ABC business reporters Daniel Ziffer and Samuel Yang yesterday posted a spurious article defending the business lobby’s call for a strong reboot in Australia’s immigration program.
The authors cherry-picked a bunch of pro-big migration economists to claim that mass immigration does not push down wages:
Gabriela D’Souza, senior economist at the Committee for Economic Development of Australia (CEDA)… [says] “workers are not exactly like goods. Workers also consume products and services in the market and so that’s part of the reason why we see these impacts come about, that there’s no discernible impact on wages because we also see them contributing to the spending in an economy”…
Research says no
While there are some caveats about areas of exploitation and a concentration of migration in certain skilled professions depressing wages for locals, much research doesn’t back a general view that migrants are keeping wages lower…
“On aggregate, we just find that it’s basically a wash” [Gabriela D’Souza said].
One of the winners of this year’s Nobel Prize for Economics was David Card, whose work has consistently upended conventional wisdom…
It’s not a case of migrants equal lower wages, according to Ms D’Souza.
“That’s kind of a well-known fallacy in economics,” she said.
“We’ve seen the experiment of that in COVID, and in shutting down of our borders, and what impact that has on the labour market, which has been quite negligible”…
Brendan Coates [from the Grattan Institute]… agrees with Ms D’Souza that migrants don’t affect the wages of locals, on average. But “migration that is highly concentrated in sectors of the labour market can have bigger impacts on the wages of incumbents working in those sectors”…
Analysis of 1 million Australian temporary visas for high-skilled workers in a 2020 study published by Oxford University found that when a particular occupation received a lot of migrants the incomes of local workers tended to rise as they adjusted to competition by shifting to other jobs, often earning higher pay.
Why not cite studies/economists arguing that immigration does lower wages of incumbent residents. These include:
- Victoria University
- University College of London
- Bank of England and Cambridge University
- Professor Bill Mitchell
- Property Council modelling
- Productivity Commission modelling
- Professor Ross Garnaut
- Professor Judith Sloan
- Economist Gerard Minack
- Economist Chris Joye
- RMIT public policy professor David Hayward
- CBA head of Australian economics Gareth Aird
- ANZ economist Daniel Gradwell
- Economist Stephen Koukoulas
- Economist and former Liberal leader John Hewson
Indeed, economists, commentators and industry are now warning that wage inflation 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 Australian business groups like CEDA 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% fact.
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 no impact on wages, we would not have seen Australia’s wage growth so badly miss the government’s and RBAs own forecasts:
The Australian Treasury’s own immigration propaganda report, Shaping a Nation, explicitly acknowledged that the overwhelming majority of Australia’s jobs growth (especially full-time jobs) went to migrants between 2011 and 2016, thus keeping the unemployment rate elevated:
Recent migrants accounted for two-thirds (64.5 per cent) of the approximately 850,000 net jobs created in the past five years. For full-time employment, the impact is even more pronounced, with recent migrants accounting for 72.4 per cent of new jobs created.
Migrants took most jobs between 2011 and 2016.
Professor Peter McDonald released similar findings:
The permanent and temporary skilled migration policies established by the Australian Government from 1995 played an important role in meeting that labour demand…
From July 2011 to July 2016, employment in Australia increased by 738,800. Immigrants accounted for 613,400 of the total increase…
The RBA and Treasury has advised that Australia’s unemployment rate needs to fall to 4.5% or below to generate significant enough labour market tightness to lift wages. Obviously, this was a fool’s errand when 180,000 to 200,000 migrant workers flooded the economy every year pre pandemic.
However, thanks to the heavy fall in migrant workers due to COVID:
Australia’s unemployment rate recently hit its lowest level since 2008, only thwarted by the recent lockdowns across NSW, Victoria and the ACT:
Indeed, independent economist Saul Eslake recently noted that the closure of Australia’s border to migrants has significantly reduced the amount of ‘competition’ which Australians who’ve lost their jobs face in seeking new ones. This, in turn, helps to explain why the unemployment rate has fallen faster than expected and should soon lead to rising wages:
“The longer our borders remain closed to international migrants, the easier it is for the targets for unemployment to be achieved”.
“For example, on average over the three years to March 2020, the working aged population was growing by around 22,000 a month. And that in turn meant you needed jobs growth of around 13,000 a month or more in order merely to stop the unemployment rate from rising. But since the onset of the pandemic and in the last six months or so, the working age population has only risen by around 8,300 a month. And that means that you can prevent the unemployment rate from rising with much less employment growth than pre-pandemic. Or, to put it another way, you only need employment growth of about 0.13% per month in order to get the unemployment down to less than 5% by the end of this calendar year. Whereas if the working aged population has been growing at its pre-pandemic rate, you would have needed employment growth of more than double that in order to get the unemployment rate down to 5% or less with no change in the workforce participation rate”…
Does the ABC honestly believe that Australia’s unemployment rate would have cratered to only 4.5% had Australia’s labour force added 180,000 migrant workers over the past year, as was the case pre pandemic? Obviously not.
It, therefore, stands to reason that rebooting immigration post pandemic, as forecast by the Intergenerational Report:
Will necessarily drive unemployment back up, in turn scuttling the RBA’s unemployment and wage growth targets.
Australians already suffered a decade of stagnating real wage growth on the back of mass immigration, alongside declining amenity. The Morrison Government’s planned mass immigration reboot would be a fatal final blow for wages and living standards.
Sadly, the ABC has sided with the business lobby and chosen to gaslight Australian workers.
