> It’s only a matter of time before companies will be forced to start increasing wages just so they can find people.
It’s been like 30+ years. When does the trickle begin?
It’s been like 30+ years. When does the trickle begin?
*Just to clarify, this issue is definitely more complicated than an S&D curve and it is not my intention for this issue to become mired in politics. However it's worth having a discussion about domestic wage stagnation and the decline of the middle class in the US, and how it relates to the past 30 years of trade liberalization and increased immigration rates.
An increase in supply will result in an increased supply. But as I've said in another response--adding people to the economy also tends to increase the aggregate demand for labor. It's not a simple function.
I agree, but the contention is the lag between growth in demand and new immigration. More people will consume more and increase aggregate demand, this we agree on. Most new immigrants don't add a lot to domestic consumption especially if they come from a background of relative poverty. So finding that balance is important.
Just to state, I am more for increasing immigration for people with advanced degrees, but when it comes to low skilled immigration I feel that as a nation we owe it to our poorest to look out for their interests as long as wages remain stagnant for their income strata.
Generally this indicates that the effect is too small to overcome statistical noise.
In the long term however, we have good evidence to support that immigration of all kinds is a net benefit to the economy.
> I feel that as a nation we owe it to our poorest to look out for their interests as long as wages remain stagnant for their income strata.
And if immigration is likely beneficial long term, and the short term impact is unknown or at least too small to easily measure, then decreasing immigration isn't necessarily looking out for their interests (or the interests of their children).
Automation will likely play a much bigger role in wage growth over the next decades, but no popular politicians are calling for an ban on self-checkout lines.
What’s the evidence that it is beneficial in the long term?
We have had decades of flat wage growth and large l increases in cost of living.
In the short term it’s clearly negative when you take into account not just wages but increased pressure on housing and infrastructure.
This is the consensus view among economists. If you do some searching it's going to be hard to find anyone outside of far right ethno-state proponents who doesn't believe that long term immigration is a net benefit.
"Economic analysis finds little support for the view that inflows of foreign labor have reduced jobs or Americans’ wages. Economic theory predictions and the bulk of academic research confirms that wages are unaffected by immigration over the long-term and that the economic effects of immigration are mostly positive for natives and for the overall economy." [1]
>In the short term it’s very clearly negative when you take into account not just wages but increased pressure on housing and infrastructure.
This is not very clear. If you take it to the extreme, sure there is some amount of immigration could cause enough such a strain on housing supply and infrastructure that it would be a net detriment. We don't know what the number is, and there is no consensus view that we've come anywhere close to reaching it.
[1] http://budgetmodel.wharton.upenn.edu/issues/2016/1/27/the-ef...
Economists are the modern day equivalent of seers reading tea leaves.
> who doesn't believe that long term immigration is a net benefit.
1) Well the first problem is they are lumping all long term immigration together.
Yet it’s clear that not all immigration is alike. For example:
“the estimated fiscal burden of immigration is five times higher for native residents of California than of New Jersey”
2) The second problem is the focus on wages instead of total economic gain:
“They find a small but positive effect, equal to about half a percentage point, on the average wages of native workers”
And they go on to state the key reason for the lack of wage decline is because native workers are pushed out of lower skilled jobs and go into jobs that immigrants lack the skills for.
They aren’t taking into account the additional costs (whether they be additional study, higher stress, lack of flexibility, etc) to the native born.
E.g. A half percentage point pay rise from a new job is a financial net negative if I have to go to college to get the new job.
3) The third and biggest problem is they give no indication that the kind of immigration the US has is sustainable.
For example can natives continue shifting to communication heavy and education heavy roles without limit?
And if they can’t the article makes it clear that immigration will likely result in wage decline:
“both studies find that earlier immigrants experienced wage declines, on average, of 4 to 7 percent” [from new immigrants competing for their jobs]
Edit: Worse still they don’t even compare low skilled immigrants to the next best alternative. It reeks of bias.
Econ models are good, but their pretty useless to normal people.
For example In this scenario the reason that economist say that immigration is a net positive, is because those immigrants also need
Food Water Clothes Shelter
So the addition of those people ends up increasing total demand.
Econ is brought up to win arguments, while policy is hidden away.
The fact is that wages will go down because automation is crushing it and firms now have the ability to set prices for the market.
Immigration is a convenient concept, but ultimately useless in diagnosing or dealing with the problem.
Problem is America has a lack of good jobs, humans are hard to retrain and most of your welfare and support systems have been systematically gutted.
So the experts are useless because the data is just too complex to make accurate models, but the data isn't too complex for you to use to make accurate predictions?
