Collapse of international mobility a key factor behind wages growth
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It'd be better if the author would have either not said anything or took the time to formulate their thoughts into a piece of text worthy and representative of the complexity of the concept.
I believe the author is trying to express this.
Really sums up the problem here.
If the author had substantive points to make then they should have been made somewhere other than Twitter. Economics isn't impossibly hard but there is too much to cover for a tweet to be a useful contribution to any debate. Really all it can do is act as a sort-of straw poll for if people agree with an idea, but even then a Tweet doesn't fill that role well.
Tweets are by nature a bit vague and poorly sourced. Match that up with basic selection bias and there is nothing useful to be gained in economics by Tweet.
This is an interesting fact and observation that stands on its own. It leads to curiosity, interest, and exploration.
Noone owes you a fully ELI5 document.
It does not "stand on it's own"
Illegal immigrant labor is a key part if the American economy. These people are intentionally kept in a state of legal limbo. They're tolerated, but always could be prosecuted and have their lives destroyed. This keeps them exploitable and able to be treated in ways we would never tolerate for American workers.
The entire game is that because they are breaking the law, employers can ignore labor law when it comes to employing them. It's like any black market. The fact that everyone is breaking the law means all bets are off.
An imported serf class, intentionally kept in an exploitable legal state, is inherently going to reduce the leverage of labor that would otherwise occupy those jobs.
Er, no, to the extent immigration is an issue with the recent wage rise legal immigrants have done that. Net illegal immigration dropped below zero without significant upward wage pressure well before the pandemic.
EDIT: Just to be clear, its not actually legal immigration dropping, either, that led to the tight labor market; its the acceleration of permanent (e.g., retirement) and temporary departures from the labor force during (and in part induced by) the pandemic
Here's Hanson et al. (2002):
In this paper, we examine the impact of enforcement of the U.S.-Mexico border on wages in U.S. and Mexican border regions. ... For a range of empirical specifications and definitions of regional labor markets, we find little impact of border enforcement on wages in U.S. border cities and a moderate negative impact of border enforcement on wages in Mexican border cities. These findings are consistent with [ed: i.e. either of] two hypotheses: border enforcement has a minimal impact on illegal immigration, and illegal immigration from Mexico has a minimal impact on wages in U.S. border areas.
this doesn't talk about anything regarding wages.
> illegal immigration from Mexico has a minimal impact on wages in U.S. border areas.
That seems narrowly scoped to "US border areas" whereas the parent comment is talking about America in general. Likewise how do you provide a control factor for a study like that?
I think the evidence is pretty much obvious and doesn't require a study to conclude. The market wouldn't prefer illegal immigration (which it does - ask any restaurant operating in the US) if it didn't reduce labor costs for businesses. So the opposite must be true - citizens and legal immigrants would increase labor costs.
The other factors are simply true by careful observation. How is it not obvious that a labor class that has no legal rights of citizenship is also not going to have legal rights in the labor market? (i.e. ability to legally fight wage fraud, depressed benefits, etc.)
Seems like there's some elements similar to prohibition - the desire is strong enough to create a black market for labor and immigrants are willing to take these risks. Maybe if we permitted more seasonal ag work visas and a lower minimum wage (but still safe workplace requirements) it would be a better compromise.
It's very sad that falsehoods about the immigrants fall into racist tropes and all of a sudden we can't have a reasonable dialogue about better solutions to the problem.
I don't see any support for that assertion anywhere though.
If you're missing 2 million people who would happily take low wage jobs, and there are as many of those jobs to do, the price paid for that work has to go up.
That said, I suspect that the great resignation has a whole lot of impact as well. Again, reduced supply causing an increased price. (The ones who walk away from bad jobs into good ones not being as impactful as the ones who took early retirement post-COVID, accelerating a worrisome demographic trend of having lots of old people and few working age people.)
Another plausible explanation is that the boomers are aging out of the workforce, and the following generations are smaller.
Seriously, that was the entire point of what I said there. That there is another factor which I suspect is even bigger.
https://chrome.google.com/webstore/detail/privacy-redirect/p...
Also most youtube videos are not as high quality as the original youtube site, typically 1080p+ seems to be missing.
>This group is now starting to wake up to its plight and voting anti immigrant and against traditional labour parties which have been co opted by the progressive university elite.
That's a bit of a stretch to think universities are progressive or that they're the ones calling the shots politically. The multi millionaire oligarchs pushing this and funding anti immigrant AstroTurf groups and running the usual PR firehose of BS are of course somehow "not elite" as ever.
This isn't a requirement, this is a bad choice that one can make. There's no benefit in favoring highly-skilled workers other than that these are the workers that middle-class professionals associate with. The only reason IMO to favor highly-skilled workers in specific fields is to break professional cartels; you don't even have to favor them, just remove the artificial barriers to their employment that have been institutionalized.
> That's a bit of a stretch to think universities are progressive or that they're the ones calling the shots politically.
It's just sucker right-wing pseudo-populism financed by the same people who employ 99.9% of illegal immigrants.
