More evidence immigration suppresses wages

By Leith van Onselen

As revealed in the above BBC News video and the below article from The Guardian, UK companies are experiencing a labour ‘supply shock’ from lower immigration, which has forced them to lift wages:

Growing skills shortages in the UK jobs market are starting to drive up wages, according to a survey, as more companies across the country report difficulties finding staff…

The research compiled by the Chartered Institute of Personnel and Development and the recruitment group Adecco showed that basic pay expectations had increased to the highest level since it began tracking wage agreements in 2012.

Almost three quarters of the 1,254 employers surveyed said they were finding it tough to fill vacancies in the first quarter of 2019, with manufacturing companies having the greatest difficulty.

Despite growing concerns about the potential fallout for the British economy from no-deal Brexit, unemployment has hit the lowest rate since the mid 1970s, while record numbers of people are in work. Figures from the Office for National Statistics show that pay growth across the country has risen to the highest level in a decade, as companies raise pay to attract workers.

The latest official data show that the number of unemployed people per job vacancy has dropped to 1.6, down from 5.8 in 2011.

Growing numbers of companies have expressed concern about the post-Brexit immigration system curtailing the number of migrant workers available to hire. Net migration from the rest of EU to the UK has slumped to a six-year low, exacerbating the difficulties facing companies looking to hire staff.

Two-thirds of private sector firms in the CIPD/Adecco survey had increased their starting salaries in response to recruitment challenges, up from 56% in the final three months of last year.

Unemployment (4.0%) running at the lowest level since the mid-1970s. Wage growth the strongest in a decade. What’s not to like?

Of course, an empirical study by the Bank of England found that immigration into the UK had pulled average wages down. So obviously slowing immigration would help to boost wages.

The economics is the same in Australia.

Various Productivity Commission modelling has shown that immigration lowers the wages of incumbent workers (see here). These results were confirmed recently by modelling from Victoria University (see here), as well as modelling for NSW.

Even the RBA recently admitted that “that the flow of new workers into the labour force [primarily from mass immigration] could continue to be stronger than usual, so that unemployment declines more slowly than we expect and wage pressures could take longer to emerge”.

The economics is simple: continually increasing labour supply via immigration, and enabling employers to recruit workers from a global pool and to forgo training, necessarily reduces workers’ bargaining power and ergo wages growth.

Again I ask: why isn’t Australia’s union movement and the Left up in arms at Australia’s mass immigration ‘Big Australia’ policy, which is not only eroding workers’ conditions and pay, but also pushing-up their cost of living and lowering their amenity? Why are they playing into the hands of the ‘growth lobby’, which are capturing the gains that come from bigger markets and paying lower wages, while ordinary residents wear the costs?

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Comments

  1. Australians face weak incomes for years
    https://www.afr.com/news/economy/australians-face-weak-incomes-for-years-20190225-h1bor0
    [Real incomes are poised to barely grow over the next six years and living standards are destined for a slowdown, unless a wave of major economic reforms and technology innovation by business can unleash a productivity boom like in the 1990s.

    The International Monetary Fund has projected that incomes adjusted for inflation would average just 0.3 per cent growth a year through to 2024, well below the long-term average of 1.8 per cent since the 1960s.]

    • So how about this
      all the investments purchased will need maintenance, say to the value of 5% of the purchase price
      per year from here forward.
      Just that cost impost will wipe many out.
      Not to mention real losses in the capital value of goods

  2. Interesting comment under the video:

    in the 1960s and early 1970s you could leave a job in the morning and walk into another firm in the afternoon and get a new job. No interview, no references, no parasitic HR firms making you jump through hoops, etc.

    https://www.youtube.com/watch?v=SuJTIOrfVNc&lc=UgxQmP_OsIZHH6mVt5d4AaABAg

    Now, 1 in 10 jobs in Australia are held by foreigners! On track to be 2 in 10 soon.

    Good article on immigration 13 hours ago:

    in Silicon Valley and the surrounding area, only 29 percent of tech workers are American citizens. The majority are foreign-born H-1B visa holders whose presence in IT displaces skilled, qualified Americans

    U.S. universities graduate more than enough talented Americans to fill IT employment opportunities

    https://www.noozhawk.com/article/joe_guzzardi_overpopulated_income_unequal_california_immigration_20190224

    The same is true in Australia.

