Immigration reality mugs Greg Jericho

Last week, the Guardian’s Greg Jericho attacked Reserve Bank Governor Phil Lowe for daring to suggest that 15 years of mass immigration has harmed Australian workers:

Last week the head of the Reserve Bank suggested migration could have caused lower wages growth. It was an unfortunate statement that goes against evidence and ignores the many other factors at play.

Blaming migrants for our economic woes is not new…

[Lowe] suggested the hiring of migrants brought in to deal with “specific gaps where workers are in short supply … dilutes the upward pressure on wages in these hotspots”…

The problem is, as Lowe noted earlier in his speech, “immigration adds to both the supply of, and demand for, labour”.

Essentially migrants increase the supply of people looking for work, but also the demand of things that need people to work to provide. In effect – both taking away and adding to the pressures on wages.

Nothing in Lowe’s speech suggested that migration had a stronger impact on wages growth going down than up…

Most studies suggest migration has a positive impact on wages growth…

Blaming migrants for lower wages growth is easy but absurdly simplistic.

Strangely, today Jericho admits that the collapse in immigration is a key reason why Australia’s unemployment rate has fallen to only 4.9%:

One problem with the unemployment rate is that it is a rate – ie there is a numerator and a denominator.

It is the number of unemployed divided by the number in the labour force (those people who are unemployed and employed). If the number of employed stays the same but some unemployed people leave the labour force, then the unemployment rate itself will go down despite not one extra person getting a job.

And in a sense that is what has happened during the pandemic.

The number of unemployed obviously did grow, but a massive number of people left the labour force… a mass of people who would normally have come to the country did not because our borders were closed.

As a result the annual growth of working age people plunged from around 1.6% to below 0.2%:

…Had the labour force kept growing at around its usual 2% each year, in June there would have been nearly 200,000 more people in the labour force.

Now, if we assume all of those extra people were unemployed, the unemployment rate in June would have been 6.2% instead of the very impressive 4.9%:

So Greg Jericho has flat out admitted that because the flow of migrants has been restricted, the labour market has tightened. The next logical result of this labour market tightening is increased worker bargaining power and higher wage growth.

Obviously, rebooting immigration back to pre-COVID levels will unwind these positive impacts. Going back to importing 180,000 to 200,000 additional workers every year will necessarily drive unemployment back up and crater wage growth.

It’s economics 101, Greg. But you seem to suffer from an acute case of cognitive dissonance.

Unconventional Economist


  1. C'est de la folieMEMBER

    The most disturbing things about Jericho’s piece today is the use of this chart……

    Presenting workforce ‘growth’ since 2013 (why not since maybe 1980 Greg?) which is more than half made up of immigration (because Australians are so stressed out by the casualisation, flatlining incomes, and crowded infrastructure they arent interested too much in having kids any more) as though it is some sort of God given stricture we need to abide by

    I feel sure he will be happy clapping the moment ScoMo comes out and announces we need to double the migrant intake to 300k per year for a couple of years to make up for those we ‘lost’

    This is the sort of mindless bilge our ‘quality’ media comes out with

    • Paraphrasing someone quoting Adam Smith: soaking the poor with too much debt will stop them breeding and undermine your future ability to cut the salaries of your future wage slaves.

  2. The problem is people that read the guardian believe in it so much that they eat up any argument they put forward.
    Now I look forward to my lefties childless friends telling me that unemployment has gone up, its just that the lack of immigrations has marked the number.

  3. SnappedUpSavvyMEMBER

    I work mainly with commercial food and hospitality companies and the way it’s done in this industry is you fly people who can put your products into projects business class overseas on ‘product education’ trips. Some get 6 trips a year or used too. I’d love to know how this fella is paid off to write big Australia propaganda, how do we find out

  4. Lord DudleyMEMBER

    Ahhh, the good old alliance between the politically-correct left and the neo-liberal right on immigration policy. It’s been this way for over 20 years now. The sooner everyone breaks out of this left-right false dichotomy that’s clouding everyone’s thinking, the better. MB is one of the few places I’ve seen where this actually happens.

    An aside… in general, if you’re thinking in terms of a dichotomy, you’re probably wrong. That’s not how dynamic systems actually work. People here in the US still call the Republicans “conservatives” and the Biden administration “leftist”, which is only possible if your thinking is frozen into a dichotomy that hasn’t made sense for decades, or even centuries.

  5. Nobody actually believes the pro mass immigration nonsense that Jericho spouts. But still, he doesn’t seem like an imbecile so I assume someone is paying him to espouse this point of view in the face of evidence and logic. Shameful stuff.

    • Plenty of folk hate the mas$$ immigreation thing: one side ballooning house prices once mortgage signed … and poorer folk Uber eats… Me I hate all 3. If I want culture I eat Yoplait:))

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