Does immigration tend to lower wages (in rich countries)?

Great Debates
61

I haven’t conflated anything. This thread is a testament to the narrow view so many Americans have towards immigration, seeing it all as unskilled workers flooding the marketplace an using up welfare programs.

The entire H1b/TN visa system is based on specialized skills. The requirement for getting one is that the company cannot find a domestic worker to fill that specialized position. Proof is shown that a job was posted and couldn’t be filled. I’ve got a wife and dozens of friends that are all in the US on H1b/TN visas, doing highly specialized work. If they weren’t needed why would there be a job for them in the first place? They are working in advanced biomedical research and are not easily replaced. But in the process they work with and train domestic engineering interns. If in 2 years time there is an abundance of similarly specialized engineers the government can’t reject visa renewal and send all those fureners home. That’s the H1b/TN system. It brings in specialized workers for specialized positions. The exact opposite of a commodity.

So without those specialized immigrants, there is no growth. Companies that need those skills don’t start, and their products don’t get made. I’m quite baffled that you don’t get this.

If you want to focus now on skyscrapers, without immigration they wouldn’t have been built, it’s that simple. It’s not an issue of paying people more, you need people to pay. Supply and demand only goes so far, if there are not enough specialized workers the job doesn’t get done, and that means no growth. In your system, that means the lots sit vacant until the local community colleges can crank out enough new grads, and even then where do you think they’ll get experience?

By allowing skilled and targeted immigration you get economic growth, and with economic growth you get increased wages. Bringing in more workers to get the skyscrapers built meant the buildings could then generate income and everyone is better off. Afterwords you can send the immigrants home.

This happened in Toronto about 10 years ago, where there weren’t enough kids graduating from community colleges to fill the demand for construction workers to build the new condo highrises. As a result projects were put on hold until there were enough employees. But that hurt everyone else in the industry, a lot of other jobs suffered because of the lack of construction workers. Yes, their salaries went up in the short term, but only so far as the business model would allow. At some point it doesn’t make sense to pay a kid $500 an hour to weld, you put the project on hold until workers become available, or you scrap the venture as unprofitable. But in the process everyone else related to the industry saw their wages go down while they waited for more specialized workers.

Canada’s immigration system is such mess that it’s extremely difficult to hire foreign construction workers, even from the US; we have a points system that favours higher education. So while there was a glut of unemployed in the US, Toronto companies couldn’t make use of them. Had we a system that would have allowed immigration US workers could have supplemented short term demand, got the towers built, while Canadian kids went to school and then had a place to apprentice.

It’s what’s known as big picture thinking. Applying supply and demand to one narrow aspect while ignoring a whole world around won’t get us very far.

62

Why is the demand for products and services on the rise? Why is there a demand for, say, skyscrapers?

63

Your postings are a testament to the degree that some people will contort reality to push an agenda.

If you read what I wrote you might glean that I am both aware of it and don’t have a problem with it. granted I’m beginning to think that might be asking too much.

Oh, I get it. Especially the reality version, where growth comes, but more slowly.

Wrong.* Fewer* skyscrapers would have been built. Immigration allowed more of them to be built more quickly.

What the hell does this even mean? Either they are real forces at play or they are not. And they are.

“My system”? And what the hell is “my system”. If you think I am against bringing in qualified workers to fill a void in the market, you are profoundly wrong.

All depends on how skilled and how targeted. Even you must realize that, as you’re insistence that we look at that twwensy-weensy part of immigration.

Assuming that it was all derived of need, yes. The need for skyscrapers. The need for outside workers. You know, supply-demand. Other wise, no. And economic growth is outside the laws of supply and demand. Are you sure you’re clear on what is covered by the LofS&D? And what is not?

Oh, temporary workers? I’m ALL for having a temporary worker system…like Canada has. But that is hardly what is thought to be meant by immigration.

YES! There were just a few qualified workers and what happened, their salaries went UP. And then when the supply of workers increased, what happened? They sank to a fair market wage. Imagine that! I sure wish I had been arguing that would happen. Oh wait, that is what I’ve been arguing.

