Feds lie back to RBA: ‘Immigration lifts wages’

The muppets at the Department of Home Affairs were obviously taken aback by RBA governor Phil Lowe’s admission that immigration holds down wages, firing back with research supposedly debunking the RBA’s claim:

The Department of Home Affairs, which oversees Australia’s immigration program, said studies had “consistently found no statistically significant relationship between wage growth and immigration”.

“Research conducted by economists at the ANU (Australian National University) … found little evidence that the labour market outcomes of Australian-born workers are negatively related to immigration,” a spokesman said.

The department also pointed to research from the Committee for Economic Development of Australia, which it said found recent migrants had not had a negative impact on local wages or participation rates.

“In some cases, an increase in migrant concentrations in certain levels of qualification and experience is associated with a positive impact on wages and employment,” the spokesman said.

Why not cite studies showing that immigration does lower wages, for example from the Productivity Commission, Victoria University, the Bank of England and Cambridge University, or Professor Bill Mitchell. Economists right across the nation are also now warning that wage growth will surge unless Australia’s international border reopens. In doing so, they explicitly acknowledge that immigration lowers wages.

Let’s get back to basics here. The reason why Australia’s business groups lobby so feverishly for a ‘strong migration program’ is obvious: it enables them to hire from a global pool of labour which reduces local worker bargaining power, holds down wage costs, abrogates their need to provide training, and gives businesses a bigger pool of consumers to sell goods and services to.

It is as simple as the above. Everyone knows it to be true because it is logical and 100% true.

One only needs to look at the prior period of extreme immigration in Australia, which was associated by the sharpest collapse in Australia wage growth on record. If immigration had a positive impact on wages, as suggested by the Department of Home Affairs above, we would not have seen Australia’s wage growth so badly miss the government’s and RBAs own forecasts:

Collapsing wage growth

Collapsing Australian wage growth as immigration ripped.

In any event, Australians do not want a return to the high levels of immigration experienced pre-COVID. Public policy should reflect their wishes.

Unconventional Economist
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Comments

  1. “Research conducted by economists at the ANU (Australian National University) …

    Mates of Dr Demography?

    • They’re thick as thieves at ANU Crawford too. Or, have a look at UNSW economist Richard Holden, over at Conversation, who simply denies, then misrepresents, what Lowe has plainly said. So plainly, that even The Age reported it straight.

      All you have to do is turn Graph 3 upside down, then the “economists” and “demographers” are dead right.

      • Richard Holden today on The Conversation when Lowe’s comments were raised:

        “he’s said quite the opposite–although his comments about the link between immigration and wages growth were incomplete at best.”

    • Pick your researcher...MEMBER

      In the tradition of “Research sponsored from the cigarette industry shows…”

  2. University staff in general have a vested interest in keeping high levels of immigration. They need the fee paying students, otherwise universities would have to downsize to fit the local population.

    • C'est de la folieMEMBER

      You betcha!

      This is pretty much baked in from here anyway, and a large number of gigs have actually already been shed from the academic side already – the academics and those teaching being on temporary contracts and the administrative staff (who presumably will be under the kosh from here) more likely permanent.

      But for sure it would influence what they publish

  3. Academics shouldn’t complain, go and get some real world experience while the jobs market is hot and take advantage of the closed borders!

    • Peter SMEMBER

      I’d suggest that picking fruit or driving a harvester would provide a better understanding of economics for these folks as well!

  4. The government announced that when enough people are vaccinated they will open the borders. Australians are getting vaccinated in large numbers. Not getting vaccinated is the only way to get migration down given where the power resides in this country. I say lock me down and lock ’em out.