Or are you saying that the expert consensus is wrong because it's a product of ideological bias, but your conclusions are correct because for some unknown reason you are free from bias?
> but your conclusions are correct because for some unknown reason you are free from bias?
Who said my predictions would be better or free from bias? I also can’t read the tea leaves!
Instead since there is a great deal of uncertainty we should treat immigration as a risk management game.
Low skilled immigration can clearly have major costs to our society and from all available data provides a very limited upside.
And once you invite people into your country it is extraordinarily difficult and in many cases immoral to kick them out.
Basic risk management techniques tell us don’t take high risk low reward actions that you can’t back out of.
I thought you couldn't read the tea leaves? But here you are doing just that.
>high risk low reward
You're the one saying it's high risk low reward. That requires you to do a bit of prognosticating, and if you're predictions are admittedly know better then why should we trust you over the majority of economists?
America has been accepting high rates of non-merit based immigrants for our entire history. The majority of experts say that this has been beneficial. Why should we change the status quo now based on your unsupported and by your own admission, unsupportable predictions?
No I’m not. I’m talking about a possible outcome. I’m not assigning a likelihood to that outcome.
In theory there is some overlap in that I’m saying the odds are not so ridiculous that they can be dismissed out of hand.
> why should we trust you over the majority of economists?
I think you are misrepresenting the majority economic view which as far as I can tell is “more likely positive than not”.
What kind of guarantee do you think economists are offering?
> America has been accepting high rates of non-merit based immigrants for our entire history.
America is a dynamic system.
What would have happened if the Irish who couldn’t get jobs here went on welfare instead of going home?
Could you guarantee the same outcome?
The truth is in the real world lots of things are fine until suddenly they aren’t anymore.
> Why should we change the status quo now
I’m suggesting we apply basic risk management techniques.
The same techniques you would apply on a software project.
The same techniques doctors apply when recommending treatment options. Etc
I’m saying let’s apply a best practice used in medicine, law, engineering, and finance to government policy.
Why do you take issue with that?
With no likelihood, this is completely pointless. You don't know the odds of any outcome, you're just arbitrarily deciding "high risk low reward".
I can bring up possible outcomes as well. Here's one: We don't know what will happen if population growth reverses. The native born American birth rate is below replacement, so without substantial immigration, our population will begin to quickly decline. We don't know how that will affect our economy, but it will likely cause massive damage even if we reverse our immigration policies once we are aware of the damage.
You don't get to arbitrarily decide what the inputs are to the cost benefit analysis and then declare that you're "just applying basic risk management techniques".
I've outlined a possible negative outcome to severely restricting immigration, you've outlined a possible negative outcome to staying with the status quo.
The only way to know which is more likely is to create models and predictions, which you think is futile, but economists tend to agree that my outcome is more likely than yours.
How do you feel about other issues with unknown outcomes? The clathrate gun hypothesis? AI taking over and killing us all?
Should we ban all software development just to be safe....just until we’re sure? Once the genie is out of the bottle, it’s too late to go back. It’s just basic risk management.
Risk management is useless if you insist that all predictions are just reading tea leaves and there is no way to know which outcome is more likely.
Would you play a round of Russian Roulette for $100? The most likely outcome is positive.
> Should we ban all software development just to be safe....
Why do you keep trying to reduce the argument to the absurd?
I haven’t made any mention of banning immigration and yet you are contrasting my position to banning software development... like somebody working on a web browser will magically invent a new master AI.
>Why do you keep trying to reduce the argument to the absurd?
Really?
In your Russian Roulette example, we know the risk, we know the rewards, and we know the probabilities of both.
With regards to immigration, you believe you can't estimate the probabilities, so you've arbitrarily decided that expected the risk outweighs the expected reward.
>I haven’t made any mention of banning immigration and yet you are contrasting my position to banning software development... like somebody working on a web browser will magically invent a new master AI.
So if that's the problem you have with the argument I’ll change it to just banning just AI research?
Let's go another route. Automation through software development has the potential to cause very similar problems to what you think immigration will cause--depressed wages, high unemployment etc…
There’s a big potential downside, we can’t realistically undo it once it’s done. We don’t know the probabilities because the experts can't be trusted. The sheepmullet doctrine says we should ban it (or severely restrict it?).
Think about what you are saying.
What probability of serious harm are you willing to accept in return for a half percentage point pay rise?
You must be certain the chance of things going wrong is almost nil.
What gives you such certainty? Your economics experts certainly aren’t claiming to offer such certainty.
