Comment by jimnotgym | Hacker News Reader

Comment by jimnotgym | Hacker News Reader

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I'm struggling to find the reference I wanted to share, but here is the right to control migration from a new member country, which presumably are the lowest wage areas[0]. Britain chose not to exercise this right in the first place, so it seems fallacious to suggest that the government would exercise further restrictions if it could. It was explained to me by an economist (Roger Martin-Fagg) as a deliberate policy (and why the UK lobbied the EU so hard to move east, the irony) to add more young people to the UK workforce because of low productivity and most particularly the pension crisis.

You are correct of course that extra people coming into a profession could cause stagnation of wages, but it is usually far more complicated than that. In the UK, despite all of this immigration we have rather low rates of unemployment, marginally lower than before the 2004 expansion of the EU. This seems counterintuitive if wage growth is an over-supply problem. It is also not true to say that an industry will just keep paying more and more to attract workers from other sectors. This soon hits the point in the modern globalised world that the industry just becomes uncompetetive and closes down, outsources, invests in labour reducing machinery, or moves. Wage stagnation is very real in Britain however, and for pointers to the cause you might want to look at why non wage inflation has been so low for so long, putting aside the last 18 months of FX driven inflation caused by comparatively weak sterling post Brexit vote (This adds around 15% to most imported goods).

[0]:https://en.wikipedia.org/wiki/Freedom_of_movement_for_worker...

> Britain chose not to exercise this right in the first place, so it seems fallacious to suggest that the government would exercise further restrictions if it could.

It's not fallacious and the UK did do that [0] for 7 years after they realised that the A8 migration estimates were incredibly wrong.

> In the UK, despite all of this immigration we have rather low rates of unemployment, marginally lower than before the 2004 expansion of the EU

First of all, no one here said immigration is causing unemployment, just wage stagnation for certain industries.

Second of all, it's not "counterintuitive", immigrants tend to move to areas with low unemployment so I would expect the above to be the case anyway. Most immigrants wouldn't come if there were no jobs.

> This soon hits the point in the modern globalised world that the industry just becomes uncompetetive and closes down, outsources, invests in labour reducing machinery, or moves

But that's not what's happening here, as you said, the jobs are still here (low unemployment). They're not automated or outsourced, they're done manually for minimum wage (or lower) by hard working immigrants from poorer countries.

I have to say, you kind of changed the topic. We were discussing about the existence of limitations for low skilled workforce, not whether or not Brexit was a good idea.

[0] http://www.bbc.co.uk/news/world-europe-25565302

> Most immigrants wouldn't come if there were no jobs.

That's fallacious. Perception of a market does not always match actual figures about that market.

Probably but we're talking about the UK here.

> But that's not what's happening here, as you said, the jobs are still here (low unemployment). They're not automated or outsourced, they're done manually for minimum wage (or lower) by hard working immigrants from poorer countries.

If this new labour force had not appeared are you seriously suggesting that UK employers would just have paid more and more to attract workers from other sectors? How would they remain competitive?

So you're not actually answering the topic at hand or the majority of my replies... OK.

> If this new labour force had not appeared are you seriously suggesting that UK employers would just have paid more and more to attract workers from other sectors?

Yes?! That's how it works... You literally agreed in your previous comment that part of the reason for wage stagnation was the extra new labour force.

> How would they remain competitive?

The same way they were competitive before 2004 I guess.

If your company relies on low skilled manual labourers working 12h a day for minimum wage or you go bankrupt... You should go bankrupt. It stops you from modernising and increasing productivity long term.

> If your company relies on low skilled manual labourers working 12h a day for minimum wage or you go bankrupt... You should go bankrupt. It stops you from modernising and increasing productivity long term

Yes they would go bankrupt or move production or automate...like I said originally. Perhaps this results in less jobs in the economy and the low skilled get paid less, the economy shrinks and every one gets poorer?

There is an interaction between immigration and wage growth but it is not a simple or linear one.

> Yes they would go bankrupt or move production or automate...like I said originally.

Yes you did. Did you miss the part where I replied to that?

> Perhaps this results in less jobs in the economy and the low skilled get paid less, the economy shrinks and every one gets poorer?

I'm sorry but what are you talking about?

Shitty companies going bankrupt does not mean less jobs or lower wages, in fact the opposite. It's natural and a good thing in a free market. So I don't know what you are on about here.

> There is an interaction between immigration and wage growth but it is not a simple or linear one.

Oh for sure. Immigration can definitely increase wages and the economy and create jobs. But you forgot the low skilled part.

Look, this thread has gone long enough and you're not addressing most of the things I write, so I don't see the point of this.

All I wanted was to clarify that the UK did not in fact have any power to limit freedom of movement of workers from the EU, that's it. I never wanted to argue about anything else.

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