The government finds that a lot of employers are prejudiced, and discriminate ag

Question

The government finds that a lot of employers are prejudiced, and discriminate against foreign workers. The secretary of labor offers the President three options to deal with this problem: 1. Arrest all employers who are hiring foreign workers at less than the market wage. 2. Introduce laws to improve the competitiveness of the labor market and economy, 3. Introduce an equal-work-for-equal-pay law that forces employers to pay the same market wage to both US and foreign workers. Explain how each of these solutions affects the labor market, foreign and US workers, and select the best solution.

Explanation / Answer

Let us evaluate each of these solutions one by one.

1. Arrest all employers who are hiring foreign workers at less than the market wage.

If this is done, it will harm forign workers rather than helping them for two reasons:

a) First people will be scared of hiring foreign workers as it will attract more legal bindings and checks on them. Therefore, employers will be unwilling to hire foreign workers and it will reduce job opportunities evn at lower wages for foreign workers.

b) Avaialbity of jobs will increase for US workers because those employers who have a preference for US workers wer hiring foreign workers for cost cutting as they were paying lesser wages to them but when they would be required ot pay equal wages ot both, they would prefer to hire US workers, other things being equal.

There is no "free lunch" when the government mandates a minimum wage. If the government requires that certain workers be paid higher wages, then businesses make adjustments to pay for the added costs, such as reducing hiring, cutting employee work hours, reducing benefits, and charging higher prices. Some policymakers may believe that companies simply absorb the costs of minimum wage increases through reduced profits, but that's rarely the case. Instead, businesses rationally respond to such mandates by cutting employment and making other decisions to maintain their net earnings. These behavioral responses usually offset the positive labor market results that policymakers are hoping for.

2. Introduce laws to improve the competitiveness of the labor market and economy

If labour market is so competitve that automatically the person with best calibre gets the highest payment then this discrimination can be stopped. Even if two people will get different wages, it will be based on their abilities not country of origin. No matter how many campaingns are done to request people to save elctricity, the best and fastest way is to increase per unit charge. Automatically people become more conscious. Similarly, competitiveness will work without direct intervention.

3. Introduce an equal-work-for-equal-pay law that forces employers to pay the same market wage to both US and foreign workers.

This option is best solution but will work to increase competitiveness of the market but when there are no prejudices. When people are surviving with prejudices then no laws can make market competitive. Laws work with rational minds. Prejudices minds are not rational. Prejudiced minds think in favour of or against a party irrespective of any logical backing. So, along with this law we need to use media, TV programs and other modes of communication to eradicate this prejudice from the minds of people.

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