> Automation through software development has the potential to cause very similar problems
At the end of the day it’s a significantly easier problem to manage.
Software can’t vote, get welfare, etc. Software doesn’t have any rights.
And of course even on this much simpler problem we should still apply risk management techniques.
Again, you're completely ignoring the potential negative consequences of severely restricted immigration, and understating the likely positive benefits.
How is that working out for Sweden at the moment?
2. You realize you were replying to a statement that said "In the long term"?
What an amazing and completely original scapegoat. Even if it were true, using a 7th grade economics to describe the entirety of U.S. employment economics has to be a joke, right?
I am not an economist but immigration rates and the relaxing of barriers of trade between nations would seem to be the most impactful policies on domestic wage growth. You can always argue that these policies have helped to lift the rest of the world out of poverty, but it doesn't belie the fact that increased immigration rates impact on wage growth for American workers. Maybe someone could shed more light on this issue, but I would suspect that both issues are inexorably tied.
Immigrants also contribute to the economy. Depending on how much they contribute, immigration can raise or lower wages. The issue is how much do they contribute? Immigration doves argue they are a net gain, while immigration hawks argue they are a net detriment.
Historically, in the long run, immigration has always been a net gain.
How is it not a scapegoat to say immigration is the cause of flat wages?
Flood your economy with low skilled labor at the same time that average GDP growth is at an all-time low and productivity growth is at an all-time low. See what happens.
If your economy isn't growing fast enough to absorb the amount of low skill labor that you're importing, you're going to considerably depress wages.
In more realistic terms, 1.5% to 2% GDP growth isn't going to get you anywhere. You have a stagnant economy at those growth rates. Finally then the mistake is being made of throwing a lot of new unskilled labor on top of that at exactly the historical time when you need a lot of new unskilled labor the least.
This is not the effect that the term "trickle-down", or "supply-side" economics refers to. Trickle-down economics is a fallacious concept that says if you make rich people or corporations even richer, they will in turn re-invest their riches in things that employ wage-earners. There is no empirical support for this concept, and much empirical evidence that the reverse is true - a vibrant economy requires most of the economic activity to be enriching the lower/middle class wage earners.
The massive flow of capital to e.g. China is simply wage arbitrage combined with structural disadvantage, e.g., no worker safety protection, environmental protection, etc costs.
If you leave out unskilled workers (whose share of capital went offshore), wage growth among skilled American laborers has been very high... which is also what you'd expect from trickle-down.
From the Chinese central bank, which has massively expanded the economy through low interest rates and easy credit.
Wealthy people are are investing their windfalls, but not in production, but rather in rent-seeking FIRE assets. Those assets do not create middle- and lower-class wage jobs, in fact they suck income out of those classes.
> wage growth among skilled American laborers has been very high
You will have to support this with more than just an assertion. The wages for skilled trades, for instance, have not nearly kept up with inflation. Skilled manufacturing, same. Some of the professional categories, like software development, have seen some growth - but the outliers in SF/NY are outliers, not the median nationwide. Doctors net less, lawyers are mostly destitute unless they are in the 10% who make it in biglaw, and so on and so on.
[1] https://www.ft.com/content/45bd8052-59dc-11e8-bdb7-f6677d2e1...
Supply-side economics seems kind of flawed then.
How does it account for automation taking jobs?
The inflation adjusted per capita income transfer for welfare programs has nearly tripled since 1979.
The US welfare state has massively expanded over 30 and 40 years. The rich are paying for that social safety net expansion. The top 20% pay 87% of all income taxes in the US.
Nobody ever wants to talk about these facts because it's unpopular and deflates the propaganda.
US poverty is near an all-time low. Homelessness is at an all-time low. The poor now have near universal healthcare coverage.
The US spends more on welfare programs as a share of GDP than what Australia and Canada do. It'll surpass Switzerland on that metric within a couple of years. The US has a lower homelessness rate than Canada or France and a poverty rate as low as those.
If the rest of the unfounded assertions above are as incorrect as this one, we should completely disregard this comment.
In many republican-controlled states, for instance, it is impossible for a non-disabled male living in poverty to obtain health coverage.
The top 20% pays more taxes because they make 80% of the money and own 80% of the assets in the country. That's how it's SUPPOSED to work.
As a PERCENTAGE of their income they pay much less that the middle and lower class.
The poor have universal health care? WAT. Cant even justify this with a response.
The US spends more on welfare programs as a share of GDP than what Australia and Canada do...but we're behind like 20 other countries. Bizzare cherry picking there.
https://en.m.wikipedia.org/wiki/List_of_countries_by_social_...