if the issue is framed over worker privacy and paperwork requirements on the human resources department. They will care if it costs $2 more each time they go to McDonalds.