-Submitted by David Drumm (Nal), Guest Blogger
While Republicans have been trying to leech the credit for the killing of Osama bin Laden, President Obama has upstaged them by laying out his immigration reform plan. This is a signature political issue that the Republicans have tried to make their own. However, the E-Verify program will test whether they really want to solve the problem or whether, like bin Laden, they’re more interested in maintaining the issue for its political usefulness.
The E-Verify system looks for a match between the name and SSN of the worker who applies for a job. If there’s a mismatch then the worker may be undocumented, or the worker has to contact the SSA to get the records corrected. The E-Verify program, if widely implemented, would dramatically reduce the incentive for illegal entry.
However, business hates it. The Florida Chamber of Congress has succeeded in getting mandatory E-Verify removed from a Florida immigration reform bill. Republicans are caught between their business overlords and the Tea Party.
The Florida Chamber of Congress cites out-of-date error rates and concerns over identity theft as the basis for their objection to mandatory E-Verify. Could it be there’s another reason? Maybe it’s because businesses can take advantage of the illegal’s vulnerability and pay them less than the minimum wage and violate work safety rules, as pointed out in Obama’s recent speech.
The error rates for E-Verify are steadily improving with most errors occurring due to typos and changes in names or citizenship that are not reported to the Social Security system. Workers need to get these errors fixed in order to receive their full Social Security benefits to which they are entitled.
The problem with identity theft occurs when an undocumented worker uses someone else’s (matching) name and SSN when applying for a job. That problem has been solved by something called “E-Verify Self Check” where individuals can access their status before applying for a job. The system knows whom you’ve worked for over the years and can ask the kind of questions that only the legitimate worker would be able to answer correctly. Therefore, workers can be verified and identity thieves won’t be able to verify their data.
Another problem for E-Verify is the case of Chamber of Commerce v. Whiting that is before the Supreme Court (Kagan, J., recused). At issue is a 2006 Arizona statute, the Legal Arizona Workers Act that requires all employers to participate in the E-Verify program, which is preempted by a federal law that specifically makes that system voluntary. The law was signed by then-governor of Arizona Janet Napolitano, now the Secretary of Homeland Security, the department that runs E-Verify. What you have is the Obama administration’s Solicitor General arguing against the most effective tool in the administration’s arsenal against illegal immigration.
As pointed out by Justice Ginsburg during oral arguments:
How can Arizona take a Federal resource, which the Federal Government says is voluntary except in certain circumstances, and turn it into something that’s mandatory?
The E-Verify Modernization Act of 2011 seeks to make E-Verify permanent and mandatory. It will be interesting to see if the bill suffers the same fate as the Florida legislation.
H/T: VC, Miami Herald, Adam Serwer, Daily Finance.
@Roco: 3 against 1 we have a majority. We just made you our slave. See how that works? You know how we do it? The 3 of us can kick your ass, i.e. use force.
You are a dim bulb indeed. My demand was that any law you pass apply equally to you as to me. Get it?
That was the point of the 100% rule, if you get 75% of all voters to vote for this scheme and THEY will be just as subject to it as you and I, and the money goes to the common good and defense of all citizens, including those who voted against it,, then maybe you have an argument.
Until then you are just inventing transparent lies about what I said and nothing more. Try arguing against what I actually said, not what you wish I had said.
As for 3 people against 1 person, I do not agree with a majority vote there either; and I specifically said majority rule was the only thing that would work in large groups of hundreds or thousands of people. I said unanimity would not work for half a million people, and not even for a few thousand living in a small town. Unanimous agreement often works for a handful of people, even to the dozens of people. Probably up to about 200, based on sociological and anthropological studies. Unanimity will not work for thousands, or millions, or hundreds of millions, or billions. The probability of intransigent disagreement grows to virtual certainty very fast.
@Ekeyra: Somehow in tonys view, more people producing food at lower cost doesnt equal more food available to consumers.
You’ve got to get past ECON 101, these are not linear relationships. Lower labor costs mean higher profits for employers, not lower prices for consumers.
There are pressures that will force sellers to change their prices, including competetition and often higher costs, but if their costs are lowered they will just pocket the higher profits; people don’t give up free money easily.
As for new competition coming in: I don’t know what it costs to start a large farm to compete with other large farms, but I do know it costs about ten million dollars to start a mid-range hotel, much more for a high-end, and that doesn’t count about two years of operations and marketing to make it start breaking even.
