Workfare leeches

Let me introduce a concept that will help you understand what’s wrong with low-skilled immigration, despite “they are doing jobs locals don’t want to do”. For that, let’s imagine a tribe that has two activities: gathering food and building a statue to for the spirits. It’s obvious that someone not gathering food is a burden to the tribe, someone else has to gather food to feed him. The time spent gathering food for him is time not spent building the statue. Because of this welfare leech, the statue is building slower. If enough people are welfare leeches, all the productive people are gathering food and the statue building halts. So far it’s obvious.

But let’s look at the group that gathers food, but not enough to survive. While they contribute to their own well-being, they still need assistance from others, taking away their time from building the statue and – assuming there are enough of them – can cause the building to halt. Only someone who gathers all his food is not a burden to the tribe. Of course just gathering for yourself is not enough, you actually have to contribute to the statue to be a valuable member, but hey, if you neither take food, nor contribute, you are no different from the stone in the corner.

People who work, but not enough to support themselves are the workfare leeches. They are clearly better than the welfare leeches, both because they create some part of their consumed value and need only the rest and because they show good faith by at least trying to contribute. Why isn’t this obvious? Because anyone who works contributes to the GDP. If we add a tribemember who pick some food, the total food production of the tribe goes up, so the chief looking at the charts is happy about this improvement. Too bad that the statue is now building slower. Of course if he wouldn’t be dumb, he’d notice that the GDP/capita went down.

In the real society, it’s not as easy to see who contributes for himself as in the tribe. We don’t only need food, shelter and other things we buy, we also need education, health care, roads, police on the streets and many other services that the government provides. In order to keep the society afloat, people have to pay taxes. Being small-government fiscal conservative doesn’t change that as the current level of welfare state is objectively existing. Sure, go change it, but until you do, it’s here.

Ergo, someone who has a full time job and receives no formal welfare can still very well be a workfare leech, someone who is carried by the society, assuming that he receives more health care, education, police assistance and whatnot from the government without paying enough tax (including the tax that the employer and the buyer of his product pays) to support these. Such people – despite being self-reliant people on the surface – are still burden on the welfare state. Please don’t forget that in order for the society to be in balance, you have to pay for your childhood expenses (mostly education) too with your later taxes.

You probably guessed where this is going: the meatpacking or fruitpicking immigrant worker who pays no taxes at all is a workfare leech. The main problem isn’t that he “takes the job of a citizen”, but that the job itself is insufficient for supporting anyone. Importing someone who can’t even support himself is alike getting tribe members who collect some food, but not even enough for themselves. “Hey, GDP is up” – says the dumb commerce chamber guy, not realizing that GDP/capita went down. The productive taxpayers pay for all kind of government services to him and his family (who will likely stay and be workfare leeches like himself) instead of building “the statue”: military, space exploration, nature conservation and other government issues that do not directly cater to any particular person, but to the whole country.

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Author: Gevlon

My blog: https://greedygoblinblog.wordpress.com/

26 thoughts on “Workfare leeches”

  1. “You probably guessed where this is going: the meatpacking or fruitpicking immigrant worker who pays no taxes at all is a workfare leech. ”

    Why does your country allow fruitpickers to not pay taxes? That sucks. In the US, we collect 15% of even the poorest worker’s income with the special non-income tax income tax, which is theoretically earmarked for social security and medicare but which actually just goes into the Treasury, and then there’s another 10% from sales tax, so 25% total as an absolute minimum, for someone so poor as to pay o% state and federal ‘income tax’. Our fruitpickers generally immigrated here as an adult, so we don’t pay for their schooling, and they get very little other benefits, the police totally ignore them, etc. The very rich generally have enough loopholes for their spending so that they pay under 20% of their income in total taxes (like Trump, who lives like a king but pays zero taxes), so we reward the rich for their intelligence by exempting them from taxes, while still collecting 25% from our illegal immigrant fruitpickers. You always brag about how your country doesn’t let workfare leeches into the country; but the real win is letting them in and then making them work harder than the benefits they receive. That’s why Trump talks a lot about being tough on immigration but hasn’t really done much to back up his talk. He knows that we need the fruitpickers and the veggiepickers, because we like to eat food.

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  2. Let’s say that Adam and Bob are normal productive members of the tribe. They both gather enough food to sustain themselves, and they both work on the statue in their spare time.