    • “In the 1960s and early 1970s you could leave a job in the morning and walk into another firm in the afternoon and get a new job.”

      If you were a bloke.

      • @Peachy

        Just as a serious observation: It also seems to me that the social bonds of the time were a lot stronger than what passes today as social bond.

      • @ino …not sure if I like you all serious like that…

        Of course social bonds were stronger. We were a society of relatively poor, but hopeful and aspirational people. So we were in it together.

        Now we are a group (not society) of millionaires and temporarily embarrassed millionaires. We’re in it for ourselves. Because we are big and mighty like that.

        Why is anyone surprised?

  3. This is regarding the TR migrant guestworkers and the impact on Australian wages, taxation & cost of living.

    🔹In March 2018 we had 2.431 million Migrant Guestworkers onshore.

    https://www.vsure.com.au/many-temporary-residents-working-australia/

    The March 2018-March 2019 Yearly growth was 5.7% across all visa categories based on the DHA quarterly updates.
    That is 130,000 extra TR migrant guestworkers in the last year. Getting close to the entire PR intake of 190,000.

    🔹 So the March 2019 estimate is : 2,561 million Migrant Guestworkers.

    Concentration.
    🔻Sydney 1.3 million or 1 in 4 people a migrant guestworker.
    🔻Melbourne 1.0 million, or 1 in 5 people a migrant guestworker.
    🔻And 250,000 elsewhere, mostly other state capitals.

    Wages impact.
    1.4 million are on a visa pretext / working illegally.
    See the list below.
    The vast majority are of third world origin, adult & unskilled. (DHA tables of origin & visa category at bottom of the Vsure link)

    They have high rates of work participation – but many work illegally as well legally due to their visa categories & conditions if entry or COE.

    The vast majority on extensive evidence, plus their DHA listed country of origin & visa category indicates they are poor to very poor, often in debt to a foreign agent procurer, and burdened in sending back remittances to their families in their country of origin.
    (World Bank & Western Union / explosion in Australian personal xfer / foreign remittances from $4b to $18b)

    Many have fake ID, multiple jobs, work in the cash economy, or ABN / labor rings with no tax paid.

    🔹TR migrant guestworker income.
    The Treasury estimate is migrant TR yearly earnings of $43.7 each or $24 hour.
    And that’s generous.
    There is much media evidence & exposure that it is closer to $15 or $10 an hour – offset by extreme hours & multiple jobs.

    As one example: the foreign students & partners across a number of visa categories.
    The total declared funds of all TR yearly is $4.2 billion (DHA). The foreign students (non self declared) are $2.8 billion of this. However this is extensively frauded.

    The 672,000 foreign students & partners do form a $29 billion onshore sub economy of economic activity (@$43.7 each average income) but almost all that money was earned here onshore & 75% illegally fake ID or cash in hand.
    So our foreign student industry is NOT an Export industry at all.
    The attending primary students only pay $8.2 billion in fees (Deloitte) which is less than 505,000 jobs they steal costing some $9.2 billion in Centrelink.
    So on any measure, even the foreign student industry is immediately negative and a cost burden import to Australians.

    And it’s the same in the other visa categories.

    On balance the 2.5 million migrant guestworkers, who are mostly adult working age & unskilled, highly motivated to work legally & illegally / displace at least 2 million Australian jobs. As we see later in the unemployment statistics.

    They massively lower Australian wages.

    The average Australian wage ABS May 26th 2017 full-time male weekly earnings $1,631 / females $1388 weekly..
    Or 50/50 gender = $1,500 or $78,000 or $43 a hour.

    So even using the much higher treasury migrant guestworker wage estimate (perhaps the cash rate of $15 -20 hour being a gross rate of $24 hour if they were actually to pay tax) the migrant guestworkers are working at $24 an hour, or half the rate of the $48 Australian average.

    12.7 million (ABS seasonally adjusted Workers Dec 2018) + the migrant guestworkers illegal black economy the ABS has no stats for is 14.1 million.

