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300 over a whole year is small compared to the inflation we've beeen seeing recently. And if it's coupled with increased wages then it's not too bad.
It's coupled with increased wages for the <1% of people who work on farms. The other 99% just pay higher prices.
Except all across the board, in this scenario, the country removes the downward pressure to wages caused by the underclass who can get paid under the table, who cannot ask for help if they are abused, and who are desperate to accept any wage to avoid going back home. That changes the wage equilibrium everywhere.
If farm wages double (not quadruple, like in the example above - I think that the quadrupling was a hyperbole) and farm workers make $40 an hour, price of groceries increases $150/year per family of four. Let's say $50/year for a single person.
Then anyone else in a shitty job can say, "is this really any better than making 40/hr picking corn?" And so now Amazon has to raise wages, or provide better working environments, to at least be better than farm work. And so it goes, rippling through the economy. Wages for the bottom third of the country should rise more than 150/yr.
Machinery is also abusable and doesn't require any wage at all, should we increase wages by banning it?
That would lower GDP, while reducing immigrant labor to increase productivity and GDP. Possibly because there is an increase to automation when cheap laborers are less available.
Machines are different from cheap laborers in that they do not compete for housing, food, etc. Demand decreases if you swap out a machine for a human. Where does price equalize if demand decreases and supply stays the same?
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There's a very straightforward way to resolve the humanitarian concern here.
Even if we gave everyone citizenship, there would still be downward pressure from wages. The majority of immigrants are in low-skilled jobs. If we maintained immigration so that the same proportion of upper-, middle-, and lower-class people immigrated as US citizens, then there would not be distortion. Even with removing illegality from the equation, immigration creates a distortion to the labor market exerting downward pressure.
This is in addition to the cultural concerns of having 16% of people in America "foreign born" and the increased difficulty of passing along US values to immigrants as the proportion of native-born Americans goes down. Does American culture matter? Yes! It created the prosperity and freedom that Americans enjoy - the very reason why the world wants to come here. Don't kill the Golden Goose. Don't tear down Chesterton's fence.
Leaving aside the issues with this argument*, then why bring up the humanitarian concern if it's not a serious priority?
This is not a novel problem, nor much evidence that it's actually a problem in itself (as opposed to generating backlash from nativists). The US has a history of absorbing staggeringly large waves of immigration, and we've gone through this song and dance before with the Irish, the Germans, the Italians, the Poles... Somehow none of these destroyed America.
In particular, it's remarkable how anti-Hispanic sentiments echo anti-Irish sentiments: they're lazy and parasitic (but also too willing to work long hours at hard labor for low wages), they're criminals, they're undemocratic, they'll overwhelm us with their numbers and fecundity, they're not assimilating, etc. About the only prominent difference I observe is that there isn't very much overt anti-Catholicism nowadays.
Of course, nowadays, the Irish are at least as American as the English.
Do you not think the tens of millions of immigrants who helped build America (somehow without destroying society) had anything to do with it? Xenophobia in the US is generally correlated with the least free and least prosperous parts of the country.
*it's pretty questionable that reducing the labor supply is generally welfare enhancing.
The humanitarian concern that I need to address first is that our own lower class is dying deaths of despair, keeping unemployment down but also decreasing the life expectancy. I wasn't listing out things I want you to be concerned with, when I was talking about how exploitable the labor is. I was listing out several reasons why that labor is distortionary.
We have NEVER had over 16% of the US population foriegn-born since we became a country, and every time we approached this number we put hard breaks on to reduce immigration, usually to the benefit of the economy and rising labor standards.
Leaving the spigot on will quickly dilute American civic values. If it is so easy for someone from another country to maintain American values without being surrounded by native-born Americans, then why do they not just turn their countries into America? If they are already American's at heart, why does the world not have the same Bill of Rights, expectations surrounding civil duties, trust, and friendliness?
Instead, we have programs in place to inculcate legal immigrants on the path to citizenship into our civic values and ensure their loyalty to our nation over their former ones. Illegal immigrants and people here on temporary Visas don't have that.
The inculcation is made much easier when 90% of your neighbors, co-workers, shop keepers, etc are also already part of the American culture. If only 50% of the people surrounding a new immigrant are from their previous country, then obviously they will be very slow to adopt American norms, if they ever do. Look at the Enshittification of California for an example.
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If other low-wage employers are increasing wages to compete with the new high-wage farm jobs, then the total cost to consumers will be more than the $150/year/family.
We know how this works out, because the main feature of the Biden economy was higher low-end wages paid for out of higher consumer prices. The median voter hated it enough to vote for the crook.
Are you saying inflation was caused by wages increasing instead of the government printing money?
Real wages went down in the Biden years.
What I recall during the Biden years was employers complaining that they couldn't find people to work for them, without being willing to raise their wages. And then Biden imported millions of new low-wage workers for the complaining businesses instead of letting the market come to a new equilibrium.
Changes in average real wages masks the explosion in bottom decile wages during the pandemic. That's a 12% gain in real terms for the bottom decile, 2019-2023.
I don't know why you are linking an average wage analysis from a single month as evidence of anything.
Where did all the money the government printed go?
It was average wage taken from several months in a year span. But you are right, your article is better.
Where did all the money go? What did Pete Butigeg spend his 7.5 billion that was earmarked for charging stations across America in the Infrastructure and Jobs Act?
Probably a lot went to the pockets of Beltway grifters. It certainly didn't go into the pockets of actual construction workers.
Then there was the child tax credits, the stimulus checks, etc. Money went to everyone across the class spectrum.
Reading your article, it looks like the increase in wages was caused primarily by Minimum Wage laws increasing wages by fiat. I do not suggest doing that. Creating artificial floors is not great for a market. Even so, your article sounds pretty happy about increasing lower decile wages? Why is that? If you are correct, then should not it be obvious to an economically savvy publication to be terrified of the resulting inflation?
Or is inflation a little more complicated than that?
Of course, but we all know that poor people have more kids and that poor people are more likely to spend the marginal dollar rather than save it.
I didn't read the article's causal analysis and don't stand by it. I knew from prior reading that wages increased most for those at the bottom of the distribution and grabbed the first article that Google found.
I am skeptical that minimum wage laws make a big difference here given that few positions pay near minimum wage, but I admit I haven't looked closely into this.
People don't like to think about demand-pull inflation or the wage-price spiral for these very reasons, but unfortunately facts apparently don't care about my feelings.
Inflation occurs when aggregate demand outstrips aggregate supply. Covid torpedoed a bunch of supply chains, reducing supply and everyone got helicopter money (and don't forget eviction moratoria and a million other things) that juiced demand. The result is as you see it.
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