The supply and demand of wage growth.

A comment on last week’s hawt chicks & links from a reader with an unpronounceable name:

In a world where we continue to experience labor shortages I might agree with Carlson, but the future we face indicates millions of jobs erased by automation.

Worker salaries around the West have in general seen much stagnation over the past few decades. But this has not been caused by automation. Rather, it is down to a combination of bad trading policy that has destroyed manufacturing as a base as well as wholesale immigration. The laws of supply and demand are real bitches when it comes to this sort of thing.

An example that I find illustrative is what occurred in the Netherlands after the Second World War. With large parts of the country devastated and the economy moribund, hundreds of thousands of Dutch emigrated to countries like Australia in search of work. Then the economic boom of the 60s occurred and suddenly there were not enough workers to go around. Because of this, wages increased. Businesses didn’t like having to pay all these wages to the suddenly uppity lower classes so they lobbied the government to bring in thousands of immigrants from countries like Turkey.

Their excuse was that suddenly the Dutch did not want to work jobs that were beneath them such as cleaning toilets or sweeping the streets. The real reason was that in an ultra-competitive job market in order to attract people to do those jobs the wages would have to be increased to a level that businesses did not want to pay.

Not that they couldn’t pay; they just did not want to.

So hordes of immigrants from incompatible cultures were brought to Holland to do the jobs that no sane Dutchman wanted to do. Apart from the social upheavals associated with such a decision, the other major consequence was the effect that this had on wages. Wage growth plateaued as competition for new employees fell. The same thing has happened in many other countries around the world.

(Note; I haven’t even mentioned the effect that welfare had on this but keep in mind that there are many other factors at play as well.)

The conservative party in Australia won the recent unwinnable election partly because the working class has had enough of seeing wages driven down by the political classes’ fixation with whole scale immigration. For the political class, immigration is crack cocaine; once they get a taste they just cannot stop. Here in the USA the two sides of politics are currently arguing over which types of immigrants should come in. The Republicans want some standards while the Democrats scream that this is racist and we must bring in absolutely anyone with a pulse.

But nobody that counts is raising the point about why we need any immigration at all. It’s simply taken for granted that we must bring in more and more people, no matter that the present infrastructure is close to collapsing under the weight of numbers that it simply was not designed for. Whether that be roads, schools, hospitals, or airports, our countries already have far too many people. What possible benefit could bringing in more people have?

Well, it could continue the trend of keeping wages down. If you keep wages down and inflation continues its merry trend then eventually the proles will be ripe for manipulation into a 1917-style revolution. The thing that socialists hate above all else is any upward mobility of the lower and middle classes. If people are doing well then they can’t be tricked into socialist revolutions. Everything that the left has done over the past 50 years has been carried out with this aim in mind. Climate change is simply the latest version – beggar the populace with climate taxes until they’re happy to rise up in the streets for the glorious revolution, comrades.

Here in the USA the job market is going gangbusters for the simple fact that Trump is fixing the trade imbalance side of the problem. Almost every business that I drive past or walk into in Louisiana has a sign up stating that they’re hiring. I’ve never seen anything like it. And as a result wages are going up for the first time in years. But imagine what the effect would be if there weren’t 22 million illegal immigrants in the country? And imagine the effect if legal immigration was not anywhere close to the present numbers? Why, wages would be off the charts. Comrades.

This is why cries about the dangers of losing worker jobs to automation are feeble cries in the wilderness. Fix the immigration addiction and we won’t have any problems with job losses for generations to come. Nothing exists in isolation and our present economic circumstances are a creation of 50 years of careful manipulation with one end goal in mind.

This is why they hate Trump so much. Trump has shown that it can be undone, and easily so once you get the ball rolling. All we need to do is to progress to the next step and stick the hardcore socialists up against a wall.

9 thoughts on “The supply and demand of wage growth.

  1. TechieDude

    Another thing unfettered immigration does is screw up the entry-level job market for teens. The immigrants take these jobs, then lefties crow about the minimum wage being too low to support a family.