    One day, Adam and Bob have returned to the village after a successful day of hunting. Adam stops Bob and suggests “Hey Bob. We’re both going to deposit our food at the village storehouse. Why don’t you drop your stuff here, and I’ll carry everything back? That way, you’ll have time to talk to your wife before we begin work on the statue.” Bob agrees. Adam drops off two units of food, while Bob drops off none.

    In the eyes of the village elder, Adam has suddenly doubled his productivity. He’s a stellar contributor! Meanwhile Bob has suddenly become a welfare leech. We ought to exile him! But in the omniscient eyes of the village spirits, no meaningful change has occurred — it’s just an accounting error.

    Under a modern capitalist system, you can’t judge a person’s contributions solely by examining their net income. Bob the fruit-picker earning $0.30 per carton of grapes seems like an unproductive leech, but he enables the existence of Adam the millionaire farmer. If you divided the farm’s income fairly among all participants (giving a larger share to the farmer based on his administrative work, capital investment, etc) then we’d probably find that *nobody* there is a workfare leech.

    If the fruit pickers weren’t under threat of starvation and deportation (i.e. if they could effectively negotiate and/or form unions) then they might actually earn decent wages. That would necessitate vast increases in the retail price of produce, of course. But those current prices are bizarrely low *because* of market distortions (such as agricultural subsidies and migrant labor).

    You could remedy the situation by deporting all of the immigrant fruit pickers. Crops would go unharvested. Supermarkets would be unable to stock many kinds of produce. Regular citizens would be unhappy at the restriction of their diets (and/or the higher prices for imported fruit). Farmers would adapt; some would pay much higher wages for domestic workers, while others would invest in new equipment. Either way, you’d see a major restructuring of the workforce and displacement of millions of people.

    But at the end of the day, what would you actually have *achieved* with this transformation? There’s still an orchard somewhere in Californa growing apricots, and there’s still a human picking them. Since it’s a domestic worker, we can assume that he’s being paid a livable wage and that the fruit is now significantly more expensive for consumers. Why is this outcome preferable to one in which keep the *migrant* worker, but pay him a decent wage? You’ve replaced a tough and experienced worker with a clueless newbie (who will probably quit when things get rough).

    If he has to pay $12.50/hr, then the farmer would probably prefer his old workforce instead of whiny Millenials with bachelor’s degrees in basket-weaving 🙂

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  3. @Mike: most fruitpickers pay no taxes because they are employed outside of the books. Even if they are formally employed, with $5/hour, the 25% is mere $1.5/hour tax, $2900/year. That won’t pay for anything.

    Even if they immigrated as adults, they have kids for school. They get sick like everyone else and they won’t be able to pay their hospital bill. The police can’t ignore them because they commit crimes, just as any other person of the same socioeconomic status. Who will pay for all these? You.

    The reason Trump is just talking is that he is another lying politician now. He tell the people the right thing for votes, and then does the opposite for the Goldman Sachs type state capturing oligarchy.

    @edwardqjones: then Bob is dumb for falling for the trick. Exile one of them and all the rest of the Bobs will make sure their food crates are properly accounted for.

    Even if you are right, the taxpayers are robbed. The fruitpicker pays nothing because he earns nothing. The millionaire farmer pays nothing because of loopholes. The hard working non-farm people pay for everything. Let’s burn this down I say – even if you were right (you’re not).

    Deporting isn’t instant. Let’s say 10% deported in a year. Then we should see the effect.

    What I achieved is not paying for health care, education, criminal justice for 20+M people whose contribution to the society is next to nothing.

    @Anon: that would be the perfect solution, but that can’t be done. Deporting the migrants can be done. Just because you can’t deport all workfare leeches, you should deport as many as you can.

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  4. The problem with your “two tribes” example is that the scope of the economy is limited by localization and scale. You also associate welfare with labor in regards to taxes being paid by illegal immigrants, which according to IRS and SSA figures, undocumented workers paid in almost 11 Billion in tax dollars in 2010, even though they were not required to. But according to SSA/IRS numbers, they are the last to ask for, or receive any type of social welfare benefits.

    The common nonsense heard from the right(conservatives) is: Get a better job!

