David R. Henderson  

Rubio versus Harwood and Rubio versus Free Labor Markets

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"In retrospect, that decision ... The Danger of Economics...

Last night's Republican debate was quite interesting. I can't do justice to all of it in one post, but here are two highlights that involve Marco Rubio.

I said yesterday that leftist John Harwood was a strange pick to be questioner. I asked rhetorically "How does that help any of them?" Maybe I was wrong. It might have helped because he was so biased and so into gotcha that the candidates, especially Rubio, looked good by comparison.

The most interesting interaction between the two was this:

HARWOOD: Senator Rubio, 30 seconds to you.

The Tax Foundation, which was alluded to earlier, scored your tax plan and concluded that you give nearly twice as much of a gain in after-tax income to the top 1 percent as to people in the middle of the income scale.

Since you're the champion of Americans living paycheck-to-paycheck, don't you have that backward?

RUBIO: No, that's -- you're wrong. In fact, the largest after-tax gains is for the people at the lower end of the tax spectrum under my plan. And there's a bunch of things my tax plan does to help them.

Number one, you have people in this country that...

HARWOOD: The Tax Foundation -- just to be clear, they said the...

(CROSSTALK)

RUBIO: ...you wrote a story on it, and you had to go back and correct it.

HARWOOD: No, I did not.

RUBIO: You did. No, you did.

(APPLAUSE)

(CROSSTALK)

HARWOOD: Senator, the Tax Foundation said after-tax income for the top 1 percent under your plan would go up 27.9 percent.

RUBIO: Well, you're talking about -- yeah.

HARWOOD: And people in the middle of the income spectrum, about 15 percent.

RUBIO: Yeah, but that -- because the math is, if you -- 5 percent of a million is a lot more than 5 percent of a thousand. So yeah, someone who makes more money...

HARWOOD: (inaudible)

RUBIO: ...numerically, it's gonna be higher. But the greatest gains, percentage-wise, for people, are gonna be at the lower end of our plan, and here's why: because in addition to a general personal exemption, we are increasing the per-child tax credit for working families.


I checked the data and Harwood is both right and wrong. Notice that he doesn't say above that the percentage gain to the top one percent exceeds the percentage gain to the bottom 10 percent. He says that the [percentage] gain to the top one percent is double the percentage gain to the middle. According to Tax Foundation scoring, he's right.

But Rubio is right that Harwood admitted two weeks earlier that he had screwed up and that he had retracted. It was stunning to see Harwood deny this when there's an electronic trail.

Notice how careless The Federalist is about this. It's headline:
Surprise! John Harwood Lied About Marco Rubio's Tax Plan

No, he didn't. What he lied about was that he had had to take back a previous criticism. Notice also that Scott Hodge of the Tax Foundation did not claim in his now-famous tweet that Harwood lied or even got Rubio's plan wrong. Instead he claims that Rubio correctly stated that the percentage gains to the lowest 10 percent exceed the percentage gains to the top 1 percent. Here it is:

What disappointed me most about Rubio was his call for increased regulation of labor markets. He stated:

For example, before you hire anyone from abroad, you should have to advertise that job for 180 days.

One of the big pluses we have had in this country is relatively flexible labor markets. Making employers wait half a year to hire someone? That's positively European.


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COMMENTS (8 to date)
Chris Koresko writes:

DRH: What disappointed me most about Rubio was his call for increased regulation of labor markets. He stated:

For example, before you hire anyone from abroad, you should have to advertise that job for 180 days.

One of the big pluses we have had in this country is relatively flexible labor markets. Making employers wait half a year to hire someone? That's positively European.

Correct me if I'm wrong, which is quite possible because this is just from memory, but I believe the context was in hiring a foreign worker with an H-1 visa. The moderator had raised the concern that Rubio's plan to liberalize the hiring of foreign workers would lead to US companies' replacing Americans with cheaper foreigners. Rubio would require the companies to advertize the job opening for 180 days and to pay the foreign worker a 'prevailing wage' in order to discourage that.

I don't think a smart conservative like Rubio, or even a dumb conservative, would advocate a 180 job ad requirement for hiring in general.

It's interesting that he's advocating a minimum wage law to restrict hiring of otherwise potentially low-wage workers. Shows he understands some economics, doesn't it?

DK writes:

[Comment removed. Please consult our comment policies and check your email for explanation.--Econlib Ed.]

David R. Henderson writes:

@Chris Koresko,
You’re not wrong.

David R. Henderson writes:

@Chris Koresko,
Moreover, that’s what I said. Note the quote I used from Rubio. That’s what “from abroad” means.

_NL writes:

The "180 day" rule seems like a transparent attempt to make it completely impractical to ever hire any foreigner but for certain highly idiosyncratic positions like professors, creative-class jobs, and maybe top flight business managers. Some of those jobs, particularly where it's pre-wired and they know who's getting the job, they can wait six months between picking the candidate and starting work.

Maybe they'll write it generically. In that case, you might be able to list a position perpetually, then just hire whatever people you want.

This sounds like a dumb idea. Is the government going to get into what it means to advertise for the job - does the Internet count? Is the government going to decide whether a posting on a link buried in the company's website for "multiple positions in multiple departments" is generic enough to cover every job opening? Will Article I judges have to start reading job ads to decide if they are specific enough to the job? This rule is stupid and encourages cheating; rules that encourage cheating also encourage further government rulemaking and enforcement.

Republicans talk about eliminating dumb government rules and expensive regulations, but they have the same mindset that leads to the proliferation of such rules and regulations.

David R. Henderson writes:

@_NL,
Well said.

Hazel Meade writes:

Unfortunately for everyone, it is increasingly clear that liberalizing immigration law is a non-starter for a huge number of Republican voters (and probably a lot of Democrats too). Trump's success seems almost entirely based on that one issue, and the fact that he is the only candidate taking such a hard line stance against immigration. So much that Republican voters are willing to overlook his un-conservative stances on a host of other issues.

There may even be enough of these people to outweigh the Hispanic vote in the general election, which everyone has been saying is so important to get. If not, it would be a disaster for the Republican party, of course. But the virulence and single-issue focus of so many of these people is a little scary in that it could convince a lot of people that it is.

Paul Brown writes:

Good observations about Rubio's allusion to a 180 day advertising requirement. Would get messy.

Nevertheless, if I remember right he did describe the nature of the problem that prompted the unpractical cure. Many businesses, as he said, are in my mind abusing the H1B visa program to the detriment of fully qualified and very experienced American citizens.

I know a lot of computer programmers, and in a lot of big companies they are taking it in the shorts just as Marco described. Programmers are told they are going to be replaced by foreign workers, a severance package is proposed, and in order to receive it they are compelled not only to train their replacements, but also to sign agreements that preclude their going to the press or anyone else to rat their employers out. One programmer I know well had this happen at two successive companies, Nationwide and State Auto.

This is happening to thousands of very skilled professionals across the country, and with regularity. And it has nothing to do with recruiting people with skills that can't be found here. Those being replaced are generally more skilled than those replacing them. They just cost more because they're Americans with years on the job.

This phenomena is increasing with the passage of time, and is simply morally wrong. Period. That's not to say there's never a need for international recruiting. But these tragic and unfair practices generally impact large numbers of people simultaneously, wiping out departments in large part. Only justice in it is that often the managers selected to stay and who manage the layoff and transition are themselves replaced a year or two later.

A patently immoral practice to which a solution needs implemented. Testimony has been given in Congress multiple times, yet nothing is ever done to rectify the situation. As usual. Don't want to interrupt the flow of campaign contributions.

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