    12 million at $48 hour & 2.1 million of the 2.5 million migrant guestworkers working at $24 a hour in a full time equivalent week (one or multiple jobs)

    ➡️ That gives an Australian wages loss or degradation of 6.8% or more.

    Which means every migrant guestworker costs every Australian ($1,500 a week average) at least $102 a week or $5,300 a year lost income.

    That’s just the tip of the iceberg in impact.

    Many migrant guestworkers are working illegally, Fake ID, cash, labor rings so they aren’t paying tax, but they are creating massive cost impacts on public services, transport, education & infrastructure projects – so that is an extra tax burden on Australians subsidising the migrant guestworkers.

    The migrant guestworkers create Australia unemployment.
    We have 1.3 million Australian/PR unemployed (Roy Morgan feb 2019) & lets say half are totally unemployable, but the other half genuinely can’t get a legal job because migrant guestworkers are being hired instead.

    So that’s at least 750,000 Australian/ PR at $18k centrelink / support a year each – costing the Australian taxpayer $13.4 billion or $1,100 per Australian taxpayer.

    We then have another 1.1 million Australians seeking work. No direct taxation outlay impact, but let’s say it’s only part time work at the same rate of $43.7k as the migrant guestworkers.
    That’s $48 billion of lost wages earnings & another 18% tax loss of $9 billion on that potential income & again lowering our GDP per Capita.

    Then add on 116,000 Australian permanent homeless and another 360,000 on housing assistance displaced by the migrant influx – that directly costs us $4.8 billion a year (DHS) – that’s another $400 each taxpayer cost.

    Then add on housing contention (rent or mortgage debt) cost of living impacts – another $3,000 at least of direct tangible costs yearly.

    Then add on degraded our education with exploding costs as the education industry was allowed to sell itself as a migrant guestworker visa alibi – at say a modest $2-3,000 per averaged worker yearly.

    Then add on congestion, contention and overload of services, hospitals, environment, ‘water levies’ tolls etc as the cities population explodes way beyond projectors capacity – $2,000 a year each.

    And it quickly gets to the view that each and every migrant guestworker is costing something like $5,000 a year lost wages growth / income ($60.5 billion) over $20 billion in lost taxation as much of this is at the top rate… plus other taxation loss in the people seeking work but displaced by the migrant guestworkers.
    Plus an added cost of living of some $6,000 each as well..

    ➡️🔻So $11k negative to each Australian worker.🔻

    That’s a very conservative estimate.

    -/-

    Or in other words. To use the UK example (article)
    If we exited the 1.4 million migrant guestworkers who are working & living illegally..

    And if we controlled the remaining 1.1 million to be either be no work rights at all, or genuine high quality skilled & high income earners..

    Then the average Australian Workers would be $11k or 14% better off.

    That would ‘catch up’ nearly a decade of gdp per Capita, wages and productivity decline.

    Our government wages tax inputs would be much higher, our outlays would be far less – justifying a reduction in taxation rates.

    The cost of living would fall.
    Large white elephant ‘infrastructure projects’ costing tens of billions would not be needed.

    ▪️The Net Benefit:
    ▫️A Higher Australian Employment rate,
    ▫️A higher gdp per capita – particularly as most of our economy is based on fixed commodity exports divided by the number of people here. Less people, higher average GDP per Capita.
    ▫️Less taxation,
    ▫️Lower cost of living,
    ▫️Better housing affordability,
    ▫️Better & more affordable education,
    ▫️Less congested trains & buses.
    ▫️Over 500,000 cars / international licence drivers taken off the city roads,
    ▫️A more sustainable use of our infrastructure & environment
    ▫️And a far better standard of living for all Australians and our new PR. (Who we are stuck with btw)

    All by the very simple & legally expected enforcement of the visa conditions of the non resident TR Migrant Guestworkers.

  4. yeah but having lower prices of all life necessities is a good thing, right?

    well, … except if we are talking about the highest of all living costs – housing …. in that case government will do everything to push prices up and not let them fall

  5. ErmingtonPlumbingMEMBER

    “Again I ask: why isn’t Australia’s union movement and the Left up in arms at Australia’s mass immigration ‘Big Australia’ policy, which is not only eroding workers’ conditions and pay.”

