WSJ's Wage Argument Strikes Out

Monday, October 23, 2006

WSJ's Wage Argument Strikes Out

Late last week on its editorial pages, the Wall Street Journal cited a study by the National Foundation for American Policy (NFAP) as proof that immigrant workers don't depress wage levels.

What sector of the workforce did NFAP examine? You've got to read it to believe it:
A new study shows that, as of Aug. 31, a whopping 23% of (baseball) players on active rosters in the majors were foreign born.

... But you don't hear Americans complaining about this group of immigrants. And we're not aware of any U.S.-born hitters accusing the Red Sox home-run champion David Ortiz — or the other Dominican players here on visas — of stealing their job.

One of the most potent anti-immigration myths says that granting visas to foreign workers drives down salaries for Americans in the same field, be it technology or anything else. .... this myth ignores reality. In truth, an employer's ability to hire all the skilled labor he needs tends to lead to higher productivity and, ultimately, a growing economy that will create a demand for more jobs, not fewer.

At any rate, research for the study revealed that an influx of foreigners in the fixed market of 750 major-league roster jobs hasn't depressed salaries.

On the contrary. As the percentage of foreign-born players doubled after 1990, average salaries quadrupled. Among the factors at work: the visa-holders contributed to more exciting play and higher attendance.
Trying to extrapolate by using the wage patterns of major league baseball players as a barometer for all sectors of the economy is laughable.

In the case of pro baseball, we are talking about highly specialized, highly skilled professionals who work seasonally in a business that enjoys a federal exemption from anti-trust laws. It's a huge stretch for even the WSJ to suggest that the wage patterns of these working professionals are a sound basis for assessing wage patterns among, say, child care workers, day laborers in the construction industry, or housekeeping staff at hotels and motels.

The minimum wage for a major league player is at least $300,000.* Last time I checked, that was a little bit higher than the federal government's minimum wage.

I also find it amusing that the WSJ cites the example of big league baseball to make a point about wage levels. After all, free agency and the powerful union — the Major Leagues Players Association — have had a significant impact in providing steadily rising wages for players.

But, of course, the WSJ would never want to credit the union's role in negotiating and supporting high wages. The corporate crowd and the "ownership society" aspirants who are regular WSJ readers would rather believe that higher attendance and "more exciting" play were the key factors.

My sense is that the wage impact of immigrant workers probably depends somewhat on which sector of the economy you're looking at, but (as with so many complex issues) the WSJ's conclusion is prejudiced by its dogmatic adherence to the gospel of the free market.

* - That $300,000 minimum salary was as of 2003. I'm willing to bet that the minimum salary is even higher today.

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