So what’s so wrong with labour shortages driving up low wages?

[patrickkinney]

Interesting article today:

So what’s so wrong with labour shortages driving up low wages? | Larry Elliott

For those who are part of Britain’s casualised workforce Brexit isn’t flawed – quite the opposite

www.theguardian.com

"There has been much academic work done into the impact of migration on wages in the UK. The evidence is that where workers from overseas complement home-grown workers, they boost earnings. This tends to benefit those at the top end of the income scale.

It is a different story at the other end of the labour market, because wages are held down when migrant workers compete with domestic workers. The competition tends to be greatest in low-paid jobs, such as hospitality and social care.

That is not quite the end of the story, because increasing the supply of overseas workers also boosts demand. The new employees are also consumers and spend the money they earn like everybody else. The extra demand creates more jobs, although mainly in low-paid sectors.

Against this backdrop, it is perhaps unsurprising that Brexit divided the nation in the way it did. If you were in a relatively well-paid job and not at risk of being replaced or undercut by a worker from overseas, you were likely to vote remain. The Polish plumber was cheaper, the Lithuanian nanny was better educated, so what was not to like?

If, on the other hand, you were part of Britain’s casualised workforce, needing two or more part-time jobs to get by, you were much more likely to vote leave, on the grounds that tougher controls on migration would lead to a tighter labour market, which in turn would push up wages.

For those who have nothing to fear from open borders, labour shortages are evidence Brexit is flawed. For those not so fortunate, it is doing what it was supposed to do."

Is this perhaps why Jeremy Corbyn was a bit lukewarm on the issue of Brexit?

 

[FogBlueInSanFran]

Interesting article today:

So what’s so wrong with labour shortages driving up low wages? | Larry Elliott

For those who are part of Britain’s casualised workforce Brexit isn’t flawed – quite the opposite

www.theguardian.com

"There has been much academic work done into the impact of migration on wages in the UK. The evidence is that where workers from overseas complement home-grown workers, they boost earnings. This tends to benefit those at the top end of the income scale.

It is a different story at the other end of the labour market, because wages are held down when migrant workers compete with domestic workers. The competition tends to be greatest in low-paid jobs, such as hospitality and social care.

That is not quite the end of the story, because increasing the supply of overseas workers also boosts demand. The new employees are also consumers and spend the money they earn like everybody else. The extra demand creates more jobs, although mainly in low-paid sectors.

Against this backdrop, it is perhaps unsurprising that Brexit divided the nation in the way it did. If you were in a relatively well-paid job and not at risk of being replaced or undercut by a worker from overseas, you were likely to vote remain. The Polish plumber was cheaper, the Lithuanian nanny was better educated, so what was not to like?

If, on the other hand, you were part of Britain’s casualised workforce, needing two or more part-time jobs to get by, you were much more likely to vote leave, on the grounds that tougher controls on migration would lead to a tighter labour market, which in turn would push up wages.

For those who have nothing to fear from open borders, labour shortages are evidence Brexit is flawed. For those not so fortunate, it is doing what it was supposed to do."

Is this perhaps why Jeremy Corbyn was a bit lukewarm on the issue of Brexit?

No argument that a stagnating environment is better than growing one has ever worked very well when put in practice. If you stop growing, surely as water is wet, something or someone will grow around you, and as a result, you’ll erode.

Ask Manchester United. Or Arsenal. Especially Arsenal.

 

[I'm With Stupid]

It depends on the sector. If it's relatively low-skilled jobs, then I have little sympathy with people offering £3 a hour and them moaning that they can't find anyone to take the job. Although it's worth mentioning that it will make things more expensive to buy (if you've ever been to Japan where they have very few immigrants and seen the price of things like fruit, it's ridiculous). But obviously there are certain sectors where there's a bit more training required, so if you instantly take away thousands of migrant workers it takes time to train new people to do the jobs (although it's not like employers had no warning).

But even in training, that's highlighted a big problem of relying on immigration to fill jobs. When did it stop being the employer's responsibility to train staff to do the job? We seem to have created this situation where people are always individually responsible for their own training and when a haulage company says "There aren't any trained HGV drivers." it doesn't enter their mind for a second to pay the £2000 training costs to encourage people to enter the industry. In skilled industries, immigrants become the easy option. Why train more British people as doctors at huge cost when you can just pop over to India and pluck them off the shelf?

Having said that, I think the wider economic arguments are generally in favour of immigration benefiting the country as a whole and in the longer term, improving standards of living for everyone. It's certainly not immigrants who have created the mess of the last 10 years.

But yeah, the article in many ways is like the ones about house prices, where middle-class middle-aged journalists in London warn about how something-or-other is going to affect house prices, and everyone under the age of about 35 thinks "good!"