For most $1M+ businesses the market IS stable. Not infinitely, but it isn’t “extremely dynamic” or “dynamic” at all. No new competitor is going to drop $10M or $20M on uninformed speculation, they will spend months and thousands of dollars and probably an entire year looking to see if there is enough room traffic to warrant an investment, and there probably is not.
As a metaphorical device, consider a simplified evolutionary scenario; a forest has enough forage to keep 100 fairly equal deer from starving. If we just add 200 more deer to this equation, making 300 fairly equal deer, what happens? It isn’t that 200 die: All 300 deer starve, because in the constant competition no deer is strong enough to take three times the average share, so they all starve.
Markets are the same way; where there is enough traffic for two hotels can survive, three hotels can all go under, because reducing their share of the traffic from 50% to 33% cuts 33% off their revenue and typically their margins just aren’t that high.
I am not opposed to that tragedy, I do not regard businesses as entities that have a right to survive or to be free from competition, even stupidly suicidal competition. (Of course I do not believe in “necessary” businesses either, if something is actually a necessity to life it should be run by the government as a zero-profit operation.)
But educated businessmen are aware that there is not always a survivor, and if there is not enough room traffic to support a fourth hotel outright, they will have to marshall the resources to put somebody else out of business, and for big operations with assets and borrowing power that might be a war of attrition that takes five years or more.
Potential competitors won’t make that decision based on whether labor is $4 an hour or $8 an hour. Nobody that wants to compete with a $100 per night hotel is going to launch a $99 per night hotel based on their secret weapon of immigrant labor.
in tony’s world businesses dont compete, they simply decide how much of their product their going to sell and at what price and tailor their workforce accordingly.
No, my world is the real world, your world is a fantasy world of tinkertoy models. In my world, businesses do not decide how much they will sell, customers decide how much they will buy of whatever the business offers.
In my world, most businesses that survive their infancy eventually face the reality of saturation and an end to their growth. Advertising maintains demand but more advertising doesn’t increase it, expansion is either unaffordable or was tried and failed, new products and offerings were tried and failed, and five years into it they have run out of ideas.
But their business is still generating profits. So, having tried all they can think of to grow, and being sensible, and being familiar with the fluctuations in their demand and when and why they occur, the smart business owner will indeed turn to operational efficiency to maximize her profits. Some of that may be automation and regularization of processes to minimize her labor costs, but the first thing she will try is usually tailoring her workforce to meet the predictable demand of her customers.
@Ekeyra: [Tony rants about] how [markets] dont work and thats why we abolished them long ago.
Now you are just confused. Markets work fine, if they are regulated, and I believe competitive markets are a great thing. FREE markets fail, and we abolished THEM a long time ago. They still spring up; the whole credit-default-swap scheme that led to the current economic collapse was a brand new idea designed specifcally to circumvent the regulations we had in place on insurance, and created a wild west free market in insurance, and after about 15 years it collapsed and cost us a trillion dollars or so.
Unregulated markets fail, and fail consistently. When regulations are removed, people find a way to game the system, to take risks that, if they fail, let them default on their contracts and guarantees and loans, and should they win, produce huge payouts.
That is the problem with FREE markets, it is impossible to trust anyone if they can lie with impunity. You can’t trust anybody you hire to see if they are lying or trustworthy, because those guys can lie with impunity or take bribes to lie, and so on and so on ad infinitum.
If you think you are going to rely on “contract law,” think again: Contracts today already limit liability as much as they can under existing law and regulations; in an unregulated market without those restrictions nobody in their right mind is going to sign a contract that makes them liable for one penny in damages of any kind, ever. Heck, they should even prohibit you from saying anything remotely negative about their product without their written permission, and should rule out any demands for so much as an apology for damages, public or private. Why wouldn’t they?
Everything we buy will have the contract that says you have no right to complain, no right to damages of any kind, no right to talk about the purchase with anybody ever, and if you don’t agree then tough shit, take it or leave it. Every place you work for will have an employment contract that reads about the same way.
Of course that “take it or leave it” isn’t a “choice,” because we have to eat, we have to work, and we have to live somewhere. The deregulated free market produces the horrific work and product safety conditions we witnessed in their full glory at the beginning of the industrial revolution. It was tried, and that is why the majority demanded the regulations in the first place.