    Its basicly path of least resistance stuff in my view.
    For careerist politicians and “left wing” intellectuals, agressively defending the working class and the poor will have you attacked relentlessly as a Communist or a Socialist by our pro Corporatist media establishment.
    This will destroy their future earning potential in a way that howling about treatment of GLBTIQs or the evils of “Patriarchy” will not.
    You can’t have a “Left wing establishment”.
    If its not directed and controlled, Democraticly by the working class,…demanding their interests and opions be heard, then its not “Left wing”
    All we get served up as “left” is just media spin.

    https://youtu.be/38JNg210L24

    • Now the cool aid has near run out and its time to pay it back,
      And of course it is not there.( the punters just dont have the readies)
      Now some may think this is all about the money?
      But in reality its all about suppression of the common punter.
      As the corporate move to divvy up all the assets they wish for
      This in fact has been a civil war against the punter,
      where the punter was lured into the trap
      Knowingly.
      JJF)I think some people focus too much on the dynamics of the banks rather than the dynamics of the people who actually form the economy. It is an easy mistake because the bankers run the economy,
      but they aren’t THE economy.

    • From ‘Immigration and Consensus’ 1992.

      ‘As far as the high immigration intake generally goes and its specific effect on Australian workers, what of the ACTU, the supposed guardian of working conditions’? What was it doing while immigration numbers were being forced up? During the rise of multiculturalism and a strident brand of feminism, the ACTU found itself under attack by middle class, left-leaning academics for not taking these concerns to heart. The ACTU resisted these criticisms initially but gradually gave way.

      People of the sort who gave these criticisms, rejecting the aspirations of their own class, but not the comforts of the lifestyle, have systematically taken over the Labor Party. The agenda of these people reflect their own aspirations and desire for status. They may still support workers in specific efforts to secure better working conditions, but their support for a high immigration rate means that wages and working conditions will invariably be undermined anyway.’

      Once upon a time the ACTU opposed mass Third World immigration, to protect Australian’s wages, working conditions and way of life. The ACTU should consider cutting it’s funding and links to the Labor Party till it changes it’s treasonous ideology.
      The Labor Party is infested with and controlled by the progressives ideology and it is barely imaginable they will legislate the required cuts to the net migrant intake, when the program is effectively a Third World population replacement program.

  6. I doubt unemployement is as low as they claim in Aus. You only have to be working 1 hour a week to be considered “employed”. In all likelihood more and more people are underemployed and barely getting by. Where I live theres plenty of Indian immigrants walking around in the middle of the day doing nothing. As they keep pushing so many of these people into our cities you’re going to see an increase of a ‘working poor’ class. People will be forced to juggle multiple casual jobs to survive. 4-5 people living in two bedroom units will be the norm. This is the obvious outcome to craming in hundreds of thousands of desperate unskilled workers from the third world every year.

    • There’s nothing like taking a day off work and walking around the suburban shopping strip at midday to see just how many immigrants are living in your local area. I never see any in the morning or night when I get the train, or on the weekend.

    • They aren’t walking around doing nothing, they are often walking around the streets talking loudly on their phones in Hindi or Punjabi.

  7. Sure. But think of the disappearing vibrancy, not to mention cultural enrichment.

    Not everything can be measured in money, you know ..

    • You’re right. It’s not all reducible to dollars.

      What’s the right unit of measurement for chuntyness and treasonousness?

      Kilobyres? Megarobbs?

  8. plebngineerMEMBER

    Why? Because they get to grow their member base. They don’t actually care about their members.

    • Growth in the member base, but more importantly growth in the funds under management for the super funds they control.

  9. The media only deals with Sally McManus who has effectively become the voice of all unions. The problem with this is Sally represents Trade Unions who are direct beneficiaries of Big Australia via increased membership and increased Trade work.

    I am disappointed that unions in other sectors haven’t worked this out and demanded their own media air time.

    • The unions themselves are beneficiaries, sure, but their member base? Not so much. Maybe someone needs to educate all these wrokers that Sally and her ilk are using their member dues to actively work against their interests.

