Ignoring research and logic

An ounce of anecdote is worth a ton of research. The Hon. Jackie Ashley reports:

Joan Ryan, a Home Office minister, has reportedly warned her colleagues of anecdotal evidence from Southampton that the effect of the new migration has been to depress wages for low-paid workers.

This flies in the face of more rigorous research (all pdfs) which shows that immigration doesn't depress wages.
There are good reasons for this. First, as Tim says, immigrants spend their wages, thus increasing demand for labour.
Second, many immigrants  fill jobs which native workers don't do. The Polish plumber is a good thing for low-paid native workers. He doesn't drive their wages down (they're not plumbers) but he does buy beer and burgers, thus increasing demand for bar staff and fast-food workers.
But let's say - contrary to rigorous evidence and theory - that Ryan is right. So what? The Hon. Jackie says:

Migration is a class issue...Who benefits? Certainly, the service companies employing cheap cleaners, security staff, receptionists and the rest. Certainly, too, the middle-class households enjoying a boom in the servant sector - not butlers and maids, but cleaners and plumbers, nannies, painters and decorators.

But it's a howling fallacy to infer from this that the solution is immigration controls.
Put it this way. Pretty much any economic change - higher gas prices, Albanian immigrants, whatever - is a "class issue", insofar as it changes the distribution of income. But it would be absurd for the state to make ad hoc interventions in every case. Leaving aside (which we shouldn't) the effects on liberty, the government just doesn't have the expertise or administrative machinery to intevene.
Instead, the solution is a simple, general rule - a tax system that ensures that the benefits of immigration are spread more equitably.
But hey?  Groan writers are in favour of the exercise of state power, rather than equality, aren't they?

Comments

[Phil]

"as Tim says, immigrants spend their wages, thus increasing demand for labour"

I'm sure Tim, like me, has seen stories like this:

http://www.guardian.co.uk/food/Story/0,,1790473,00.html

"None of us like strawberry picking," said Svetlana, a Ukrainian student. "Today I have earned £23. But I must pay £35 a week to live in a box with three other people. Perhaps I earn £150 in a week, but when I have paid for food, accommodation, tax, everything, maybe I have £70 for a six days. It's not good".

But I agree with you that restricting the supply of migrants willing to work on terms like that wouldn't stop employers offering terms like that to groups with similarly restricted options. The question is, what would? Less regulation?

[Matthew]

Why do you call "Jackie Ashley" a "Groan" writer?

[angry economist]

The main losers are the UK residents and citizens with a marginal attachment to the world of work but who want to work and who are most suited to low/no skill entry-level jobs. They are much more difficult to get into work, and less attractive to employers. But in eras of high labour demand (e.g. 1998ish-2004ish)its easier to get them into work in the face of dwindling supply.

The effect of immigration is not to price the real wage below their threshold, but to push them out with more workers who are more able to secure work, are more work ready, are probably more productive. Thus the workless resident who wants to work has their competitive position pushed downwards, and the immigrant might push them out of the labour market.

What will be interesting to watch is when the labour market slackens, and what happens to immigrant labour demand and supply then.

[chris]

Phil - surely less regulation would help Svetlana. People like her are vulnerable to exploitation because they are illegal immigrants, and so fear being deported if they complain or change jobs. Legalizing immigration would abolish the power of the gangmasters and human traffickers who exploit her.

[1skeptic]

Is there any evidence to show that a lack of immigration depresses wages, especially for lower paid workers?