Tony C:
ekeyra, puzzling and I vote for you to pay all of us 80% of your paycheck to be split equally among us.
3 against 1 we have a majority. We just made you our slave. See how that works? You know how we do it? The 3 of us can kick your ass, i.e. use force.
That is exactly what our federal government does. In exactly the same way. Except the force they use is threat of jail time and loss of assets rather than ass.
The founders did believe in majority rule but only to a point and if you remember, not everyone got to vote back then. So it really wasn’t majority rule.
By the way ekeyra and Puzzling are libertarians. I am the Objectivist. Or almost so. ekeyra and Puzzling believe in the market acting as a control mechanism for society and I believe we need some government.
None of us are totalitarian, we believe in individual liberty. We don’t believe humans owe anything to other humans except respect of person and rights. Your need is not my concern, it is your concern. I do not owe you a living, it is up to you to earn your own way. If you cannot and come on hard times, I would gladly offer you some of what I have as long as I had enough for myself. I am sure Puzzling and ekeyra think the same way.
Your misfortune is not a blank check which can be written against my life without my consent.
You and others like you are the true totalitarians and have no respect for the rights of others. You and people like you are evil and are the reason for so much human misery around the world.
I disagree with ekeyra and Puzzling on the need for government, I think you need a government as created by our founders, limited and unobtrusive except when protecting the rights of individuals from predators like you.
@Puzzling: This argument is entirely immoral.
No, your argument is entirely immoral.
Tony believes that our lives are the property of himself and his neighbors to do with as they please.
No I don’t. I believe that every day you live in this society, you owe a share of the cost of maintaining it, whether you incurred those costs directly or indirectly. Think of yourself as a piece of property all you want, think of yourself as Batman for all I care, but if you live here, you pay your share of what we do together, and what we do together is determined by majority vote, because there is no other way of determining what three hundred million people are going to do except your totalitarian view of preventing us from doing anything except what you and a handful of Randians want us to do.
Well, our lives won’t be ruled by your tiny little minds, ever. The founders of this country believed in majority rule by the people, and the majority of people believe in government services, and that is why we have them: We want them.
We don’t own you, you owe us. You Randians are like five-year olds threatening to run away from home and stamping your feet about how you don’t need anything while understanding NOTHING.
Roco,
“correct me if I am wrong but aren’t falling labor prices a sign of unemployment? Or are you saying that due to better efficiencies of production, labor costs are falling?”
Could be either, or both? In this particular case the downward pressure on wages is being caused by an influx of unskilled immigrant labor offering their services at lower prices.
Somehow in tonys view, more people producing food at lower cost doesnt equal more food available to consumers. But it makes sense because in tony’s world businesses dont compete, they simply decide how much of their product their going to sell and at what price and tailor their workforce accordingly. Costs dont vary, customers are not gained or lost, production is never contracted or expanded, and businesses dont compete for workers or customers. Market mechanics force labor costs down, but somehow never work in the opposite manner and put upward pressure on wages when there is a shortage of them. Oh and noone can ever quit a job, its like slavery.
Its actually quite amusing listening to tony rant about how markets work. Or how they dont work and thats why we abolished them long ago. But then when something bad happens it was the market’s fault even though we vanquished it. I guess its like jason vorhees, always rising from the dead like that.
Whats less amusing is his rants on personal liberty. As evidenced by his latest drivel about majorities, right and wrong only matter insofar as what the majority agrees is right and wrong. Individual perspectives are irrelevant. Oh and everyone agrees on whats “fair”. Scroll up, he said that.
Tony C:
“Not at all. Do you think a mid-range restaurant or grocery or hotel is an extremely dynamic business environment? That is just silly, low margin businesses are very predictable, that is why they can survive on low margins — Low variability in demand.”
Please explain that one. What exactly are you saying? If you think like that you would be out of business when a real competitor comes to town.
We had 2 or 3 major local businesses that thought pretty much the same way. Home Depot, Wegmans and Nordstroms put them down like the dogs they were. Those 3 companies that went belly up or lost significant market share were arrogant as hell too.
ekeyra:
correct me if I am wrong but aren’t falling labor prices a sign of unemployment? Or are you saying that due to better efficiencies of production, labor costs are falling?
ekeyra/Puzzling:
I wouldn’t waste my time trying to impress Tony C with the idea that you own your self and the products of your labor are yours. He just simply doesn’t understand that concept.
