I think that is a flawed expectation given what we observed over the last few years. Although i guess you could argue the wage impact on inflation was minimal and most of it was due to other causes.
Yeah but unemployment would go up.
That’s new left vs old left. Old school leftists like the people who support Bernie Sanders usually want strong borders and don’t want businesses to exploit immigrants.
I am just continuing to make the case for not raising the minimum wage as a way to make everyone rich. I do agree with you about limiting immigration will tend to increase wages at the lower end of the wage spectrum.
So my problem with the idea that employers need to pay a living wage is that a living wage differs by personal circumstances, not the job being performed.
The crux of the matter. The right underestimates the net value to our standard of living. The left wants more income distribution, yet also has an emotional desire to live up to a long held American idea. “Send me your poor, your weak,…yada yada” It is a noble pledge. It adds some dignity to being an American. That desire is hard to extinguish.
But the harsh truth is you cannot have both open borders and a robust social welfare policy. Choose one.
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What you are suggesting would cause a material amount of wage compression for workers that are right above the minimum wage.
When that happens, the workers that are now making very little above the minimum wage but have more responsibilities will become less motivated and productive. This will then have knock on impacts on economic growth.
Having a wage structure that differentiates for skill levels and responsibilities is key to improving productivity.
And improving productivity is the only way of making the workers on the minimum wage wealthier.
Its analogous to a shelf stacker at Walmart making the same amount of money as a nurse. This is actually happening in the UK and the economic effects are highly destructive (nurses leave the country).
If you take the viewpoint that the United States is a place to do business, then open borders seems like the most natural policy choice. It allows US businesses to have access to the world’s labor and population growth increases profits. You are essentially monetizing the American dream for the benefit of investors. Also a low min wage and low regulations makes it very easy for american businesses to hire immigrants, illegal or otherwise.
higher productivity increases the demand for labor, but you seem to be ignoring the supply side. If people dont want to work in a chicken factory, then the chicken factory should raise wages. But then there is inflation and people complain. So the gov brings in immigrants who are desperate and the factory doesn’t need to raise wages. How is this the free market? Do we do this with lawyers or doctors?
Higher productivity increases the demand for skilled labour. It does not for unskilled labour: that chicken factory would not pay higher wages. It would look at ways of becoming more productive via automation.
At the other end of the equal sign are consumers. Higher wages results in higher prices for that product, which then makes your product (which is now more expensive) uncompetitive with likely (now) cheaper imports. And thats when your sales will suffer (as will your companies bottom line)
Thats how a country becomes wealthier over time. It focuses on higher value add goods and services vs lower margin goods and services.
Paying people more because “reasons” won’t make them better off. Only increases in aggregate productivity will, as thats the only realistic way of increasing the lower bar without making the people living off wages at that lower bar poorer.
To add an example:
If you have ever visited Norway you would have seen that they have a lot of DIY services. They have automation, but they also rely on people to be self-sufficient when it comes to basic services, and the reason for this is the very high cost of labour there. Asking for additional services would materially raise the price for the consumer so they try to avoid it as much as possible.
In the US, this would be impossible because people would demand that someone (cleaner, butler, maid, etc) do those services for them at low wages. They would never hire someone to do it for higher wages.
You can marginally work around these problems using automation (say a robot grass cutter or a robot hoover etc) but that only goes so far.
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Okay, I thought we were disagreeing.
I’m fine with that. I think wages at the bottom in the US are “too low”. I won’t try to define “living wage”. Limiting or stopping immigration of low skilled workers will tend to increase the wages that are too low.
Are we talking past one another? I am not suggesting a change in the statutory minimum wage. I’m suggesting that we stop admitting low skilled immigrants.
Yes, that will cause some wage compression as fewer low skilled workers means higher wages at the bottom. That’s a good thing. The US has too much income inequality.
When that happens in the US, we can talk about the right response.
And skilled labor leads to higher productivity. That’s why I want to change immigration policy to focus on skilled workers. Again, I’m thinking you may have missed that this is about immigration policy, not about a statutory minimum wage.
How does shifting immigration policy to favor higher skilled workers increase unemployment?
That won’t fix the problem either as you have a material slice of the US population that is unskilled, uneducated, and unproductive.
They are not going to start doing the jobs that the lower wage immigrants were doing. Even if you increased wages to the extent that you could (in any sector) while still retaining a degree of competitiveness.
The reason is because of poor geographical labour mobility. Those lower skilled folks in the US don’t want to move away from their local areas. They want the higher paying jobs to come to them which is basically impossible in many lower income regions.
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sorry I thought you just wanted to arbitrarily raise wages.
If hamburger makers double their productivity then Mcdonalds lowers their marginal cost, then the price of big macs goes down, people eat more big macs, and then demand for hamburger makers goes up leading to higher wages.
I disagree with what you are writing. I think most low wage jobs are not desirable and it’s possible with extreme restrictions on immigration that wages for easy unskilled jobs would actually rise significantly. Most unskilled farming jobs would actually pay 30 bucks an hour, if not more, without immigrants. But apparently the free market shouldn’t apply to people working in agriculture.
Do you have any evidence to back this up? A huge portion of US fruits and vegetables are harvested by migrant farm workers here legally. You think a big chuck of the US population would suddenly become itinerant farm workers and get great pay with the right law change?
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I think they are paid by how much they harvest.
90 years ago, CA imported illegals from Oklahoma.
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I think population decline has more to do with effective birth control
No sane human wants to raise 10 kids
I said without immigrants. Everyone who works on farms here in Quebec is legal but they are paid poorly and mistreated. The wage that these farmers would have to pay in order to attract non-immigrants would be much much higher. It’s probably worse than being a custodian at a hospital and those workers make around 25 bucks an hour with all the benefits. So maybe not 30 bucks an hour, but close.