Blumneconomics VII

This week The St. Petersburg Times' own editorial pinata, Robyn Blumner, swings into action to decry the actions of employers who hire undocumented workers.

This review of Blumner's column warrants the "Blumneconomics" label because it illustrates yet again how little Blumner appears to understand about economics.

I'll spell out that obvious economic principle and then explain how Blumner blunders in her analysis.

Expanding the supply of labor will decrease the price for labor (wages). The United States, of course, has an artificial wage floor, called the minimum wage. The minimum wage, along with overtime laws, helps ensure that fewer workers will find employment (higher prices for labor cut demand for labor).

Now heeeeeeere's Blumner:

Agriprocessors, the nation's largest kosher meatpacking plant, is at the center of page after page of sickening accusations. These are contained in an affidavit for a search warrant filed by a federal agent with U.S. Immigration and Customs Enforcement (ICE).

• Undocumented workers from Guatemala and Mexico were paid as little as $5 per hour — below minimum wage.

• A supervisor made a side business of selling the workers used vehicles, sometimes threatening them with loss of their job if they didn't purchase one.

• A supervisor duct-taped the eyes of an employee, who was then hit with a meat hook. The employee declined to report the incident for fear of being fired.

First, note that Blumner fails to acknowledge that the workers came here to work for less than minimum wage. Unless they were kidnapped from Guatemala or held near the plant against their wills then they have little complaint. They appear to have chosen their situation, even if it is the lesser of two evils.

Second, note that the employee who was hit with a meat hook wanted to keep a job where his supervisor duct-taped his eyelids and after which he was hit with a meat hook. It is apparent in each of Blumner's bullet points that the workers wanted the jobs they had.

The two observations above, combined with U.S. law, creates a conundrum that Blumner likewise fails to acknowledge: If the company follows the law then the undocumented workers receive no income. In addition, if the company reports the illegals then the law calls for deportation. Worser of two evils, here we come.

So, it seems that Blumner's unstated prescription involves paying the undocumented workers (yes, feel free to substitute "illegals" if you disdain the euphemism) no less than the minimum wage of legal U.S. residents. And if she does not advocate ignoring the law, then Blumner also (silently) advocates either a guest worker program or some sort of relaxed stance on immigration.

And what is the result of such a policy, unacknowledged by Blumneconomics?

Answer: A bigger work force with almost certainly fewer skills with a resulting increase in unemployment (greater labor supply combined with the wage floor). High unemployment along with the (enforced) wage floor results in less demand for work--the draw for immigrant workers decreases--unless of course the immigrant workers are entitled to unemployment, welfare or Social Security benefits.

How is this a good thing for the United States? How is it a good thing for Mexico?

Blumner apparently doesn't have a clue. For her, this is all about the evils of big business:

Federal agents have also arrested two low-level supervisors, including one who is alleged to have charged workers $200 for new documents so they could continue working at the plant.

This is a start, but the arrests need to continue up the chain to the plant's top managers and owners.

And after the plant's top managers and owners are either in jail or fined heavily ... who is supposed to run the plant? If the plant closes then what will the former employees do for work? Perhaps the Federal Government Employment Fairy will fly to the rescue?