[Closed] Mythbustworld? Do immigrants drive down wages in the UK?

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.

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

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.

[quote="kerley"]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.

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.

[url= http://www.paulormerod.com/the-people-of-burnley-and-bradford-have-a-point-about-the-impact-of-immigration/ ]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...?

[quote=molgrips ]..............

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.

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.

arent at least 1/3rd of MPs BTL landlords anyway?

That's contentious.

If all we did was grow cabbages and mine coal we wouldn't get very far. You need primary industry but you ALSO need everything else. Those financiers that people love to criticise, they are the ones supplying the money for the coal mining operations. And the money created by adding value to coal and cabbages is what people then spend on cabbages and coal. Yes, it's circular, but you need both halves of the circle.

You could just as easily argue that education is the only primary industry, because if no-one knew how to mine coal or grow cabbages there'd be nothing.

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...?

Surely, in fact, most of that money never even hits the landlords pocket, as it goes straight out of there and into the pocket of the mortgage lender, i.e. the banks, who then lend it to the government (due to budget deficit) who then hand it to landlords, who...

Makes you think, eh?

Yes, in this case it does 🙂

I've wondered about this whenever I stay somewhere like a Premier Inn. They seem to be staffed pretty much entirely by eastern Europeans. Presumably they get paid the same as a British employee would? So where are the Brits working in these places*, and is this one of the things that's claimed to be driving down wages?

I know next to nothing about economics and the only time the driving down wages things makes any sense to me is in scenarios like builders quoting for jobs.

*Just to avoid any doubt, I don't really care where they're from - just vaguely interested in the mechanism that results in this kind of effect.

So where are the Brits working in these places*, and is this one of the things that's claimed to be driving down wages?

The theory is that the Eastern Europeans are able to work for less because they are living in cheap digs and sending their spare cash back home to their families*. So the job can pay less, which results in lower wages.

Although it's hard to imagine these not being minimum wages jobs whoever was doing them tbh, but I don't know much about the lower paid end of the job market these days.

* This is a bit of a stereotype and probably isn't true for most cases.

What would happen if they were forced to actually pay people enough to live on?

There would be less money spent on showing off to their employers how well the boss was doing..................its a british thing.

The theory is that the Eastern Europeans are able to work for less because they are living in cheap digs and sending their spare cash back home to their families*. So the job can pay less, which results in lower wages.

Although it's hard to imagine these not being minimum wages jobs whoever was doing them tbh, but I don't know much about the lower paid end of the job market these days.

* This is a bit of a stereotype and probably isn't true for most cases.

I think a more accurate stereotype is that they are living in cheap digs and saving their spare cash (some may send some back to families bit not the majority) but they are also not adverse to spending their spare cash on training because where they come from people don't expect the state to provide training or be the one to find them a job etc.

They are also not adverse to taking a second job... working long hours etc.

One of the coffee places was saying that most Brits don't actually hold up to the long hours of high pressure work... even though (in the coffee companies words) they offer good salaries at the end...

Back in my youth (mostly before I personally was looking for work) it was far more normal to start off on a non living wage as an apprentice and do crap jobs for long and hard hours but we stuck at it because that's what you did.

Sometime in the 80's this started to change and instead people wanted to go straight into a well paid job that they could live on including paying rent... and pretty much at the same time when everyone was being encouraged to go to Uni...

I think the major difference especially with Eastern European's is they expect to have to work long and hard for low money when they start out because that's what it's like back home.

So the job can pay less, which results in lower wages.

Genuine question!

The theory is that the Eastern Europeans are able to work for less because they are living in cheap digs and sending their spare cash back home to their families*.

The employer can pay less than minimum wage to those that live in company provided accommodation, where conditions can be epically bad!

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.

Depends which area of finance. The use of ICT visas by the big outsourcing companies can end up not dissimilar although slightly better accommodation than a caravan.

The Indian outsourcers are in a completely different situation. They don't sleep at all. They aren't allowed to.

So when cheaper labour showed up, employers could just start paying them less than they used to pay locals?

Well - there are agencies that can now bring pepole over from wherever for the 6 week season with minimal cost. They can be young people who sleep in dorms on the farm and presumably they can be paid less. If they are paid piecemeal as most fruit and things that aren't picked by machine are (or were when I did it) then they can reduce the price per unit as much as they like.

