Bill Mitchell: “Restricting population growth good for local workers”

Dr Bill Mitchell is one of the most progressive economists in the country. Yet he too recognises that the sharp fall in population growth due to Australia’s closed international border is a boon to local workers.

Dr Mitchell’s latest article, entitled “Restricting population growth is good for local workers”, notes the following:

  • “In the aftermath of the 1991 recession, which was the worst economic downturn in Australia since the Great Depression of the 1930s, I wrote a series of articles… My conjecture was that high rates of immigration at a time of slow employment growth would lock unemployed workers into long-term unemployment”.
  • “Historical comparisons show the unemployment response this time has been much larger than in the previous recessions. The other key point is that the working age population has grown at historically low rates as a result of the border closures. It seems that my conjectures in the early 1990s were correct, despite getting flack at the time from mainstream economists who were pushing the line that immigration is always good for the labour market”.
  • “If firms use migrant labour instead of training the local unemployed workers, then the long-term pool of unemployed remains above the levels that might normally follow the upgrading process”.
  • “With the external border closures since March 2020 we now have a situation where immigration rates are at all time lows”.
  • “This flattening out [of population growth] has forced employers to work harder to get workers and is one of the reasons unemployment is falling quite quickly, given the circumstances”.
Working aged population
  • “Now we can see more definitively the impact of the slowing population growth has on the ability of the labour market to absorb unemployed workers back into productive employment following a recession”.
Recovery from recessions
  • “The following graph shows the relationship between monthly employment growth (horizontal axis) and the change in unemployment (vertical axis) for each of these periods, denoted separately by different coloured and shaped markers”.
  • “The current recovery is very different – the slope of the blue line (and number on the x variable) is several times larger than the 1982 and 1991 recessions”.
Employment growth following recessions
  • “The major explanatory factor is the record low growth in the working age population as a result of the border closures”.
  • “The hope is that the tighter labour supply conditions will drive unemployment down much lower given that it is unlikely the external border will open until at least mid-2020… The other hope is that the tighter labour supply conditions will drive up wages as occurred during the Black Death”.

None of Bill Mitchell’s findings should come as a surprise. The Australian Treasury’s own research showed that the overwhelming majority of Australia’s jobs growth went to migrants between the 2011 and 2016 Census’, thus keeping unemployment elevated:

Recent migrants accounted for two-thirds (64.5 per cent) of the approximately 850,000 net jobs created in the past five years. For full-time employment, the impact is even more pronounced, with recent migrants accounting for 72.4 per cent of new jobs created.

Migrants stealing jobs

Migrants took most jobs between 2011 and 2016.

If pre-COVID levels of migration are restored, an extra 180,000 to 200,000 workers would join the Australian labour market every year, putting upward pressure on unemployment and placing downward pressure on wages. This, in turn, would make Treasury’s and the RBA’s new 4.0% to 4.5% unemployment target an impossible goal.

Australians experienced a decade-plus of crushed wages and living standards on the back of extreme immigration. This failed policy must not be allowed to return.

It’s time for Labor to take a stand. The Coalition’s latest immigration reforms are the equivalent of Work Choices 2.0 – designed specifically to neuter Australian workers and fatten company profits. So why is Labor remaining dead silent on this issue?

Unconventional Economist
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Comments

  1. “So why is Labor remaining dead silent on this issue?”
    Because the traditional Labor Party is long gone, replaced by the progressive Labor Party.
    The progressive Labor Party ideology, indeed their main ideology, is to socially engineer Australia toward a multiracial state, a melting pot of races … a ‘brown man’ nation.
    The immigration program of overwhelmingly Asian intake, running at average of 200,000 nom for the past 20 years is a beautiful thing in the progressive’s eyes, The progressive Labor Party are traitors to the Australian people.

    • After the election, Progressive Labor will (a) blame Murdoch (b) choose another leader who is educated to be unelectable (c ) conduct another post mortem (d) ensure that (c ) omits immigration and China (e) resume its pre-election torpor.

  2. In the last 12mths a local MR/HR truck driver hourly rate has gone from $24-$26 up to $28-$32 (country VIC/NSW)

  3. Evidence? Facts? NaahMEMBER

    So the evidence of the 1 year experiment on closed borders is in. Great for employment .
    Luckily for the property ponzi crew, the government doesn’t make decisions on evidence.
    Evidence Schmevidence ..

    Ideology not evidence is the mantra of the incumbent Liberals in all fields.
    Get enough votes to keep the base and the wealthy lobbyists are happy. Immigration purpose is to provide a low wage underpaid underclass, not to form a multicultural and equal society.