 

[FogBlueInSanFran]

It depends on the sector. If it's relatively low-skilled jobs, then I have little sympathy with people offering £3 a hour and them moaning that they can't find anyone to take the job. Although it's worth mentioning that it will make things more expensive to buy (if you've ever been to Japan where they have very few immigrants and seen the price of things like fruit, it's ridiculous). But obviously there are certain sectors where there's a bit more training required, so if you instantly take away thousands of migrant workers it takes time to train new people to do the jobs (although it's not like employers had no warning).

But even in training, that's highlighted a big problem of relying on immigration to fill jobs. When did it stop being the employer's responsibility to train staff to do the job? We seem to have created this situation where people are always individually responsible for their own training and when a haulage company says "There aren't any trained HGV drivers." it doesn't enter their mind for a second to pay the £2000 training costs to encourage people to enter the industry. In skilled industries, immigrants become the easy option. Why train more British people as doctors at huge cost when you can just pop over to India and pluck them off the shelf?

Having said that, I think the wider economic arguments are generally in favour of immigration benefiting the country as a whole and in the longer term, improving standards of living for everyone. It's certainly not immigrants who have created the mess of the last 10 years.

But yeah, the article in many ways is like the ones about house prices, where middle-class middle-aged journalists in London warn about how something-or-other is going to affect house prices, and everyone under the age of about 35 thinks "good!"

Have the same problem with construction labor in the US. It’s a bit disingenuous for the construction industry to whine about today’s shortage of folks when their investment in apprenticeship programs was thin (“that’s the subcontractor’s responsibility”), even during the beginning of the housing recovery ten years ago. Industry missed the biggest demographic wave of younger people the nation has ever seen . . . and now has a chronic shortage and skyrocketing build costs, which in turns helps lead to unaffordable home prices which, eventually, depress demand for what they sell.

 

[I'm With Stupid]

Have the same problem with construction labor in the US. It’s a bit disingenuous for the construction industry to whine about today’s shortage of folks when their investment in apprenticeship programs was thin (“that’s the subcontractor’s responsibility”), even during the beginning of the housing recovery ten years ago. Industry missed the biggest demographic wave of younger people the nation has ever seen . . . and now has a chronic shortage and skyrocketing build costs, which in turns helps lead to unaffordable home prices which, eventually, depress demand for what they sell.

Yep, I'm an English language teacher, and I don't know many people who paid full price for their training. Most either got it paid outright or subsidized by a company in exchange for signing on with them for a year. It's not difficult to do, especially if it's relatively short or it's something you can do while working.

 

[ChicagoBlue]

Population growth creates a greater social cost which has to be borne by taxation, unless your political beliefs are “starve the beast” to aid in the withering and eventual death of such programs…as is the case with Republican America, even though most Republican voters don’t realize they live off the Federal Govt teat.

However, the CAPITALIST imperative within that growth is the increase of productivity AT THE EXPENSE of addition wage costs.

As we starting to discover, there is a new generation of young, educated, highly employable people who decry the notion of “money for work, at almost any cost,” and they’re actually LEAVING their jobs in record numbers!

Workers Are Quitting Their Jobs In Record Numbers, As The U.S. Experiences A Booming Job Market

American workers are quitting their jobs more than any other time in the past two decades.

www.forbes.com

While this, on its face, isn’t a problem in a booming employment market, it is creating the OPPOSITE EFFECT people thought it would coming out of the pandemic. Instead of people being willing to do almost anything to get back to gainful employment, they’re realizing their jobs sucked, their pay sucked, and that they’re not willing to do it on employers’ terms anymore.

That is going to create wage inflation, if employers need those jobs to be filled by a smaller employee pool willing to do the work, in order to expand that pool. Now, it’s far from me to suggest that’s a bad thing, but it follows that wage inflation strolls hand in hand with price inflation as it ripples through the entire economy.

If my cost of producing widgets goes from $1.00 to $1.05, then my prices (which produce my profit MARGINS) have to increase by MORE than 5%. That ripple gets felt at every stage of the production process and, the kicker, in a VAT tax system, the added pricing gets magnified at every stage of production, so that Uncle Sam can get paid, too.

In short, whatever the general increase in manufacturing wages (costs), inflation is sure to follow, just as it would if the price of raw materials increased…which they are doing in concert with wages in many industries!

Without increases in productivity, that inflationary pressure becomes greater than the wage inflation and ends up COSTING the worker.

Thankfully, we have been living through an age of technological innovation that has seen prices actually reduced on certain products, but there are other areas, where technology has not been able to stifle the costs of production, where inflationary pricing is rampant.

The key, albeit rarely done by the hourly-working masses, is to enjoy wage inflation while eschewing the economic inflation that results. That’s because rising inflation creates higher interest rates. Higher interest rates aid the investing class not the borrow and spend class, as it is the investing class that reaps the rewards of their investment in both corporations (via stock market) and within the banking sector (savings and deposit accounts paid by borrowers).

So, while it feels good to say “I got a 5% raise” the most important part of the equation is “Did my ACTUAL purchasing power increase or decrease?”

