Mythbustworld? Do immigrants drive down wages in the UK?

The other night I watched a (depressing) BBC documentary about this, and of course they chose some particularly surly and inarticulate unemployed Brits (from Wisbech) to pick asparagus alongside some E European immigrants. Presumably to show how lazy and feckless those xenophobic Brits are by comparison. In this, the docu-makers succeeded. But what about the finer points?

What’s the full story? Seems to me that the UKIP mindset (which seems currently to be half of the English population) are quick to take arms against immigrant workers as being ‘exploiters’/’usurpers’, yet ne’ery a peep from the same crowd against ‘exploitative’ employers? The same crowd also seem to think immigrants are all on unemployment benefits as well as ‘stealing’ jobs. That can be another topic 😐

Where should/does the buck stop? I get that xenophobic bigots rarely change their minds (neither do reactionary bleeding-heart types) but what’s the real story on the wages? Is it an obscure mathematical equation? Is there some firm opinion/data on this?

Talk to me like I’m a dolt*

(*I really am, re economics and an embarrassing number of other subjects)

The documentary:

IIRC there’s no evidence that it’s true but because white van man believes it’s true we all have to respect his views and pander to his prejudices.

IME thanks to immigrants you now have a slightly higher chance of getting a tradesman to: turn up on time, turn up at all, answer the phone, call you back after promising to.

There’s an argument that because they drive the economy forward we are all actually better off. I guess we’ll find out in a couple of years time!

I heard something during the whole Brexit vote debarcle that suggested the actual net effect was ~ -0.3p/hr, but I can’t remember the source.

http://fmwww.bc.edu/repec/res2003/Hatton.pdf
2003 paper

Most studies that look across local labour markets, chiefly for the
US but recently for the UK, have found the effects of immigration to be benign. One
possibility is that an influx of immigrants from abroad to a specific area simply
pushes non-immigrants onwards to other localities and thereby spreads the labour
market effects over the whole econom

http://onlinelibrary.wiley.com/doi/10.1111/j.1542-4774.2011.01049.x/full
2011 paper

mmigration to the UK, particularly among more educated workers, has risen appreciably over the past 30 years and as such has raised labor supply. However studies of the impact of immigration have failed to find any significant effect on the wages of native-born workers in the UK. This is potentially puzzling since there is evidence that changes in the supply of educated natives have had significant effects on their wages. Using a pooled time series of British cross-sectional micro data on male wages and employment from the mid-1970s to the mid-2000s, this paper offers one possible resolution to this puzzle, namely that in the UK natives and foreign born workers are imperfect substitutes. We show that immigration has primarily reduced the wages of immigrants—and in particular of university educated immigrants—with little discernable effect on the wages of the native-born.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2706493
2015 paper

The Impact of Immigration On Occupational Wages: Evidence from Britain

Abstract
This paper asks whether immigration to Britain has had any impact on average wages. There seems to be a broad consensus among academics that the share of immigrants in the workforce has little or no effect on native wages. These studies typically have not refined their analysis by breaking it down into different occupational groups. Our contribution is to extend the existing literature on immigration to include occupations as well. We find that the immigrant to native ratio has a small negative impact on average British wages. This finding is important for monetary policy makers, who are interested in the impact that supply shocks, such as immigration, have on average wages and overall inflation. Our results also reveal that the biggest impact of immigration on wages is within the semi/unskilled services occupational group. We also investigate if there is any differential impact between immigration from the EU and non-EU, and find that there is no additional impact on aggregate UK wages as a result of migrants arriving specifically from EU countries. These findings accord well with intuition and anecdotal evidence, but have not been recorded previously in the empirical literature.

Score 2-1 in favour of no impact on wages.

Is there some firm opinion/data on this?

I get the impression that, as with most things to do with large scale economics, the answer is ‘hmmm…not sure’. Nobody knows the answer to this kind of stuff, if they did they would be making bazillions off the stock exchange, at which point they would have to close the stock exchange because everyone would all be buying the same thing. This is prob why our reptillian overlords make sure our future pre-sensability corpuscles are snipped off at birth (they would otherwise be attached to the exterior of our belly buttons)

There are huge numbers of skilled migrants in professional jobs. The companies they are working for are growing, making money, and paying more staff. The immigrants and non-immigrants are spending this money that they are helping to make in the UK. It’s called economic growth, and I think immigrants are currently essential for it.