    Which is nonsense because one of two things will happen if they do find a better job:

    1. Employers will simply fill those vacated, lower paying jobs with a new batch of workers who will still need assistance, or
    2. Employers will go out of business because no one can afford to work for them.

    The problem with the American welfare system is that for every dollar received in the form of public assistance, by those who also work, only .17-.18 cents is spent on actual food. How does that contribute to a healthy GDP?

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  5. I’m going to disagree somewhat. Imagine that you’ve got your populations of Productive, Neutral and UnProductive citizens. It’s entirely true that the Neutrals could be considered, in your terms, to be Workfare. They’re at,or around about, no impact. So they’re useless – not really contributing.

    But their existence does actually have a very significant impact – economies of scale. As economies scale, the breakeven point shifts, as the cost of living decreases. The boot factory is making 50% more boots – so the price per boot decreases. This increases the productivity of everyone in the factory, decreasing the cost of the boots – reducing the cost of living. This then cascades along the economy.

    Critically, this economy of scale even increases the productivity of the 4 hour a day canteen staff – who were neutral (or worse), increasing their value. Scale really, really matters…

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  6. You can restrict unproductive employment by applying standard regulations to the job market, enforcing minimum wages and cracking down unregulated, untaxed cash-in-hand transactions. Enforcing a baseline cost for labour restricts unproductive roles and encourages manual-labour intensive industries to become more productive.
    The UK is a poor example but basic enforcement of immigration and employment regs has resulted in non-nationals being dramatically less likely to be employed in grey-market employment than nationals, 3 times less likely to be unemployed, and half as likely to be getting in-work benefits.
    The US has an anti-regulation culture and prohibitive legalisation requirements for immigrants. As a result, some businesses profit by exploiting the undocumented servant class at the expense of society.
    TL:DR – Businesses exploit vulnerable workers. Enforced protections require them to becoming productive members of society.

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  7. The United States, in grand, shortsighted fashion, screwed itself in 1913 when it ratified the 16th Amendment to the Constitution. That’s the one allowing individual taxation. My personal tinfoil hat theory? The initial taxation wasn’t enough for the progressives to really ruin society with, so they invented Prohibition right after that to provide the Hegelian Dialectic that allowed “personal income tax” to really start rolling. So: Problem: Not enough taxation of personal income! Solution: Screw our OTHER source of government income. Result: Whelp! Gotta increase the income tax! Not-our-fault! (Technically, there was personal income tax after the civil war, and it was such an awesome cash cow government got addicted to it… but the people didn’t like it.)

    Personal income tax was just too big of a cash cow to not milk into the ground. And this is why societies always collapse, they either collapse under the dead weight of their own compounded mistakes, or they were so inept in the first place that the first group that comes along can easily conquer them.

    How does this apply to Immigration? A “legit” employee has to pay a percentage of their income, plus another percent of Social Security (and other stuff.) Then the employer pays a matching Social Security component. All that money comes from the employer. The person employed is just the middle man. Unless you’re a connected industry! Then you “rent seek” the government to grant you waivers somehow. The easiest way to do that is to allow you to go to other countries, capture their people, and force them to work for you. Oops! Can’t do that… turns out that’s “slavery” and most people have a problem with that. And it was outlawed already… back in 1864. There was even a nasty war. (The war was over states rights, not slavery per se… but meh.)

    So the next best option is bring in third world wage slaves desperate to improve their lot in life and use them like slaves to bring your labor costs down. Of course, you need the government to look the other way while acting like it cares. So you rent seek it to make it drag it’s feet on “Immigration control” and whatnot.

    So what do you end up with? Second class “citizens” who expend immense effort to get to the country they want to work in, then immense effort on crappy jobs, and immense effort stressing over being deported. Meanwhile, all the ACTUAL welfare leaches in that third world country… the ones unwilling to go through that much trouble… stay home. Or… they CLAIM they’re “hard working immigrants” and ride the coat tails of their more effective countrymen.

    So. Is Mexico screwed up because Mexicans are useless, or is Mexico screwed up because of the malinvested human capitol?

    If you support immigrant labor, be careful how you answer that, because you will look either racist or stupid. If you want to help Mexicans, the only long term way to do that is to enforce strict immigration policy, and at the same time, buy the products they produce. Of course, you need balanced trade for that to work. In any case, it STARTS with not being greedy bitches and using slavery to reduce your costs. Meaning: strict immigration policy.

