Who Needs to Raise the Minimum Wage When You Have Trump

Nice article today in Bloomberg on how challenging it will be to find enough legal workers to build the wall between the U.S. and Mexico.  It turns out a significant number of construction trade workers are illegal, which Trump (at least now that he is President) will not allow. 

https://www.bloomberg.com/news/articles/2017-01-26/trump-wants-to-build-a-wall-finding-workers-won-t-be-easy

So the question becomes, where will we get the workers?  Obvious answer, pay higher wages and train people to get them out of their parent's basement and into the work force.  Which is good for workers, but which drives up inflation, drives up the price of other construction, e.g. homes, and cuts into the profits of construction companies.  Wish I had seen this coming.  Wait a second, I think I did.  In a post just over a month ago I noted the following on the participation rate:

People who would just as soon stay home in their parent's basement or live off welfare.  Getting these folks to take any new factory jobs or infrastructure jobs is going to take some pretty high wages.  But rest assured, factory wages (and service sector wages) will have to go up as we are shipping a few million illegal immigrants out of the country and building a wall to keep them out, so companies that are already dealing with a 4.9% unemployment rate will be desperate to get workers and have to pay significantly more.  Trump may be wholly against raising the minimum wage but his economic plans will do plenty to raise wages, and prices, and inflation.

To the extent companies cannot raise prices to offset the increased wages because foreign companies have a massive exchange rate advantage, there goes those tax incentives out the door (assuming companies do not simply spend the saved tax dollars on dividends and buybacks like they did with money borrowed under the Feds low rates).  Prices will also have to go up, increasing inflation, increasing interest rates, increasing dollars needing to service debt and decreasing profits.  Yep, sounds like a good plan.

Don't get me wrong, I am all for getting people jobs and increasing the participation rate, but it will have consequences that I think are being ignored.