The Labor Shortage
The Bush administration is greeting the latest stock market jitters by imposing onerous new regulations on American businesses. Among the measures announced by the White House is that the Department of Homeland Security will increase fines on employers who hire illegal immigrants. "DHS will use existing authority to update civil fines for inflation in order to boost fines by about 25 percent, as much as is allowed under current law," the press release said. Last we checked, the inflation rate in this country was a lot less than 25%. In case anyone missed the point, Secretary Chertoff underscored it, warning in a press conference on Friday, "there's going to be an economic consequence to tough law enforcement."
And how. The front page headline in this morning 's number of Crain's New York Business reports, "Firms hit wall on tech hiring." It reports that a Manhattan-based online-video company, after searching for months in New York City for six software developers, "opened a satellite office in Toronto." When it comes to labor in New York, "Right now the demand is exceeding the supply," Crain's quotes the company's chief executive, Bart Feder, as saying.
The White House's immigration initiative also includes a plan to crack down on employers who report Social Security numbers for employees that don't match up with the government databases. The employees would have to be fired. A Washington Post editorial yesterday warned that the measure will "force employers to cycle furiously through workers, at a cost of time and money."
The White House said that as part of its plan "the Department Of Education Will Launch A Free, Web-Based Portal To Help Immigrants Learn English." It wouldn't be surprising if the Web site has to be programmed in Toronto or India, because Congress has set legal immigration levels so low that there is a shortage of qualified workers here in America. Nor is it only small companies feeling the consequences, but large ones, too; a vice president of Google, Laszlo Bock, testified before Congress in June that "each and every day we find ourselves unable to pursue highly qualified candidates because there are not enough H-1B visas."
Anyone hoping that the next Republican president will improve our approach to this issue may be disappointed; Mayor Giuliani, who spoke beautifully of the value of immigration while he was mayor, has as a presidential candidate spoken of immigration primarily as a counterterrorism matter rather than an economic principle or moral concern. Governor Romney, meanwhile, is trying to get to the nativist side of Mr. Giuliani, attacking him for allowing New York to become a "sanctuary" for illegal immigrants. To which we would say, we'd happily allow the entire country to become an immigrant sanctuary, which is what it was founded as, if it could duplicate the economic growth and reductions in crime that took place in New York City under Mr. Giuliani's leadership.
George Melloan, one of the sages of the Wall Street Journal, warned on July 27 that "The federally mandated severance of labor supply from demand is inopportune." Since then, following the failure of Congress to pass the comprehensive immigration legislation championed by Senators Kennedy and McCain and by President Bush that would have legalized many of the illegal immigrants, the stock market, which knows a protectionist mood when it sees one, has dipped about 2%, as measured by the Standard and Poor's 500 Index. How much more will the market have to slide before the Bush administration stops announcing plans to crack down on employers and starts focusing on getting them the workers they need?