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  8. @Anonymous: that would be a valid argument in a small country and not 300M people USA.

    @Dobablo, Smokeman: true, but totally offtopic. The point is that just because someone works and contributes to the GDP he can be a burden to the society.

    @Souldrinker: simple, because people still do them, as it pays for their food and drink, while the taxpayers pay for everything else.

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  9. @Gevlon
    >even if you were right (you’re not)

    About which part? The assertion that American citizens won’t accept starvation wages? The assertion that apricots can’t be economically harvested (at current retail prices) using COTS technology? The assertion that livable wages for fruit workers would increase the price of produce in supermarkets? The assertion that a migrant fruit worker is more experienced and productive at his job than an average unemployed US citizen? The assertion that agricultural subsidies exist in the United States?

    I don’t mind being called out on my ignorance or stupidity. It’s disappointing to see a multi-part argument dismissed in one line, because then I don’t even know *where* I’ve made mistakes.

    >Deporting isn’t instant. Let’s say 10% deported in a year. Then we should see the effect.

    I’ll concede this point. If you deport a small fraction of workers then many farmers will begin to adapt early (via automation, crop switching, etc) and the transition could be accomplished without sudden supply shocks.

    I’m just not yet convinced that the transition is something that’s worth *doing*, because of the human costs that it would incur and the uncertain benefits from its completion. The average US household spends approx $750 per year on produce. If your program effectively cuts taxes by $750 (via reduced welfare outlays) while doubling the price of fruit (via increased wages, amortization of farm investments, increased reliance on imports, etc) … then it’s a dubious proposition.

    You want to build support for these ideas, right? Then please show us some numbers. Give us something that we can dissect, or rebut, or share with others. Your video game articles often exhibit extensive data-gathering and pattern analysis, which is very persuasive. This whole discussion is just a collection of guesses and pet narratives; it probably won’t change very many minds.

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  10. @edwardqjones: “even if you were right in your scenario that farms produce enough GDP to support owner+workers just it’s unevenly distributed and the worker is robbed”. The truth is that if farms were forced to pay living wages for their current workers, they’d all go bankrupt. In Europe we see that huge farms ran by a family with no workers except a few seasonal ones.

    If someone costs more to the society than he produces, he is a burden to the society. That should be obvious. Unfortunately we cannot gather data because illegal immigration is purposefully hidden and because those who profit from it lie (the farmer will keep yelling “deport them and you’ll starve” while it’s surely not true, at best food prices go up). So the only possible way to know is deporting a significant but not critical amount of illegals and we see the results. If the benefits beat the costs, it’s good.

    Also, you forget something: if we deport illegals, not all of their jobs will be automated or obsoleted by crop change. Some will be taken by locals who will no longer be welfare leeches. While they also pay more for food, they also earn much more.

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  11. If apricots can’t be farmed efficiently enough to pay the labourers a decent wage then maybe we shouldn’t be farming apricots? If you like them, feel free to pay extra for the privilege, but using an argument like “without illegals, our apricots will rot on the trees” is non-sequitur. Who cares about apricots?

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  12. “Even if they immigrated as adults, they have kids for school. ”

    Your theory was that kids pay for their education later in life through surplus labor as adults. Now you want parents to pay for kids education. Which is it? If they have kids here who get educated, then their kids will be qualified to be more than fruitpickers.

    “They get sick like everyone else and they won’t be able to pay their hospital bill.”

    Or, more likely, they’ll just die without getting treatment.

    ” The police can’t ignore them because they commit crimes, just as any other person of the same socioeconomic status.”

    They commit crimes less, because A. They know they’ll be deported if they commit crimes here. B. There are two reasons to be low socioeconomic status here. One: can’t speak English, no education. Two: poor morals, lazy. Obviously, the latter case is more likely to be a criminal, the former case is more likely to work in fields. Immigrants are the former case. If an immigrant does commit a crime, then he gets deported. It’s cheaper for the police to only deport the small number who commit crimes, rather than to deport everyone. Maybe there are some parts of the US where deportation makes sense.

    Where I live, unemployment is already very low. We don’t need to deport any workers. We are already sending recruiters around to nearby poorer counties, trying to steal their illegal immigrants to come work here. There are fruitpickers around here, illegal immigrants, making 20+$ dollars an hour picking grapes to make fancy wine, with employer paid healthcare. I agree that they should make more effort to hire legals, since they’re offering enough money, but that’s a long term solution, in the short term we need the fruitpickers we have.