    • The Education as well as Nursing unions need to have a greater platform. Their leadership and membership base often care more than only ‘getting more pay’, but also care about resourcing issues that come with crush-loading our schools and hospitals. Though, the leaders of these parties are ex-nurses and teachers and are therefore the more caring and therefore ‘softer’ types, so they don’t go for the hard-nose approach that the trade unions / Sally types go for.

  10. When I was young (in the 1960’s) my Mum talked about Wogs stealing good Aussie jobs and working for peanuts (usually accompanied by some mocking monkey noises), apparently in over a half a century nothing has changed.
    Gawd I hate this meme

    • Fair point, however displaced Europeans post WWII Europe are not of the same ilk as the new arrivals Australia now welcomes. May as well send state gov representatives to all airports to collect stamp duty revenue as soon as they arrive. Even better set up some tap and go terminals to speed things up. Innovation.

    • So people are not allowed to talk about modern neoliberal population pumping for vested interests because your mum was a racist?

      • You present an excellent example of true racism. You have made several assumptions regarding someone living in the 60’s, especially regarding ethnicity.

      • The people aren’t the problem.
        Our underlying problem is that we’re not efficiently deploying our available labour.
        Instead we have a wage model that allocates some percentage of the wealth our nation generates from the mining of its minerals and divides that sum across the population according to some formula we all consider fair.
        therefore: More people = lower wages
        Oh wait a minute, I’ve got a solution..why don’t we open another mine …f’ing brilliant idea mate.. except that a year or two later we have the same old problem same racist rants, same entitled solutions, same same same
        Basic problem is that our people aren’t the source of our nations wealth, our greatest asset (our educated human capital) is our least valuable asset. IF we could reverse this ( as for instance has Norway) wouldn’t we all be better off . If we can’t reverse this operations state than we’re all F’ed anyway, so please stop blaming the newest arrival for the stupidity that is our very own creation.

      • All those things you wish were happening Fisho, are in fact, not happening. Lets be clear about that – Not Happening.

        Not even close to happening. What is happening, is crush loading, wage suppression, environmental degradation, extreme inequality, infrastructure overloading and amenity destruction. Nothing whatsoever to do with race and everything to do with the rate of growth and the management of this growth.

        So until the fairly land that you want to live in occurs, and it is reasonable to point out here that there are no examples of it occurring anywhere as yet, feel free to work hard to bring them about, but don’t confuse being a patsy for neoliberal high growth economics with a social conscience.

        It’s also worth pointing out that Norway only has about 5mil people, however it is also in the grip of an neoliberal led high growth immigration model which is causing considerable concern regarding the capacity of the country, both infrastructure and environment, to deal with these growth rates and still maintain liveability. 70% of current population growth in Norway is from immigration.

    • robert2013MEMBER

      Many of those southern europeans migrants worked hard and cooperatively to own land, typically as market gardens on the edge of the city. As the cities expanded this land made them rich. So many property developers in Australia today have Greek or Italian names. They were prepared for this by their parents. I believe that this changed the pattern of Australian urbanisation. The consensus around the English view that everyone should have a house and land, no matter how small, was broken. Then, instead of increasing density by building terraces, it was decided to allow the building of more and more apartments. The new developments in Canberra like many Spanish towns I’ve seen – apartments and high density living surrounded by expansive bush. This increases the productivity of the land for the developers, making them richer, and also means that the councils had to provide less infrastructure. The shift of emphasis from detached dwellings to apartments has been slow and is not yet complete, but it is now accepted in Australia that the way to increase density is by apartment building, and it just isn’t true. London’s 1939 population over over 8 million wasn’t exceeded until a couple of years ago, and that 1939 8 million weren’t house in apartments. This is one example of what happens when social cohesion is smashed. People in the bottom half are divided and cannot organise to fight the top. Unfortunately, they feel the problem more than they understand it and they confuse the cause with the symptom. As a result, the leadership gets away with calling them racist for quite a long time. Rich people do not require social cohesion as much because they can get people to do things for them for money.

      • Making the bulk of the migrants from Asia has been a form of in-built insurance (particularly post-Pauline ridicule), so that the population pump policy would go without criticism – until now.

