Hacker News Reader

Comment by focusgroup0 | Hacker News Reader

Another factor: The Immigration Act of 1965 significantly increased the amount of labor immigrating to the country

https://en.wikipedia.org/wiki/Immigration_and_Nationality_Ac...

This is a prime example of the Lump of Labor fallacy. https://en.wikipedia.org/wiki/Lump_of_labour_fallacy

Our best studies have shown immigration increases overall welfare. The Mariel Boatlift studies are a good example of this: https://www.jstor.org/stable/2523702?seq=1#page_scan_tab_con...

I never understood this argument. More people in the country obviously leads to more labor supply but also more labor demand.

Rate of immigration past a certain threshold has been shown to suppress wages.

"a migration-induced shift of 10% in the supply of labour is associated with a 3% to 4% movement of wages in the opposite direction"

https://www150.statcan.gc.ca/n1/pub/89-001-x/89-001-x2007001...

If your supply is perpetually exceeding demand it sets that precedent. Neo-classical touters like to imagine an influx leading to new job creation: a) this is not necessarily true, b) if it is, it can be a slow process, c) if it is, it may not lead to a sufficient rate of job creation, d) companies are absorbing each other and wealth is concentrating at too high a rate. Growth will stagnate and we'll see a new era of "old money", just as it was before the world wars. And, we're dealing with the effects of automation to boot eroding jobs faster than new ones are replacing them. Just remember that what's good for the GDP is good for the rich, not necessarily workers.

Wages would go lower but goods will be higher. If an immigrant worker produces more than he consumes, the whole is richer, no way to cut that into an unfavorable calculation.

We get more goods with fewer and fewer people in assembly and we're no better off for it as far as structural inequality is concerned. I would check the assumption that a cheap immigrant worker would increase productivity at all.

Again, if the immigrant produces more than he consumes, the whole is richer. The arguments against that calculation would be that you dont like who benefts on that, but the whole is better.

You're referring to GDP increase. I already addressed this. The rest of us aren't seeing the benefits as we should. It's short-sighted.

The extra supply is balanced by the extra demand only if exports are zero. I.e. demand for Apple devices won't increase by 10% if the US population grows by 10%. And of course making 10% more rarely requires 10% more workers - you need more on the assembly line, but not more to design the items.

Those are points I hadn't considered, but what in the US, net exports are negative. Wouldn't that imply the converse effect to what you're describing?

It wouldn't. Say someone in the US buys something made in China - how does that increase demand for labor in the US? There's some marginal US labor required for the last part of the transport, but that's it.

Thee last part of the transport is not marginal in the real world. Increased local consumption drives transport, retail, marketing, etc. etc. Real life economic modeling is not a simple supply/demand, widgets made/sold chart.

The person pays for the good in US dollars. Where do those dollars go? The Chinese people who now have USD either spend or invest them back in the US.

Most of the dollars go as profit for the multi nationals. The remaining (very minimal) goes to the contract manufacturers.

Though thanks to the bigger market the prices can actually decrease, so living standards could increase, even if wages haven't.

Only if they wouldn't have bought it if they hadn't moved to the US.

This is a rather poor argument. US exports in total are only ~13% of GDP. The trade deficit is only ~2 or 3% of GDP. That's a tiny secondary effect.

Not if income inequality means only a small pool of incumbents is able to demand!

Women also doubled their laborforce participation rate from 30% to 60%.

https://ourworldindata.org/uploads/2017/08/Labor-Force-Parti...

How does this lead to wage stagnation? You've stated a potential piece of evidence but provided no reasoning to link to your (implicit) claim that immigration leads to stagnant wages. If that's not your claim, feel free to fill out the details.

Arguments have CER - claim, evidence, reasoning. Your comment was missing two.

It's pretty obvious he meant that wages were suppressed due to supply and demand, where the immigration act increased the supply of labor. If you'd like proof of the act doing just that: https://www.migrationpolicy.org/programs/data-hub/charts/imm...

Is that obvious that's what they meant? I understood it to mean that immigrants tend to earn less (I don't have this data myself), and could drag the average down. In that case the overall average real wage could stagnate while the average real wage of every cohort increased.

I don't think people need to spell out supply and demand every time they indicate that increasing the supply of something brings down prices.

In other words: yes, it is obvious.

The thing is, though, that while immigrants increase the supply of labor they're also consumers who increase the demand for labor. That's why you don't tend to see wages go down after exogenous immigration shocks like the Cuban boat lift in Miami. Well, non-English-speaking immigrants do actually tend to depress the wages of resident non-English-speakers somewhat but not the wages of English-speakers.

>The thing is, though, that while immigrants increase the supply of labor they're also consumers who increase the demand for labor.

Unless there is an increase in productivity, which if you read the article, would be apparent.

That is increase the labor supply while simultaneously increasing labor productivity and you will see a real drop in demand for laborers which is naturally going to result in a stagnation of wages. That is the extra demand created by the wave of low wage immigrants is more than made up with the increases in productivity in that same time period. Now you have a macro economy much more efficient at concentrating wealth.

How much immigrants are paid is primarily a function of how many immigrants are in the labor pool. They tend to earn less because there’s a virtually unlimited supply of poor people who want to immigrate. Supply and demand impacts markets for labor, that’s just basic economics.

Reply on news.ycombinator.com