This paper examines the relationship between a federal minimum wage increase to $7.25 per hour and illegal immigration in the United States. Challenging the common assumption that higher wages attract more undocumented workers, the paper argues the opposite: raising the minimum wage makes low-wage jobs more attractive to legal residents, reducing the vacancies that illegal immigrants have historically filled. When combined with employer-penalty immigration laws, the wage increase is presented as a mechanism that could meaningfully decrease illegal immigration by eliminating the labor market conditions that have made such immigration economically viable.
The knee-jerk reaction to news that Congress was set to raise the federal minimum wage to $7.25 per hour is that it would cause an even greater flood of immigrants to enter the country illegally and take minimum wage jobs away from legal residents. The net effect, so the argument goes, would be to essentially negate the economic benefit of the increased wage. However, when one truly examines the issue of illegal immigrants in minimum wage jobs and moves past surface-level assumptions, it becomes clear that the opposite is likely to occur. As a result of a minimum wage increase, illegal immigration will actually decrease.
An argument can be made that illegal immigrants enter the United States in order to work at minimum wage jobs that still pay better than any work available in their country of origin. Under this view, increasing the minimum wage would only strengthen that incentive, drawing more undocumented workers across the border. However, this argument fails to consider the actual reason illegal immigrants end up in minimum wage positions.
The reason illegal immigrants are found working minimum wage jobs is that these positions are open. There are not enough people willing to work for the current minimum wage to meet employer demand. Companies are therefore left to fill those roles with whoever is willing to accept that wage. Many of these jobs end up filled by illegal immigrants, who are willing to work for the low pay because it still exceeds what they would earn in their home country.
If the core reason minimum wage positions go unfilled is that the pay is too low, then it follows logically that raising the wage would attract more legal citizens and residents to those jobs. While most workers are not willing to accept the former minimum wage, many would be willing to work for the proposed $7.25 rate. This shift would fill the vacancies that had previously been taken by illegal immigrants.
If these positions are filled by legal workers, fewer employment opportunities remain for undocumented individuals. With fewer opportunities available, the economic incentive to enter the United States illegally diminishes. The end result is that illegal immigration decreases as a direct consequence of the minimum wage increase. The causal chain is straightforward: higher wages attract legal workers, legal workers fill the vacancies, and the labor-market pull for undocumented immigrants weakens accordingly.
"Employer penalties reinforce the wage effect"
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