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edit: those people would love to make the process of legal immigration so onerous that only they themselves could navigate it easily, to make laws against illegal immigration so draconian that every undocumented worker was living in constant fear, and to route all enforcement of those laws through an regulatory agency that they have completely captured.
There, I fixed it for you. In a purely globally democratized and free market, wages would be perfectly aligned to market rates, but this isn't reality. In other words, your labor supply is artificially fixed to birth rates in that sovereignty.
The overall point is anyway moot because you could also make an argument that says "because we're not having enough babies and therefore labor is relatively short from previous decades, wages are artificially high...maybe we should create policies to increase birth rates?".
Point is - trying to correlate wages and immigration dynamics is a fool's errand. IMHO, immigration policies need to be considered from an overall market perspective and not an individual wage one. i.e. does immigration provide a net benefit to the economy and that sovereign society? Given how much illegal immigration is used in our food system in the US to keep consumer prices low, I think Americans equivocally believe some level of immigration is necessary to generate wealth for the middle class.
But, yes, pricing is a useful discovery and market making mechanism. If I want a personal chef but I'm only willing to pay $2/hour in the US for such a service, I should and will have to deal with cooking my own meals or otherwise find some way to obtain food that doesn't have as large a labor component as personal service does.
Inflation can’t outpace income forever, or who will buy the goods?
Both sides of the supply/demand curve are affected.
Too much inflation? People buy less. Too little inflation? People buy more. Labor too expensive? Less labor is used (perhaps via automation). Labor too cheap? More labor is soaked up on projects that would have been marginal or automated otherwise.
Latest median earnings are negative for the last month as well as year over year:
https://www.bls.gov/news.release/realer.nr0.htm
Real average hourly earnings decreased 1.2 percent, seasonally adjusted, from October 2020 to October 2021. The change in real average hourly earnings combined with a decrease of 0.3 percent in the average workweek resulted in a 1.6-percent decrease in real average weekly earnings over this period.
Look at this graph:
Also inflation is driven by labor squeezes outside of the United States. (Freer immigration into the US would actually worsen that problem, but negligibly, since US immigration is on the order of 100K people annually out of a world total around 8B.)
Honestly, I don't understand why we are debating another few trillion of stimulus right now. My preference would be to pay for new projects with matching taxes until inflation subsides. We don't need any more "job creating" projects at the moment.
Good lord your comment history is enthralling.
Aren't illegal immigrants doing jobs that natural born citizens don't want to do? Farming, low pay contract work, etc.?
Businesses can't hire illegal immigrants on the books. They can't be waiters, retail workers, or other types of labor that the lower class depends on. So how does this impact America's poor and middle class? Absence of these workers should push prices higher.
H1B immigration is capped, and it has never led to a decrease in the salaries of skilled workers. Software engineers have never made so much.
More people working and living in the US will create more productivity and consumer demand, increasing the strength of our economy.
Why all of the vilification?
No, illegal immigrants are doing jobs that residents don't want to do (or can't do) at that price. They can afford to work for less because they're often working in order to send remittances, not to live a fulfilling, sustainable life, which is what they're hoping to do after they get back home.
> Businesses can't hire illegal immigrants on the books. They can't be waiters, retail workers, or other types of labor that the lower class depends on. So how does this impact America's poor and middle class? Absence of these workers should push prices higher.
Absence of those workers should push prices higher because it pushes labor costs higher - meaning that the effect you're noting here is evidence of the opposite of the claim you made immediately before. Absence of those workers should raise costs (which may or may not be reflected in prices), and also raise the salaries of people who work. Inflation is rising prices, rising wages, and falling debts.
Legalizing those workers and encouraging them to migrate their families here too would have the same effect, giving them the means to negotiate.
> H1B immigration [...] has never led to a decrease in the salaries of skilled workers. Software engineers have never made so much.
You're just making up the first part, and the second part is irrelevant to whether H1Bs lower salaries.
> More people working and living in the US will create more productivity and consumer demand, increasing the strength of our economy.
Lower wages = higher productivity. Lower wages != an increase in demand.
> Why all of the vilification?
Immigrants aren't the villains, the villains are these rationalizations for exploiting the precarious and brown for the sake of stockholders and owners. A quick an easy path to citizenship is just as objectionable to these people, because citizens have rights and can organize.
I believe they key point of disagreement is if immigrants earning less are competing for the same jobs. I personally think not.
I think, from the accompanying snippet of text from JPMorgan that it's meant to be population growth ("the working-age population has been falling for almost two years") but in that case why is there only one line on the graph? Shouldn't we be looking at the line for growth side-to-side with the line for migration? How does the graph show the relation between migration and growth?
I also don't understand how "population growth" in the title of the graph becomes "wages growth acceleration" in the text of the tweet.
Also also: is this graph about "international" migration, as implied by "international mobility" in the tweet, or specific to the US, as implied by the subtitle of the graph, "Source: Census Bureau J.P. Morgan"?
Funnily I find that it's the older people who are the most against immigration. Let them enjoy the high prices for anything that involves local labor.