A few weeks ago, I listened to an interview between Matt Cadwallader and Dani Rodrik on the Harvard policy cast. In this interview, Dr. Rodrik made the claim that workers who compete with labor markets in other countries may be the victims of “unfair competition.” This is because hiring workers who are protected by policies that promote worker rights (i.e. minimum wage, non-pecuniary benefits, mandatory safety precautions, etc.) tends to be more expensive than hiring workers without such protections. Thus, workers with fewer protected rights will have an advantage when competing for jobs. To make matters worse, it is generally illegal for protected workers to make themselves “cheaper” by negotiating a contract with fewer protections.
Later that week, I encountered this argument in a different context. I was discussing immigration with a friend and during our conversation, I claimed that “Mexican immigrants often take jobs that Americans will not do.” He responded that “illegal immigrants had an unfair advantage on the labor market.” He went on to explain that Americans have a high opportunity cost because they have access to welfare programs while illegal immigrants do not. Furthermore, companies do not have to pay the same benefits to illegal workers, which makes them cheaper. Though the context was different, this was Dr. Rodrik’s argument repackaged. Differences in the laws that regulate workers can give certain groups an unfair advantage over others in the labor market.
As hard as this can be to acknowledge, worker protections can have negative unintended consequences, especially when globalization and immigration create groups of workers that are governed by different policies, yet expected to compete with one another. Because of this, free trade, open borders, and worker rights–three ideas that are commonly supported together–may be inconsistent and harm the very workers that legal protections are intended to help.