In some jobs, perhaps they are keeping wages down simply by being there – more plumbers, for example, means lower wages when supply outstrips demand. But a growing economy creates more demand in the first place.

I don’t think wages are going to go up when we lose our labour supply.

It’s kinda a mute question.

Take the Asparagus… one way or another it has a cost and is labour intensive by nature so given the other costs that occur getting from seeds to supermarket noone who picks Asparagus will ever be able to afford to eat it bought from a shop as a regular thing.

This is just a universal truth…at least without a magic money tree.

Like most economics things too many moving parts to give a definitive answer.

Very simplistic example;
If the farmers could not find enough people to pick their crops they may have to raise what they are paying. That would mean their prices would be higher and people may then stop buying their products or even worse buy imported.
So even if the wages appear to be being kept lower, in reality they could not be increased even if that was desired.

If the farmers could not find enough people to pick their crops they may have to raise what they are paying. That would mean their prices would be higher and people may then stop buying their products or even worse buy imported.

Yes, and that would mean people would buy less. So you’d need fewer people. so wages would go back down – and then things would continue as they were but with fewer cabbages or whatever grown. Economic production would go down.

OR if there are still enough rich people to buy the cabbages, and people are drawn into cabbage picking cos the wages are now good, there are fewer people available to work in say banks or TV studios or whatever, so the jobs that build industries that stimulate growth would be replaced by jobs that just stimulate growth of cabbages. Our economy would be less healthy.

Score 2-1 in favour of no impact on wages.

I’m inclined to follow this sort facts-based assessment of the question. I know it’s unfashionable to rely on expertise, but all those Korean maths degrees are going to have to be used somewhere….

Wages is the wrong thing to look at – affluence of the lower paid is.

That is to say if immigration drives wages down by 0.5% (which has been talked about) but significantly improves the local economy so you have a better chance of getting a job you might regard that boost to your affluence as worthwhile. Or not.

With unemployment at 4.7% (which is lower than the number of immigrants) this hypothesis has something to it.

vvvv see also Scud’s comment

I’m in West Norfolk and always used to see the East European guys and gals arrive by minibus to the big asparagus and strawberry farms near me as i left house at 6am on bike, of they are still out there as i rode back at 6pm, asparagus esepcially is back-breaking work and the farmers i’ve spoke to including my wife’s uncle all state that they would struggle to find labour, the biggest one near with so many migrants available to work at the height of the flow across invested heavily in a canning factory knowing they could staff it.

YET- most of them voted Leave, go figure…

Like most economics things too many moving parts to give a definitive answer.

Not really…. it’s just trendy in economics to look so far into the forest you can’t see the trees.

The UK has imported more goods and services than it sells EVERY month since sometime in 1989.

You can look at the details and argue moving parts but whichever way you look at it we are spending more than our income year on year.

Government Economists however have simplified this for the rest of us.
When they talk about deficit they completely ignore the huge wooly mammoth in the room (the actual economy) and instead talk about government spending to government income.

I think it’s better to talk in terms of contribution to the economy, ie how much tax the non-Brits UK workers pay vs how much benefits they get.

A robust survey a few years ago showed the non-UK workers contributed slightly more per capita – I will try and dig it out although it might now be a bit obsolete.

I thought there was some evidence that showed a small percentage of workers with limited qualifications and insecure working patterns were affected by lower wages bought about by immigration (casual workers and so on) . Pretty much the group who are least able to bear it are affected most by immigration.

Not really…. it’s just trendy in economics to look so far into the forest you can’t see the trees.

The UK has imported more goods and services than it sells EVERY month since sometime in 1989.

You can look at the details and argue moving parts but whichever way you look at it we are spending more than our income year on year.

Don’t disagree with any of that. However, if a specific question is asked on whether immigrants drive down wages the very high level of UK ins and outs doesn’t really help answer it.

Marcus Brigstocke can hold a tune, who knew!

shermer75 – Member
Marcus Brigstocke can hold a tune, who knew!

He used to be a podium dancer too. True fact.

My personal musings are that it is industry specific. Probably location specific too.

If a team of builders can rent some digs work in a expensive area charge less than locals as they can still make enough to save money to buy a house back home after a few years then yes.

Hi tech hi skill jobs no.

