Rising wages: good or bad?

June 28, 2022

Published by Jeremy Beck

Facebook

Worker power, loose borders: pick one

(hat tip, Oren Cass)

Worker Power!	Loose Borders!
Batya Ungar Sargon: “I think working class people think about the economy in terms of jobs, because you get meaning from your job….Bring those factories back. The people who are benefitting from mass immigration, benefitting from these trade deals, they’ll be able to afford the price difference, you know, and everybody else will have dignity.”	The Washington Post: “Pay is rising at the fastest pace in years….These are welcome trends. But….Companies are desperate for workers. Millions of legal immigrants want to work in the United States. This shouldn’t be so hard to fix.”
Mickey Kaus: “…there’s more than one way to tighten a labor market (and thereby give workers more bargaining power). Yes, you can run the whole economy “hot,” raising demand for everything, including workers. Or you can try to restrict the supply of groups of workers in a more targeted way — by encouraging older workers to retire, for example (one of the original goals of Social Security), by keeping young potential workers in school — or, most obviously, by regulating immigration.”	The Wall Street Journal: “Americans can be forgiven for concluding that Mr. Biden’s de facto policy is to allow unchecked immigration without admitting it…All of this is playing into the hands of those who want to reduce all immigration, including those who want to come legally. Even Republicans who favor immigration will find it harder to support reform if the party takes Congress next year. Yet the U.S. needs workers amid a record labor shortage.”
Steve Camarota: “I don’t think wages going up is bad for the poor.”	Catherine Rampell, The Washington Post: “Democrats are terrified that a coming border surge might tank their midterm chances. But they have largely ignored a much more serious immigration-related political risk. The problem in the months ahead isn’t that the United States will allow in too many immigrants; it’s that we’ll admit too few, particularly the kinds of workers who can fill critical labor-market shortages.”

Lower wages is a feature of mass immigration, not a bug

The Associated Press reports:

These 2 million missing immigrants are part of the reason we have a labor shortage,” said Giovanni Peri, an economist at the University of California at Davis, who calculated the shortfall. ‘In the short run, we are going to adjust to these shortages in the labor market through an increase in wages and in prices.’

“…Steve Camarota, a researcher at the Center for Immigration Studies, which advocates for less immigration, believes a spike in illegal immigration under President Joe Biden will make up whatever shortfall lingers from the pandemic. He also contends wage increases in low-paying sectors like agriculture are minor contributors to inflation.

“‘I don’t think wages going up is bad for the poor, and I think mathematically it is not possible to drive down inflation by limiting wages at the bottom,’ Camarota told The Associated Press.

Camarota elaborates:

Advocates for expanding immigration have long insisted that it would have no effect on wages. But as inflation has soared, they have changed their tune. The National Immigration Forum’s 2022 position, contrary to its 2016 one, is that wages are too high because of a lack of immigration. The CEO of the U.S. Chamber of Commerce, which used to take the no-wage-impact position, said in January that doubling immigration ‘might be the fastest thing to do to impact inflation.’…

“….If more workers really are needed, it would make far more sense to let compensation rise and draw the workers from the unemployed and from the 43 million (Table A-6) people who are non-disabled, of working age (16–64), and currently entirely out of the labor force. The less educated make up the overwhelming majority of these individuals who are neither working nor looking for work. In fact, there has been a long-term decline in labor-force participation that is associated with a host of social problems from crime to substance abuse, especially for men. Addressing this decline should be a national priority. Letting in more immigrants to cut wages cannot help but make this problem more difficult to deal with.”

Camarota’s full analysis here.

JEREMY BECK is a V.P., Deputy Director for NumbersUSA