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  13. @Gevlon

    You are confusing illegal immigration with workers who come here on “undocumented” status. The latter is allowed to come here. The latter also pay taxes with an ITN that is issued by the IRS each year. They earn income tax refunds and pay sales tax on what they spend here. Immigration judges also look more favorably on citizenship applicants who work and pay taxes. There are ~2.1 million farm workers each year across the United States, a majority of which are undocumented. But those 2.1 million farm workers produce enough food so that another 18.1 million people can be employed in food processing and food service jobs.

    You act as if your tribe system will only produce just enough food so that everyone is able to be fed, with no surplus. You and I both know that a single bad weather event can reduce production. Do you then blame the workers for being “workfare leeches” because they have nothing to contribute? Do you propose they should be allowed to starve in such a situation?

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  14. @Mike: there is a strong correlation between the status of the parents and the kids. It’s very likely that they will also be workfare leeches or less.

    Hospitals treat anyone who shows up at their door.

    They aren’t deported if they commit crimes, because “sanctuary cities”. They just go to jail and when they are out, they go back to the society. If you live in an English speaking country and don’t speak English, you are lazy.

    Low unemployment: you are still not getting the point of the post: LOW WAGE WORKERS (Immigrants or citizens) are workfare leeches. While they earn some money, they also take government help from other, higher paid taxpayers. These jobs shouldn’t exist.

    @Noguff: nope. Undocumented is a politically correct term for illegal. You are talking about legal immigrant workers (green card, H1B visa)

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  15. “there is a strong correlation between the status of the parents and the kids. It’s very likely that they will also be workfare leeches or less.”

    That’s probably true here, because our educational system is designed to fail. The fact that it is designed to fail shows that the rich people here don’t agree with your theory about workfare leeches, since they’ve designed the educational system of the US to create a ton of workfare leeches.

    “Hospitals treat anyone who shows up at their door.”

    Have you personally tried to get treatment for something real in the US? I don’t mean like a broken arm or a knife wound, I mean like cancer. (some) hospitals treat the first even without insurance, but a chronic condition? They’ll say it’s chronic, not acute, and show you the door, even if Tomi Lahren says otherwise.

    “Low unemployment: you are still not getting the point of the post: LOW WAGE WORKERS (Immigrants or citizens) are workfare leeches.”

    You’re not getting the point of my reply: In my county, people are getting paid 200% of the minimum wage to do fruitpicking, so they’re not workfare leeches here. I live in an area with a lot of immigrants, and people are getting paid twice the minimum wage to do lowskill jobs because unemployment is so low; the areas of the US with low immigrant populations have higher unemployment. This suggests that workfare leeches aren’t a big drag on the economy, and that perhaps over time they stimulate and grow the economy and eliminate themselves through wage growth. A mechanism to explain this is obvious: they aren’t getting paid much, but they’re still working hard, so someone else is gathering much of the income they worked to create: the goblin who employed them, and wants them to stay. the goblin never pays much taxes, and the workfare leech doesn’t pay much, but if the goblin gets rich enough off exploiting the workfare leeches, eventually he’ll create a bunch of new jobs that do pay well, which will pay for all of the government services. I’m just confused by your new focus on “who will pay for government services” instead of “how will goblins get rich”, which seemed to drive your earlier and more convincing economic theories.

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  16. It’s strange that schools under every administration “are designed to fail”. I find it more likely that the kids inherit the bad morals of their parents.

    They might don’t treat chronic conditions, but those are common among the old. For young there are knife wounds and heart attacks.

    If they are so well paid, I’m sure the jobs could go to unemployed citizens.

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  17. The foundational idea of this post, that a worker’s wage measures his total contribution to the economy, is incorrect. Just as a merchant doesn’t capture the entire value created by the economic transaction of a sale, so a worker doesn’t capture the entire value added by his labor.

    Illegal workers are at a particular disadvantage in capturing the value added by their labor, because they can be deported– so their BATNA isn’t a job at some other minimum-wage business in their host country, or even living on welfare in their host country, it’s whatever opportunity they have in their country of origin. Which is bound to be pretty bad, or they wouldn’t have entered another country illegally to find work there.

