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Does the arrival of migrant workers reduce the wages of those already in the country, or not?
For many years, mainstream economists have been telling people who worry that immigrants are driving down wages that they are mistake. Yes, they said that new people increase the supply of labor, but they also increase the demand for goods and services, so eventually this more or less goes away. This theory is supported by a large number of empirical studies that have found only minor, if any, effects of immigration on the wages of native workers.
However, many economists are now warning that President-elect Donald Trump's plan to deport millions of illegal immigrants will create… Labor shortages, rising costs Increased inflation in the American economy. Could these statements be true? Isn't the idea that deportations would fuel inflation an implicit admission that migrant workers have already been depressing their wages all along? People are not stupid: I think they notice the obvious intellectual contradiction, and that makes them more likely to distrust or ignore what economists have to say on the subject.
However, I do not think that these two statements are necessarily mutually exclusive, but only because the economics profession (with some honorable exceptions) has done a poor job of trying to understand the way in which immigration has reshaped labor markets. Most economists have looked for effects on wages or employment levels of local workers. But this is a very narrow lens.
I realized this when I was writing about the implications of Brexit and the end of free movement in the UK. For example, consider the perspective of a woman I once interviewed who worked in a food factory in Sheffield. I watched as an increasing percentage of the expanding workforce became agency workers, mostly from Eastern Europe, whose schedules could be tweaked and changed without notice and who didn't get the same benefits I did. Her wages and working conditions were not undermined, but she believed that her fellow migrants were being exploited and that the sector was no longer a good place for new arrivals. Over time, people like her retired and the sector became dominated by migrant workers.
The point is that Economies They are dynamic, and employers in some sectors respond to the availability of migrant workers by changing or expanding in certain ways they would not have done otherwise. Meat processing plants in the UK have gradually shifted to 12-hour shifts and in remote locations because they can find temporary migrant workers to fill these roles, although they will not work well with settled workers who may have families and prefer to live in larger cities. With more amenities. As one time president of the British Meat Processors Association He told me“If we are honest, working patterns have developed around the presence of non-UK workers.” It had farmers in the UK He responded to the availability of seasonal workers from Eastern Europe after 2004 by growing more labor-intensive soft fruits.
Because immigrants are deeply integrated into an economy that has reshaped itself around them, this means that if these immigrants suddenly leave or are deported, short-term economic disruptions can be severe in some sectors. Employers annoy me when they imply that native workers are too lax or lazy to do these jobs, but they are right that it is difficult to hire non-immigrants – for the very good reason that they are very difficult jobs, and native workers (as good as they are) speak the language. mother) have better alternatives.
It is certainly possible – if you raise wages and improve conditions enough – that local workers will get involved. But many of these sectors operate on healthy profit margins and sell their products to grocery chains that do their best to squeeze prices. In the post-Brexit UK, the hope of employers raising wages and an army of British workers to fill the gaps was not really real. Farmers complained Fruit rot In the fields, pig farmers said they had to slaughter Pigs are healthy due to labor shortages in slaughterhouses. It wasn't long until the government relented and gave them more visas to hire migrant workers.
Whether through higher wages or simple decreases in production, the prices of products like vegetables and milk in the United States are indeed likely to rise if Trump implements his deportation plan. It is also possible that some goods produced in the United States, if they become more expensive, will be replaced by imports instead. This may be a trade-off Trump voters are happy to make. But neither side has done a good job of explaining this.