    When I was growing up there were all sorts of opportunities for work as a teen. I myself cleaned rooms in a local nursing home on weekends. I’ve also worked in warehouses, unloading trucks. I mowed lawns, as many of my peers did.

    The flip side of this is it made our kids lazy. I was having some concrete work done, and was chatting with the concrete dude – an older black dude. He said he tried to get vibrant youth into the business, one that has fed and housed his family and put his kids through school. He said they don’t last the day. It’s too hard. So he had two mexicans with him. One, and older dude, did the lions share of the work. The younger one was lazy and pretty thick.

    I’ve seen this a few times. Immigrants really aren’t the answer, and the really don’t work harder than anyone else.

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  2. Not that they couldn’t pay; they just did not want to.

    When it comes to business making wage decisions, this isn’t universal as you seem to imply. This is particularly true in the service industries where the consumer use and demand for the services dictate the possible charges for such services. Those charges limit the amount the business can pay to employees and remain profitable. Also, a lot of the automation in the service industry today is focused on filling gaps where employees are hard to find for almost any wage.

    The single thing that is driving a labor shortage in non-skilled jobs in the US isn’t employers paying to little, but government benefits paying enough to where it makes more sense for some people to draw a check and not work at all than to take any job they’d be qualified to hold.

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  3. Manufacturing is the backbone of a strong economy.
    More manufacturing –> Stronger economy
    Less manufacturing –> Weaker economy
    There’s no way around it.

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    1. You do realize that in the US, while manufacturing employment has dropped, that since 1946 the US population has more than doubled in size but real manufacturing out as grown by nearly 10 times the output of 1946. Manufacturing output has more than doubled since 1980 when manufacturing employment hit it’s high in the US at 19.5 million workers.

      I’d also argue that manufacturing, while important, isn’t any more important than certain other industries like agriculture and energy for a strong economy.

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      1. A lot of manufacturing moved overseas, starting in the 80’s, and national debt and trade deficits shot up at the same time. Was it a coincidence?

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      2. Yeah, so what as that doesn’t negate anything I said about the fact that manufacturing as a sector is still growing. Automation and computerization are what’s reduced overall employment and sticking to a mindset that only manufacturing jobs are good jobs is one of the things holding people back. There’s plenty of work in the trades in the US that pay just as well, or better, than any manufacturing job.

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      3. PB

        Jack’s observation certainly applies in Australia at least, where so-called “Service industry” jobs have all but supplanted manufacturing. Apart from sporadic mining booms, breadwinners are moving into areas that were formerly seen as female areas of employment such as Nursing. I’ve now seen enough overweight, bearded guys with bricklayer accents in student-nurse uniforms to tell me that a fundamental shift has occurred in this country.

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  4. WFJacoby

    I work as an engineer for a company that makes stuff. The tarrifs are helping us justify moving parts we would normally buy from China back to American businesses. There is just one problem. These American businesses cannot provide the number of parts we require.

    Many of the people who possessed the skills and expertise required to run the factories retired long ago. These factories have been scaled down for so long that they are hesitant to expand again for fear of the tarrifs changing.

    There is a strong drive for manufacturing to return to America, but companies are hesitant to make the investment with the potential for “free trade” to return.

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  5. Katie

    Another factor along with immigration is government control of wages (via minimum wages, etc). This also has the effect of reducing the supply of entry level jobs where value and skill can be added (for the company AND the employee). Imagine how many more help wanted signs would be out across the US if minimum wages were not a factor. Supply and demand would regulate wages offered, and skill and experience might even be reflected in the paycheck (what a thought). Yet another example of “compassionate” interference where the actual effect is precisely the opposite of the rhetoric. But that doesn’t bother anyone because the fundamental goal wasn’t actually to help anyone get out of poverty, but to preen oneself as “such a compassionate person.” Therefore it’s only intentions, not actual real life effects, that matter.

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