Full text: Price Takers' Plenty in a Model of Pure Capitalism.

Here again, however, the price maker’s excess demand for labor does 
not necessarily lead him to create a sellers f market for labor. On the 
analogy of product markets, one is tempted to argue that just as the 
price-maker seller can look to foreign markets as an outlet for his excess 
supply instead of incurring the cost of persuading the domestic public, to 
buy more from him, so the price-maker employer can also look to importing 
unemployed low-wage foreign workers and so satisfy his excess demand for 
labor without the expense of pampering his domestic workforce with fringe 
benefits. Slavery in America’s past, the toleration of the illegal entry 
of Mexican workers in America’s present, and the admission of foreign 
guest workers to just about every advanced industrial country during the 
postwar period are the obvious examples. 
I believe, hovrever, that there is also a more general factor that 
militates against employers’ being motivated to establish pension plans 
and other fringe benefits for labor by the profit motive (rather than by 
union pressure) and that is unemployment. As long as the employer can 
get additional workers for the asking, it is not in his interest.to incur 
the cost of offering fringe benefits — unless he wants to get and keep the 
best ^workers and ensure the loyalty and stability of his vrorkforce. For 
labor is one of the most highly substitutable commodities, which means that 
the availability of labor in one field soon spills over into other fields 
in the absence of artificial restraints on entry into those other fields. 
Accordingly, nonwage competition with its fringe benefits for labor is not 
likely to be engaged in by isolated price-maker employers in the presence 
of unemployment in the rest of the economy.

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