IMO pretty basic economics, a freely available supply of cheaper labour will always drive down wages of existing domestic labour force. I have seen it first hand with a long list of immigrants offering to do gardening, handywork, cleaning etc all much cheaper than our existing tradespeople.

Also think about this example. Tradesman comes to uk and lives very cheaply, eg sharing a room in a rented house. He gets work by undercutting wages vs UK resident who is raising a family. Immigrant's family remain at home in their own country where the cost of living is much much cheaper. Immigrant can raise his family on lower wages.

On @molgrips point immigrant short term workers can earn as much as £10k and pay no tax whereas a UK citizen working 12 months in various jobs wants more money gross as he has taxes to pay.

IMO pretty basic economics, a freely available supply of cheaper labour will always drive down wages of existing domestic labour force.

Careful.

Supply exceeding demand will drive down wages. If the demand is there then wages won't drop, they just won't climb as much if the supply keeps up.

But the people who come and work generate their own economic activity as well - they buy things too. Economy grows.

Also think about this example. Tradesman comes to uk and lives very cheaply, eg sharing a room in a rented house. He gets work by undercutting wages vs UK resident who is raising a family. Immigrant's family remain at home in their own country where the cost of living is much much cheaper. Immigrant can raise his family on lower wages.

True. But young people without families can also do this. Part of it is expectation drive. When I moved to Helsinki (yes, I was an immigrant) I was shocked at how small some of the flats I looked at were. I couldn't believe they existed, but the locals viewed it as normal. But then, it's probably similar in London too.

I work in an industry with very few immigrants. Employers in the events and arts seem to depress wages very well on their own. Our "subsidies" come from mainly white middle class parents supporting their off spring.

My personal theory is that we won't see a reduction in immigration for say agricultural workers. They will simply apply for a seasons work and be given a licence. If we don't I think that the food will just rot in the ground.

I agree. There will probably still be fruit pickers.

I am worried about the high skilled workers though - they are likely not to want to come, even if we offered them visas. Or at least fewer would want to come.

Might push wages up though. If we can afford to pay them.

One of the coffee places was saying that most Brits don't actually hold up to the long hours of high pressure work... even though (in the coffee companies words) they offer good salaries at the end...

Back in my youth (mostly before I personally was looking for work) it was far more normal to start off on a non living wage as an apprentice and do crap jobs for long and hard hours but we stuck at it because that's what you did.

Sometime in the 80's this started to change and instead people wanted to go straight into a well paid job that they could live on including paying rent... and pretty much at the same time when everyone was being encouraged to go to Uni...

A interesting visit back to the town where I was a student, touring round some old haunts, revealed a very different student culture to when I was there in the early nineties - back then most of the pubs/cafe's etc were staffed by students with 'normal' people as customers (I worked in Mc'D's and in a pub over my time there, most of my cohort were doing the same) go back now and they are all staffed by Eastern Europeans with students as customers.

Having witnessed first hand the exploitation in Manchester, particularly Higher Broughton, Cheetham Hill, Crumpsall, Whalley Range, Hulme, Moss Side, parts of Trafford, Ardwick and Longsite where first generation immigrants supply rented accommodation (unsurprisingly unfit for legit rental purposes and subject to tax evasion) to men sleeping on the floor 15 to a room (in large 3/4 storey houses) working for the landlords and their mates cash businesses.

One house on Kings Road Crumpsall (not the worst I've been in) had men packed into rooms and on the notice board in the hall was detailed information, in multiple languages, on how to seek asylum and claim benefits. It is an organised racket, where the main suspects claim to not speak English, to be victims of spurious sub-letting unbeknownst to them, claim it's a relatives/foreign owned property who happens to be out of the country (it's not me it's my brother) etc you get the picture.

I have also seen industrial units where men lived on-site packed into caravans on the car park.

It seems some are happy to turn a blind eye/ignore things especially when it's not on their doorstep.

It seems some are happy to turn a blind eye/ignore things especially when it's not on their doorstep.

Sorry, what?

Yup those directly and indirectly benefiting from cheap/slave labour don't seem to have a problem with it.