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  18. Due to Pareto’s law, it’s normal for roughly half the population to be a net burden. Normally they’re kept around as cannon fodder. Consider the skill distribution for warfare – 20% of the warriors are doing 80% of the winning. However, if you have one group of 20, and one group of 20 with 80 ‘useless’ grunts in front, the group of 100 is going to win, simply due to exhausting the other side’s competent fighters.

    This instinct hasn’t caught up to modern technological warfare, where the energy is provided largely by chemicals rather than muscle power. However, immigrants are still useful for voting, more or less mimicking the cannon fodder mechanic, and indirectly for buying off other voters or lobby groups.

    It’s strange that schools under every administration “are designed to fail”.

    Of course they’re designed to fail. Dependent, childish citizens are far more tractable than independent citizens. Google John Taylor Gatto for the full history.

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  19. @Ravanna: of course no one told that wage = GDP contributioni. The average wage is $22/hour, so with 8 hours, 20 days, 12 months the average wage is $42K and only 1/3 of the US population is employed ($14K/capita) while the GDP is $55K. But there is a strong correlation, since those who generate more can command more salary at the penalty of quiting and going elsewhere.

    However even if a worker somehow creates $100K GDP while not earning enough to pay for his healthcare, education and whatnot, the situation is unacceptable. This case would mean that someone (likely his employer) pockets the $100K while other people are keeping his worker alive with their taxes, practically subsidizing his business. This case self-solves when deportation comes, because the employer – wishing to keep at least part of his $100K – will pay more to his workers (the same ones or legals after the illegals are gone) to keep the business running.

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  20. @Gevlon: “of course no one told that wage = GDP contributioni…. But there is a strong correlation, since those who generate more can command more salary at the penalty of quiting and going elsewhere.”

    This is only true to the extent that wages are linked to value created, which is often a weak link, just as the price of products is often weakly linked to the value to the consumer. Road workers in the US don’t make much money, even though having roads is immensely important to GDP, because the job requirements are low, so a road worker who demanded a wage based on his GDP contribution would be out-competed by one who was willing to work for the market rate.

    On the other end of the spectrum are jobs that are very well-paid while making a zero or negative contribution to GDP, like contract attorneys whose main function is to make contracts so complicated that no one but a contract attorney can understand them, or insurance claims adjusters who make someone other than their employer pays for a claim.

    “However even if a worker somehow creates $100K GDP while not earning enough to pay for his healthcare, education and whatnot, the situation is unacceptable. This case would mean that someone (likely his employer) pockets the $100K while other people are keeping his worker alive with their taxes, practically subsidizing his business.”

    That argument only applies if the link between wages and value created is strong– which is why I called that a foundational idea of the post. It’s not necessarily “unacceptable” for the market to set a low wage for a high-value job, any more than it’s “unacceptable” for the market to set a low price for a high-value product. It just means that some other factor than value created is determining the value of the labor/product.

    In the case of the unskilled road worker, no one person “pockets” the difference in value– the entire society benefits. In which case, it makes perfect sense for society to subsidize the road construction industry through welfare.

    In general, if a job contributes to GDP, but the market value of the labor isn’t enough to keep a worker alive (e.g. unskilled road worker making minimum wage), then the government has to choose between paying welfare to legal workers, or forcing those industries to get cheap labor on the black market.

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  21. It’s indeed true that some high value jobs (like the road worker) is not paid, just like the highest value product (air) is free. However it has a reason: supply and demand. Air is free because it’s very common. I can just breath it. Similarly, the road worker is easily replaceable because there are many unemployed or badly employed people around who can do the job. If that’s the case, why not just deport a big part of them? This way the other part will have better employment and higher salaries.

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  22. You might as well suggest requiring a college degree or a pricey certification for road workers to narrow the pool of eligible workers. All it would accomplish would be to force construction-sector hiring further into the black market.

    The US has a tremendous demand for cheap labor. Based on our track record with Prohibition and the war on drugs, I feel confident in saying that trying to legislate a high-demand item off the market will only end badly.

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  23. @Ravanna: if it would be done by forced minimal wage or forced college degree, you are right, it would just go to the black market. But if you deport half of the workers, they’ll have no one else to hire and the equilibrium market price would go up. And an illegal is much harder to hide than a bottle of beer.

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