Unskilled potato pickers? Not sure, i doubt it. I think the business would be come less viable or prices go up and less would be sold as potatos are a comodaty to be imported.

Not alone but that’s because people have been trained to ask the wrong questions and not consider consequences.

We could have had a referendum instead on the whole country (or everyone except MP’s and people on higher rate tax) getting a 5% pay rise… and I’m sure enough people would be stupid enough to vote for it.

The same people would a year later be complaining that the COL has risen MORE than their pay rise….

We can chuck out a load of Costa workers and somehow get some “Brits” to work there…. and we can increase their pay with special legislation… etc. but then a load of people will be complaining WHY they can no longer afford a coffee… (or Asparagus or …) then of course demand plummets and the jobs disappear because those jobs only EXISTED because they were low enough paid to have demand

However I think wage suppression blaiming is a manifestation of a problem that people have with imagrants.

Unskilled potato pickers? Not sure, i doubt it. I think the business would be come less viable or prices go up and less would be sold as potatos are a comodaty to be imported.

So.. if the government gave grants or interest free loans to farmers to invest in potato picking machines*.. we could remove the need for potato pickers altogether, no? And prices would still be low.

* I know potatoes are already picked by machine in reality, this is a thought experiment.

Yes. And there would be no jobs at all for potato pickers*.

*I used potato pickers due to its illiteration.

My niece is a midwife and her favourite births are eastern Europeans. They don’t moan , require very little help and seem to be able to withstand lots of pain.
Indians moan the most and she can’t really comment on English births as she does very few of them.
This is in North London.

But more work for me to make the machines!!!

Is all immigration equal?

Swiss bankers aren’t living in the same area or competing for the same jobs as, for example, Spanish nannies or Romanian cleaners

Is all immigration equal?

No, absolutely not.

IT workers in finance don’t tend to come over for six months a year, sleep in a caravan and then go back home to spend their cash.

Yes. And there would be no jobs at all for potato pickers

Indeed. But in a growing economy, these people can go and do something else.

If there really isn’t anything for them to do, then they will become cheaper than the machines again and they will end up back picking potatoes.

That is our inefficient UK economy!!!!

I.e why our productivity rate is low.

I see a huge amount of inefficiency caused by misguided cost-saving measures. Like IT outsourcing for example.

Overall they benefit the economy, the studies suggest yes

however that money does not necessarily go back into the communities that support them ,e eg schools, nhs, councils etc

that is a failing of Westminster, however blaming, immigrants, the EU etc is much easier

that is a failing of Westminster, however blaming, immigrants, the EU etc is much easier

Yep, and they will have to spin like crazy in a few years when they can’t blame the EU and can’t mention immigration as we have taken back control.

Sadly, they will manage to convince most people using some bullshit or other.

If there really isn’t anything for them to do, then they will become cheaper than the machines again and they will end up back picking potatoes.

Not necessarily as there is a minimum wage in place and other overheads.

The answer to the OP’s questions is it varies by location and sector. And while the average may be positive, that doesn’t mean in certain places it isn’t a negative.

The people of burnley and bradford have a point about the impact of immigration[/url]

It’s interesting. The government have said that the national living wage is £7.50 p/h, yet it isn’t until your household income is greater than about £40000 that the amount of tax you pay is larger than the benefits which you can claim. This suggests that £7.50 is nowhere near a living wage, and that what is actually happening is that the government (or to be more precise, those whose household income exceeds £40k) is subsidising all those businesses who aren’t paying people enough to live on.
What would happen if they were forced to actually pay people enough to live on?

Taxes could go down?
Prices might go up?
Poor businesses might fold?

I will admit that I object to subsidising Tesco, particularly when I don’t shop there.

It’s murkier than that.

People need the higher wages because rents are high. If benefits were pulled suddenly, then millions of people would be kicked out of their rented houses which would then be sat empty. So rents would be forced down.

So this money that the government hands out is going straight to the pockets of landlords… I wonder what proportion of landlords are Tory voters…?

Notwithstanding that growing cabbages and other primary industries (livestock, fishing, quarrying, and mining etc) are the only true creators of wealth as they have taken a zero cost resource ie. sunlight (current and fossil) , and converted it into a saleable product. So from nothing, wealth has been created. All other industries & services just add value to that which has initially been created from nothing.