Ezra Klein at the Washington Post today argues against a federal policy setting minimum compensation for workers:
That will create an incentive to do one of two things: Don't hire low-income workers (hire a teenager looking for a job rather than a single mother, or hire a housewife looking for a second job rather than an unemployed breadwinner), or hire illegal immigrants.
Klein is addressing not minimum wage laws, but a Max Baucus proposal Klein calls “possibly the worst [policy] in the world.” Baucus has proposed a “free rider” provision in his health-care overhaul bill. The bill penalizes employers who don't give low-income workers health insurance and thus stick taxpayers with the tab for the workers' insurance, through Medicaid.
Klein says this proposal “penalizes employers for hiring low-income workers who are eligible for subsidies.” A defender of Baucus would probably say the proposal “forces employers of low-wage workers to insure their workers or pay a fine.” I prefer Klein's phrasing, which I think more accurately describes the measure.
But we can borrow Klein's construction to describe minimum-wage laws, too: minimum-wage laws prohibit employers from employing low-income workers. This then drives employers to do one of two things: don't hire low-income workers, or hire illegal immigrants.