For example Rand Paul made a statement recently about Obamacare being the same as slavery because it would force him, as a doctor, to work when and where and for a set amount of money determined by other people. He would no longer be a free agent.
His life would no longer be his own. If something is not good for the smallest minority, the individual, it is not good for the majority.
ekeyra,
Agreed, but I think the most troubling argument Tony made – even with later caveats – was:
Tony,
“The point was it disproves your claim that a reduced cost of labor will produce the good outcome of more product available to more people”
It disproves nothing. How does prices being subjective somehow refute the fact that a reduction in labor costs translates into an increased pool of labor to manufacture that product? If anything subjective pricing reinforces my claim because once people see the abundance of a product they will be less likely to continue paying higher prices for a good or service they could easily acquire for a lower price, thanks to the increased productivity of a more affordable labor pool. THATS econ 101 stuff and you still dont get it.
Puzzling,
Its ok, Tony is a successful businessman who doesnt have a clue how markets work. The fact that prices are subjective is the entire underpinning of austrian economic theory, most of which would probably make tony rip his hair out due to their conclusions. Not to be detered however, tony uses this insight to somehow disprove fundamental market mechanics. This is because in his world, changing prices only effect his business, allowing him to reap a bigger profit from falling labor costs. It would never occur to him that the cost of labor decreasing means it is more plentiful and available to a bigger selection of customers, aka employers, aka his competitors, who can offer the same services at a lower rate, pressuring him to reduce his rates or lose customers. To tony, market dynamics only effect him and his business unless he thinks it proves some point he has and then it effects all of us. Thats why we got rid of that pesky free market. Yet in his mind we eliminated the free market but are somehow able to pin all of our social maladies on it, even though we stomped it out of existence. I think tony doesnt understand because tony lives in fantasyland.
Tony wrote:
Wal-Mart? Why do you think that Wal-Mart stocks thousands of goods made in China? Of course prices can fall with lower labor costs. If prices didn’t fall, more manufacturers would enter and dominate the market forcing everyone else to lower prices or go out of business.
@Ekeyra: Prices are subjective. No shit.
The point was it disproves your claim that a reduced cost of labor will produce the good outcome of more product available to more people: It won’t, because the price won’t be lowered. If people are paying $100 a night right now, what about lower costs would either force me to lower the price or cause me to voluntarily reduce the price?
What makes the price of a consumer product any different than the price of the labor needed to munufacture it?
Consumer products are not people. They don’t get desperate, hungry, or commit crimes. They cannot feel pain, or harm. They don’t think.
Wouldnt being a good businessman mean being able to adapt to an extremely dynamic business eviroment?
Not at all. Do you think a mid-range restaurant or grocery or hotel is an extremely dynamic business environment? That is just silly, low margin businesses are very predictable, that is why they can survive on low margins — Low variability in demand.
Im not even sure why you think that is anything but gibberish.
I’m not sure you think at all. There is no evidence for it.
Tony,
Prices are subjective. No shit. What makes the price of a consumer product any different than the price of the labor needed to munufacture it? Wouldnt that be subjective too? If we need minimum wage laws why not minimum refrigarator prices, minimum tv prices?
“If I am a good manager and businessman, there will be virtually no elasticity”
Wouldnt being a good businessman mean being able to adapt to an extremely dynamic business eviroment? You sound like the worst businessman ever, and until i see proof refuse to believe anyone pays you to manage anything.
“66% do NOT have the right to impose their will on the 33%. 66% have the right to impose their will on the 100%.
A majority oppressing a minority is oppression; a majority decision that all must obey is not. ”
Im not even sure why you think that is anything but gibberish.
I forgot what a gigantic waste of time it is conversing with you.
@All: I said, …by virtue of taking the path that more people want than not.
I should have also said by virtue of being inherently fair in that they apply to everybody; thus they are not oppressing a minority, and I would add caveats on implicit oppression: It is not fair to say we enslave everybody with physical characteristic X and then claim the law is being uniformly applied to “everybody.”
@Ekeyra: Well its not like everyone on the planet would have a different definition of whats fair right?
