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Could a $9 Minimum Wage Reduce Illegal Immigration?

Undocumented immigrant men wait to find work in the early morning on a street corner in Brooklyn, N.Y.

Photograph by Stan Honda/AFP via Getty Images

Undocumented immigrant men wait to find work in the early morning on a street corner in Brooklyn, N.Y.

President Obama didn’t draw the connection in his State of the Union address, but his plan to raise the minimum wage might help him with his plan to curb illegal immigration.

If companies pay more for low-skilled work, they’ll have an easier time finding native-born workers and legal immigrants to fill the jobs. That will decrease the demand for illegal workers.

While Obama didn’t make that point, others have. Michael Dukakis, the Democratic presidential candidate in 1988, co-wrote a New York Times op-ed in 2006 headlined “Raise Wages, Not Walls.” “If we want to reduce illegal immigration,” they wrote, “it makes sense to reduce the abundance of extremely low-paying jobs that fuels it.”

Ron Unz, a former physicist and banker who ran for governor of California in 1994, says the only problem with Obama’s plan is that it doesn’t go far enough. He says the minimum wage should be at least $10 an hour, and possibly $12. Even if today’s illegal immigrants are put on a path to citizenship, “there will be large-scale incentives for more to come” unless the minimum wage is raised substantially, Unz says.

Free-market economists respond that raising the minimum wage is the wrong way to deal with illegal immigration. “There is an evil logic to the idea,” admits Bryan Caplan, a professor at George Mason University and blogger for EconLog. One drawback, in his view, is that illegal immigrants who are working and contributing to the economy—even, in some cases, paying taxes for Social Security benefits they’re not eligible to collect—would be thrown out of work. “They’ll go from illegally employed to legally unemployed,” Caplan says.

“It’s cutting off your nose to spite your face,” says Madeline Zavodny, an economist at Agnes Scott College in Decatur, Ga., who is a visiting scholar at the American Enterprise Institute. “With a big increase in the minimum wage, you would reduce employment for everybody who’s a low-wage worker.”

Coy is Bloomberg Businessweek's economics editor. His Twitter handle is @petercoy.

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