Canada does have a temporary worker program. It seems, from here, that the problem is that they don’t have a category for construction workers:

:rolleyes: Whether you like it or not, the laws of supply and demand do apply to the whole world. Do other factors come into play? Of course. But look at any of your specializations even, there is not one of them that is not subject to the the realities of a free market.

64

Because real estate companies think they can make a profit leasing out the space. If they’re correct, they will. If not, they will lose their shirts. That’s why there is more construction in places like San Francisco then Detroit.

65

Right, and the extra space is needed because there are more workers.

66

You’re putting the cart before the horse. The workers are there because businesses are growing and real estate types see an opportunity to build what they need. To have things built they need workers. But you’re assuming these workers don’t already have housing. That they don’t already live in the area. Yes, they might have to bring additional workers in, and build more housing, but that’s only if there aren’t enough workers in the vicinity already. So, if you’re going to build something in the middle of nowhere, like they did Hoover Dam, you need housing. If you’re building in a place like Detroit, or any city/state that does not have full employment, you probably don’t have to build that extra housing, as those people are already living there.

So building skyscrapers doesn’t necessitate bringing in new workers. It depends where they’re being built, how many are being built, and the supply of labor there.

67

This discussion is getting away from the OP somewhat. The fact is that whatever job you have, whether highly specialized or unskilled, the more the demand for labor exceeds the supply of workers, the more power the workers have and the higher the wages will be. If more people come to town with your same skill set, the power shifts to the employers, who will, naturally, use it to lower wages. The less scarce a commodity is—labor included, even highly specialized labor—the cheaper it is. Immigration—whether good or bad (depending on the situation)—lowers wages the minute the demand is met.

68

More skilled workers. Places like Detroit have plenty of potential workers, but they don’t tend to be as skilled.

69

That’s all well and good in a narrow subset of the economy. But you are aware of elasticity and plasticity within the supply and demand curve right? What you are describing is accurate so far as the first 4 pages of the chapter.

You do realize that there are points where prices rise too high and consumers look for alternatives. There are points where prices are too low and sellers walk away.

Even today there are labour shortages in specific sectors in specific locations. Like you said, if there is a shortage wages (price) shoots up, but it can only go so high. There are upper limits to what people will pay before they look for alternatives. Some times the alternative is to do nothing, that is to say, if there aren’t enough construction workers the project gets cancelled. Steal prices have the same impact, reduce supply by putting in tariffs and the price goes up. When there is a construction boom the price shoots up further, and at some point it stops being economical. Builders either look to other materials or choose not to build. There is also the very real potential that there won’t be enough steal for all the construction required. There is also the very real potential that the domestic steal isn’t of the right type for skyscrapers. Then what? What happens to the construction boom when steal supplies can’t keep up with demand? When you’ve answered that, tell me what happens to all the other employees in the construction industry when there are steal shortages.

If farmers can’t find enough guys to pick oranges the fruit rots. The loss from not picking fruit is weighed against the cost of hiring during a labour shortage. Because the world is bigger than just the s/d curve for farm hands. The guy selling the oranges can only get so much, if the price gets too high people buy something else or nothing at all. If the farmer can’t sell his oranges for $10/lb, but it costs him $9/lb to have them picked, he’s going to forgo growing oranges. When that happens, what happens to the s/d curve for the farm hands?

70

What happens is the same thing that would happen if he closed his business for any reason. Those workers would be available to other growers, who would take advantage of a labor glut. And then someone would decide to grow cabbages on that land. Or oranges, if the consumers will pay the higher price. I really don’t get why this is so mysterious to you. Or why you feel you need to believe that in a free market the laws of supply and demand don’t operate in special circumstances. I don’t think we differ on what should be done (guest worker programs, for example), only the forces at work. And if prices get so high that people don’t think it’s worth, it’s simply not worth it. The market for $10,000 an ounce truffles will never be big.

And by the way, just as a point of information, in agriculture, labor costs account for only 10% of most foods. So if a head of lettuce is $1.00 and you tripled the labor costs, the lettuce would only cost $1.20.