You are probably being sarcastic but actually people do largely agree on fair and unfair, they do NOT have definitions that vary widely enough to cause disagreement. Whatever difference do exist are immaterial anyway, because the question should always specific: Should murder be against the law, vote yes or no? Whatever unique mechanism they may use to determine their answer, it is crystallized in the result: The vast majority vote YES, and that is how we make the decision to outlaw murder.
@Ekeyra: But the 66% have every right to impose their will on the 33% by virtue of what?
66% do NOT have the right to impose their will on the 33%. 66% have the right to impose their will on the 100%.
A majority oppressing a minority is oppression; a majority decision that all must obey is not.
There is no society, no contract enforcement law, no moral issue (including murder) that would be passed by 100% of half a million people (much less 160M adults in the USA).
If you demand absolute unanimity on anything it will fail at this level; and likely fail much sooner, because there will always be the mentally ill, sociopathic, psychopathic and other criminals that will absolutely refuse to vote for a law that would mean their own imprisonment or death.
If we had just one law, “Murder is punishable by death,” then we implicitly agree we must have a means of enforcing that law, a means of deciding if the law was broken (or the killing was in self-defense), a means of bringing a murderer to justice by force, and a means of paying somebody to do it on behalf of those (like the elderly, or children, or the disabled in poverty) with no means of doing it themselves.
A psychopath that enjoys killing people and with unilateral, anonymous veto power over a law will simply vote it down and go on killing. A rapist will vote down making rape illegal, and go on raping. An extortionist will vote against making extortion illegal, a con man will vote against making fraud illegal.
Unanimity is impossible even in groups the size of a small town. (And what if somebody comes to town, and says, “Nah, I disagree…” ?) If we are going to have laws that get enforced to protect and defend people from predation we need a way to decide the laws that will not depend upon unanimous consent. Majority rule is a good way, super-majority rule is a better way, that may produces fewer laws but will still pass the important laws upon which there is likely to remain a broad consensus.
So to answer your question, “By virtue of what?”, the answer is by virtue of virtue itself. Enforced laws that apply to everybody (not just some people) that are agreed upon by a super majority will automatically produce a net good, by virtue of taking the path that more people want than not.
“So only politicians you dont like engage in cronyism? Cronyism and regulatory capture arent endemic to politics as a whole no matter who is in charge? Couldnt Obama have appointed anyone he wanted to that position once he was in office? He must have thought they were doing a heckuva job or he would have replaced them wouldnt he? Also Ill humbly point out that your trying to rebut a government failure with a government failure. Not sure what thats supposed to prove other than government is inept?”
No, dear, both sides of the aisle engage in cronyism but using your example of the DI, herein lies the difference – the Bush Admuddlestration discounted science at every opportunity, and loaded up the DI, just as he did with the DOJ, with science-denying oil industry hacks who worked in concert with the very industries they were to regulate in order to undermine the regulatory functions of the DI.
And, I will humbly point out that Bush cronies no longer head up the DI. While Ken Salazar may not be perfect, he’s a damn sight better than:
Gale Norton who, during her tenure, not only actively suppressed science, and failed to collect billions in royalties due the government from the oil industry but ultimately resigned due to her connections to Jack Abramoff;
Dirk Kempthorne who, during his tenure, sought to undermine both the Endangered Species Act, and the Safe Drinking Water Act so each was more favorable to the oil industry, spent over $200+ of taxpayer funds to renovate his office bathroom, and turned a blind eye, like Norton, to the orgies attended by those who he oversaw.
@ekeyra: Except you did not offer a rebuttal of MY argument, you offered the same old Econ 101 infantile argument I have heard a hundred times before.
Your proposal is artificially inflated wages
No, it isn’t. Your proposal is grounded in artificiality, in the pretense that workers are flexible, employers are honorable, and that lowering the price of goods (by cheaper labor) quote “Makes them available to a wider range of customers thanks to lower prices.”
That is just wrong. That is a false linkage, it is not how business works, or how business men work, including me.
Allow me to explain: Our prices are not determined by our costs, they are determined by the market and the value we provide. Value is not determined by the cost of production.