Those who can't believe it goes on because they never see it in their safe rural hamlet.

Of course cheap immigrant labour effects wages...to a degree. Near Bird HQ there are Eastern Europeans working fruit farms that live on site/get bussed in, stick around for a few months then leave for the winter. You literally couldn't afford to live round that area with those salaries on a full time basis, so yes its keeping the salaries down in that regard, but then if the labour wasn't cheap, you'd not buy the product. Also, they are turning previously pasture land no longer grazed into amazingly we'll organised looking fruit fields (its pretty amazing what they are doing in a limited window of time). Thats helping our economy by reducing the amount of imported goods we need. Pay less here, pay less overseas, someone has to do it for peanuts if you want cheap prices in the supermarket. Not saying its right or wrong, just an observation on the economics.

If they suddenly had higher costs, the company wouldn't sell as much, so they'd not pay the salaries of the execs as well. They'd not pay as much in tax and they'd not buy their veg from the local posh grocers. Its all swings and roundabouts I reckon.

I still sigh a little when I speak with alot of people in the North East (where I now live) for their anti-immigrant rhetoric (its pretty strong up there). Compared to daan saaf where I was living its practically a mono-culture. Eastern Europeans are a relative rarity, hell even I'm feeling like an immigrant up there! So in that regard I do think its blown out of proportion.

Generally though it feels like an excuse for policies that benefit the wealthy and hamper the worst off to me.

A interesting visit back to the town where I was a student, touring round some old haunts, revealed a very different student culture to when I was there in the early nineties - back then most of the pubs/cafe's etc were staffed by students with 'normal' people as customers (I worked in Mc'D's and in a pub over my time there, most of my cohort were doing the same) go back now and they are all staffed by Eastern Europeans with students as customers.

Yes this really illustrates that this is about how the UK and expectations have changed. There are probably way more coffee shops selling expensive coffee as well.

If you use some common sense in that if your source of income is making coffee for other people then it is reasonable that buying coffee made by other people on a daily basis is beyond your means.

I find the same across everything, people getting a taxi to the JS+ .... which at the end of the day means (on the whole) they consider their time more valuable than a taxi drivers time.

What that means (in general) is that people aren't going to do the job [b]at what they themselves are willing to pay[/b].

I say "on the whole" and "in general" because there are of course exceptions... but the real point is the price of a coffee or taxi ride ultimately determines what the job can pay... so when a service (such as posh coffee or taxi) is being used by low paid workers it has to pay less

Those jobs are just being taken by people who will take a job that they don't expect pays enough to buy coffee or get taxi's on a regular basis etc.

Where they come from is not really relevant except when it illustrates that people want/expect certain services but are unwilling to pay what it would cost ...

So when cheaper labour showed up, employers could just start paying them less than they used to pay locals?
Well - there are agencies that can now bring pepole over from wherever for the 6 week season with minimal cost. They can be young people who sleep in dorms on the farm and presumably they can be paid less. If they are paid piecemeal as most fruit and things that aren't picked by machine are (or were when I did it) then they can reduce the price per unit as much as they like.

I see this for fruit picking and stuff like that. But I would naively have assumed that if a company (like the big hotel or coffee shop chains) is paying their staff £££ in, say 2010, they then can't say "there's a lot of Lithuanians around here, let's get them in instead and only pay them ££" in 2011.

Or am I in cloud cuckoo land and they can and do do this?

Those making the supply and demand, more cheap labour availability drives down wages and similar arguments are correct if demand is constant.
But given we know that one effect of immigration has been to grow the economy, we know demand isn't constant.
So the simple more labour supply equals lower wages argument doesn't work.
Now that doesn't disprove immigration lowering wages but it does mean that argument can't be used.

But given we know that one effect of immigration has been to grow the economy, we know demand isn't constant.

That's what I'm saying.

Those who can't believe it goes on because they never see it in their safe rural hamlet.

Hoold on a minute. Easy with the massive generalisations.

People abuse all sorts of systems. There will always be people exploiting the vulnerable and taking the piss. This is NOT a symptom of immigration.

And I am in no way endorsing the exploitation of anyone, immigrant or otherwise. Nor am I in denial about it.