There is a reason that in America we are currently experiencing the first generation since the Great Depression that can be said to be living with a lower standard of living than their parents, and the generation just exiting school is facing even harsher prospects, as the basic building blocks of that standard of living (a home building equity, growing savings and investments, a job that has growth and income prospects for life) become ever more difficult to achieve.

 

[Len Rum]

Nothing wrong really if you've got enough spare workers who you can train and make available at the right time and place and if you don't mind prices going up ( at least in the short term until productivity improvements maybe kick in).
But if you've 'full' employment and an ageing population as a high percentage of your population, shit training facilities and apprentice programs ( can be corrected), a workforce that is not flexible or willing to take on certain jobs and price rises are not acceptable you might have a problem.

 

[Vic]

Interesting article today:

So what’s so wrong with labour shortages driving up low wages? | Larry Elliott

For those who are part of Britain’s casualised workforce Brexit isn’t flawed – quite the opposite

www.theguardian.com

"There has been much academic work done into the impact of migration on wages in the UK. The evidence is that where workers from overseas complement home-grown workers, they boost earnings. This tends to benefit those at the top end of the income scale.

It is a different story at the other end of the labour market, because wages are held down when migrant workers compete with domestic workers. The competition tends to be greatest in low-paid jobs, such as hospitality and social care.

That is not quite the end of the story, because increasing the supply of overseas workers also boosts demand. The new employees are also consumers and spend the money they earn like everybody else. The extra demand creates more jobs, although mainly in low-paid sectors.

Against this backdrop, it is perhaps unsurprising that Brexit divided the nation in the way it did. If you were in a relatively well-paid job and not at risk of being replaced or undercut by a worker from overseas, you were likely to vote remain. The Polish plumber was cheaper, the Lithuanian nanny was better educated, so what was not to like?

If, on the other hand, you were part of Britain’s casualised workforce, needing two or more part-time jobs to get by, you were much more likely to vote leave, on the grounds that tougher controls on migration would lead to a tighter labour market, which in turn would push up wages.

For those who have nothing to fear from open borders, labour shortages are evidence Brexit is flawed. For those not so fortunate, it is doing what it was supposed to do."

Is this perhaps why Jeremy Corbyn was a bit lukewarm on the issue of Brexit?

If you're poor and you need something delivering (anything you buy essentially), you'll pay in the end for higher prices. Or if you need a plumber.

 

[i kne albert davy]

Not a lot really but it's complicated as inflation will erode pay increases, but there again importing cheap labour isn't the endless solution either as second generation rarely want the crap jobs and the country doesn't have rubber borders.Personally my wages have gone up 10k in last 12 month's and I don't need a plumber, fixing taps and soldering pipes ain't rocket science done by supermen.

 

[hilts]

Interesting article today:

So what’s so wrong with labour shortages driving up low wages? | Larry Elliott

For those who are part of Britain’s casualised workforce Brexit isn’t flawed – quite the opposite

www.theguardian.com

"There has been much academic work done into the impact of migration on wages in the UK. The evidence is that where workers from overseas complement home-grown workers, they boost earnings. This tends to benefit those at the top end of the income scale.

It is a different story at the other end of the labour market, because wages are held down when migrant workers compete with domestic workers. The competition tends to be greatest in low-paid jobs, such as hospitality and social care.

That is not quite the end of the story, because increasing the supply of overseas workers also boosts demand. The new employees are also consumers and spend the money they earn like everybody else. The extra demand creates more jobs, although mainly in low-paid sectors.

Against this backdrop, it is perhaps unsurprising that Brexit divided the nation in the way it did. If you were in a relatively well-paid job and not at risk of being replaced or undercut by a worker from overseas, you were likely to vote remain. The Polish plumber was cheaper, the Lithuanian nanny was better educated, so what was not to like?

If, on the other hand, you were part of Britain’s casualised workforce, needing two or more part-time jobs to get by, you were much more likely to vote leave, on the grounds that tougher controls on migration would lead to a tighter labour market, which in turn would push up wages.

For those who have nothing to fear from open borders, labour shortages are evidence Brexit is flawed. For those not so fortunate, it is doing what it was supposed to do."

Is this perhaps why Jeremy Corbyn was a bit lukewarm on the issue of Brexit?

Lots of people in this country have to do long hours and multiple jobs to get by, others need the rest of us to top up wages not because their employers can't afford to give them more they just don't have to.

If employees had to accept the hand they have been dealt then I ain't concerned about companies having to improve they way they treat people if they want people to work for them.

Does every employer take the piss? No but too many do. There is an attitude that workers sole purpose in life is to be there to do what companies want. When they want and if you don't like the crumbs on offer tough.

I also find the attitude of let foreigners do the shit jobs quite appalling.

It will be interesting to see the govt response if the situation continues for any length of time. Do they have the brass neck to allow immigration to increase by a lot to solve the problem?

I wouldn't put it past them.