    • Well, it’s actually true. Herbert Hoover (US president) Came to WA and was the manager of the Sons of Gwalia gold mine. He subsequently started employing lot’s of Italians on the mine because they were cheaper labour. So, yes, it’s been happening for a long time.

      ” He employed contract labour from the pool of European migrants willing to work for lower wages, bringing him into conflict with the Miners’ Union which had already organised a number of strikes on the WA goldfields in a bid for better pay and conditions. He is reported to have written of the migrants, whom he regarded as his allies against the powerful union:

      “I have a bunch of Italians coming up … and will put them in the mine on contract work. If they are satisfactory I will secure enough of them to hold the property in case of a general strike and … will reduce wages.”

    • There was actually a need at that time, and people were leaving war-torn Europe.

      But what now? We don’t need the extra people for a booming manufacturing sector. We are growing our population for the sake of a magic GDP number because successive governments don’t know what else to do. Now, we have a large surge of people we don’t want or need, from countries whose cultures have a lot to be desired.

      We are being crush-loaded with people we didn’t ask, we don’t need and we don’t particularly like, and as a result our amenity has been greatly reduced.

      • Yeah that works IF all Australians are happy with that solution AND everyone else in the world respects our decision and leaves us alone to determine our own fate
        Seems to me the Australian Aborigines made a similar decision 250 years ago…how did that decision work out for them?
        Of course things are different now, we don’t just go around the world finding people that have things we desire and killing them…or do we…that’s right these days we don’t actually have to turn up and risk our life it’s all done by drones and remote controls and it’s all very tidy and “clinical” not like the old days at all…Targetted. precise, necessary. sanctioned, agreed, not at all like the old days

        All that I’m really saying is that over the long term our collective Labour pool needs to create real global value that is derived from the labour pool itself. Achieve it now or achieve it later either way it’s necessary for out longer term survival.

  11. robert2013MEMBER

    Why aren’t the unions and the “left” up in arms about lower pay for workers?

    1. The union movement is dominated by public servants who are permanent employees getting paid above average wages. It no longer represents the bulk of working people.
    2. Once a person has risen through the ranks of any organisation, be it a union, government or commercial enterprise, they become highly paid and benefit disproportionately from higher immigration through lower fees for service and higher asset prices.
    3. Ordinary working people still have something to lose. They are willing to keep working hard to keep their house rather than fight back.

    Nothing will change until a proper, bona fide recession hits. A 2 quarter technical recession will not be enough.

    • Union salaries are far out of touch with reality. They are all very smug with their big salaries and ability to escape the worst of the Big Australia policies.

  12. Similar findings from a US study that examined firm-level effects of H-1B visa lottery outcomes: https://gspp.berkeley.edu/assets/uploads/research/pdf/h1b.pdf

    We compare winning and losing firms in the Fiscal Year 2006 and 2007 lotteries for H-1B visas, matching administrative data on these lotteries to administrative tax data on U.S. firms, and to approved U.S. patents. Winning additional H-1B visas causes at most a moderate increase in firms’ overall employment, and these H-1Bs therefore substantially crowd out firms’ employment of other workers. Additional H-1Bs generally have insignificant and at most modest effects on firms’ patenting and use of the research and experimentation tax credit. There is some evidence that additional H-1Bs lead to lower average employee earnings and higher firm profits.

  13. Jumping jack flash

    “Again I ask: why isn’t Australia’s union movement and the Left up in arms at Australia’s mass immigration ‘Big Australia’ policy, which is not only eroding workers’ conditions and pay, but also pushing-up their cost of living and lowering their amenity? Why are they playing into the hands of the ‘growth lobby’, which are capturing the gains that come from bigger markets and paying lower wages, while ordinary residents wear the costs?”

    The answer is blindingly obvious – it is because of the debt.
    high immigration facilitates wage theft which allows the top tier of business to repay their debt and keep up with costs of living.

    For everyone else: too bad. Part time employment, a few hours a week, shared with an army of imported labour. Like it or lump it.
    And most importantly, they’re not unemployed!

    Unions are made from people, and people have debt. Mountains of it.
    The tradies like the cheap labour, too. They have enormous piles of debt that needs to be repaid, like everyone else.