Fashion designers do not multiply their cost of a jacket by five hundred to determine the price, artists don’t set their prices that way, venture capitalists don’t compute that way, a movie ticket or DVD rental or hit song or concert ticket does not change price depending on how much they cost to produce. The pricing of magazines, newspapers and books do not depend on their cost of production. The price of advertising on TV or Radio has nothing to do with how much it costs to air, or the labor involved in airing it: It is determined by how many customers are likely to see or hear it. Some ads can sell for less than the cost of airing them, just so a broadcaster doesn’t have dead time.
Commodity services depend on the cost of labor, but reducing that cost does NOT change how much people are willing to pay. If I am a landlord of a large hotel or office building, I am not going to do the cleaning myself. Period. I will hire it done, and I will pay the price.
So if the workers get minimum wage, and it costs me $2.00 per room for cleaning, and that is what everybody charges, that is what I will pay. Period. The work must be done. Just like my dishes must be washed, my trucks must be unloaded, my food must be served and tables cleared, my grounds must be maintained, my damages repaired, and my registration desk must be manned and my phones answered. I cannot do it all myself.
I don’t get a choice, there is very little elasticity in the commodity services I require. If I am a good manager and businessman, there will be virtually no elasticity, because I will have already trimmed my staff and organized the duties of staff so that I am not paying anybody I could live without. So I won’t lay people off if wages go up, I need those people to provide whatever I sell. So what are my choices?
I can try raising my prices, but if that were possible in my market, and I am not an idiot, I really should have done that years ago: We charge what the market will bear.
Within a few years of opening a business its pricing should already reflect the sweet spot of maximizing my total average profit.
So what else? Nothing else. I either eat the lower margin or risk experimenting with price changes. If I have any margin to spare (and if I am a good manager I will), I will let my competitors take that risk first and see what happens to them.
The bottom line is that it is naive to think we set our prices based on our costs; we set our prices based on what customers will pay. We don’t lower our prices if labor is cheaper, we don’t raise prices (or lay people off) if labor gets more expensive. A well run business has exactly the number of people it needs, there should be no extras standing around being paid unnecesarily.
Stamford,
“Oh, yeah! I forgot about that … if memory serves me correctly, the DI was loaded up with McFlightsuit cronies who let the oil industry run the department. The oil industry did the work, turned in said work to the McFlightsuit morons in the DI and the DI just signed their names … yes … good times, GOOD TIMES!”
So only politicians you dont like engage in cronyism? Cronyism and regulatory capture arent endemic to politics as a whole no matter who is in charge? Couldnt Obama have appointed anyone he wanted to that position once he was in office? He must have thought they were doing a heckuva job or he would have replaced them wouldnt he? Also Ill humbly point out that your trying to rebut a government failure with a government failure. Not sure what thats supposed to prove other than government is inept?
“They are stealing from the rest of us. They steal from me because our American low-wage workers (and don’t tell me there aren’t any because I was one, including farm labor, and I still know many through my extended family that are still minimum wage laborers) cannot compete with no-tax, $4/hr work, and up on longer unemployment lines, food stamps, and welfare.”
Tony I suppose this is what you mean when you say you explained it? That was on the 16th.
But the day before, the 15th, I had posted this
“If you say because they are taking jobs at lower prices, then maybe you should consider how much the labor they are offering to do is really worth.”
So who is not reading who if I, almost supernaturally, offered a rebuttal to your argument before you even made it. Your proposal is artificially inflated wages (they would be artificial if they are set arbitrarily by the government and not voluntary interactions of individuals, which by your own admission would lead to lower wages), which drives up the price and reduces the availability of the products they produce. This solves the so-called “problem” of immigrant workers performing those jobs at lower wages, lowering the price of the goods they produce and making them available to wider range of customers thanks to lowered prices. .
Again there are plenty hoops you have left to jump through to prove that people making more food available at lower prices are somehow stealing from you.
“My sense of right and wrong is grounded in an inherent but well-informed and rational consideration of what is fair”
Well its not like everyone on the planet would have a different definition of whats fair right? I mean that wouldnt be an entirely subjective judgement at all.
“My behavior is not restrained only by what I might be legally punished for, so I pay my employees a living wage, or I get out of whatever business I am in that cannot afford to do that.”
Thats wonderful. Its your business, your money, your risk. Run it however you like. You have no right however to impose your personal business decisions on other business owners. No matter how many people agree with you.
“I do not think 33% have the right to dictate terms to the 66%.”
But the 66% have every right to impose their will on the 33% by virtue of what?