A Lack Of Migrants Is Raising Wages – This Is Good, Isn’t It?

We’ve a complaint that a lack of incoming migrants is causing wages to rise. That all sounds pretty good really, as the usual and major complaint about the British economy is that wages haven’t risen for a decade. If we reduce migration, wages rise, we thus solve that problem. Without Momentum taking over the country that is:

The shortage of skilled workers is getting worse amid a “sudden reversal” in the numbers of EU and non-EU migrants in employment in this country, according to a new report.

Research among more than 1,000 employers suggested that vacancies were becoming harder to fill.

The squeeze on skills is leading employers to increase pay rates, said the Chartered Institute of Personnel and Development (CIPD) and the Adecco Group.

Their report said the shortage of workers is being driven by a falling interest among migrants wanting to work in the UK.

Gerwyn Davies, of the CIPD, said: “The data implies that the pendulum has swung away from the UK as an attractive place to live and work for non-UK-born citizens, especially non-EU citizens, during a period of strong employment growth and low unemployment.

There’s a number of different ways to read this. The first is that pretty much none of this is about illegal immigration. Sure, checks on who can work and who can’t all that great but skilled labour does tend to get checked and thus be legal. There’s a difference between checking the paperwork of the accountant and the delivery driver.

The second is that this doesn’t seem to be about any changes in our paperwork about who can come. Rather, it’s that either we benefited from other places being even worse, or that other places are now becoming better than we are as a destination. Ah well, so, to solve this we should become a better destination. Thus lower tax rates and bureaucratic regulation – says no one at all except us realists.

Quite the most interesting point though is the standard one that immigration – legal or otherwise – doesn’t reduce wages. Because those immigrants bring with them their own demands for products and services. Sure, they occupy jobs but they also create them with the same multiple locals do. On the gross scale that seems to be about true. Even Migration Watch has never found more than a few pounds a year in it and they’re not inclined to be liberal about this.

But here we’ve the opposite contention. Lack of migrants is pushing up wages at least among skilled workers. Thus migrants must have been holding said wages down. Which leaves us with one of two uncomfortable choices. Either this report here is hairy dangly bits and it’s not lack of migration causing the wage pressure, or the original contention that migration doesn’t change wages is those dangly bits. Which is where things get interesting, isn’t it?

This past decade there’s been a lot of complaining about zero real wage growth in the UK economy. This past decade we’ve also had more than a little bit of migration into the country. Are the two connected, as this original story here insists? Is it the migration keeping the wages down?

The reason for the interest isn’t so much to decry the migration nor even to stop it. Rather, if this is the cause then we have to make a decision about it. Accept the wage stagnation and have the immigration or not. As opposed to all the other plans out there, the socialisation of the economy, higher tax rates to pay for more redistribution, government control of wages and all the rest that gets floated around over on the left. If migration’s the cause then something to do with migration will be the cure, none of those other ideas. The value of finding out is thus that we can rule out all those other plans.

Oh, and almost by the way. Our aim in having an economy is that the average bloke in the street becomes better off over time. Rising wages as a result of less migration? Well, we applaud the rising wages bit at least, don’t we?