Labor's Hurricane George

New Orleans offers a quick study of Bush labor policy in action: On Aug. 29, Hurricane Katrina strikes, causing widespread destruction. Four days later, President Bush commits $10.1 billion of the taxpayers' money to rebuilding New Orleans. Four days after that, he suspends the Davis-Bacon Act — the law that requires federal contractors to pay workers the going local rate.

Illegal immigrants, willing to work at less-than-prevailing wages, stream into New Orleans. And a mere six weeks after the last evacuee leaves the Superdome, we hear of complaints by illegal workers that employers are stiffing them of their meager pay.

So here you have it, a lesson on how to crush the market for blue-collar labor. And it could have been done in four PowerPoint slides.

In the Bush view, market forces may do their magic for some Americans, but not for others. They can operate freely when they raise the prices for stocks, oil or real estate. But when they raise the price for American labor, something must be done.

If you really believe in market economics, and there is a labor shortage in New Orleans, why even bother suspending the Davis-Bacon Act? Any attempt to lower labor costs when the laws of supply and demand are pushing them upward should be futile.

A market knows how to deal with shortages. When there's a shortage of something, the price for it automatically rises. That applies to oranges, rhinestones or labor. If you can't find help, you raise the pay, and the workers will come. That's the way markets work.

There's only one sane explanation of why Bush would try to lower wages in a tight labor market: He intended all along to flood the market with cheap foreign workers.

It's a simple setup: (1) Get rid of Davis-Bacon, so contractors can offer below-market pay that Americans and legal immigrants won't touch; (2) continue to disregard the law that forbids companies to hire undocumented workers; (3) when people complain that the workers restoring New Orleans are not legal, say that they are taking jobs no American wants.

The one price that may never rise, in the Bush mindset, is the price of labor. Companies must cope with rising costs for energy, drugs or land. If they can't deal with it, they go out of business. But cheap labor is somehow an entitlement.

Bush had no problem imposing tariffs on steel to protect domestic companies from foreign competition. But he expects American workers to compete with the several billion people around the world who want their jobs.

Meanwhile, the market for upper-income workers remains protected and respected. All nod in agreement when the hotel executive defends his $10 million pay package as the going rate for a man of his talents. But supply-and-demand explanations never seem to apply to the compensation offered the woman who cleans the rooms.

High wages for the workers rebuilding New Orleans should be a good thing. They would bring back people who had fled the region. And they would attract other Americans looking for good jobs. More people with more money in their pockets are the formula for jump-starting the devastated Gulf economies.

On a national level, better wages for laborers would help reduce the growing income gap between the richest Americans and the working class.

A total mystery is why the sweating masses let the Bush administration do this to them with so few political repercussions. Are they stoned in front of their televisions?

The people are actually riled up by the labor free-for-fall, we are told. But then Bush gets up and gives his phony tough talk on immigration. He promises more money for police action at the borders and says nothing about doing the only thing that can ever solve the problem: prosecuting employers who hire illegal workers. How about using the new detention-center beds for them?

If rock bottom is where Bush wants American wages to go, we have more ways to get there. We could bring back child labor. We could reinstitute slavery, which is not far off when companies stop paying illegal laborers for the work they've done.

Could the day be near when Bush announces that America needs people to do the work illegal aliens won't do?

Providence Journal columnist Froma Harrop's column appears regularly on editorial pages of The Times. Her e-mail address is fharrop@projo.com