Democratic leader Rep. Nancy Pelosi is hitting President Donald Trump in a soft spot — the slow growth of Americans’ wages in a go-go economy.
‘The President’s reckless policies are …. wiping out the few meager gains that some families should have received from the GOP tax scam, as wages remain stagnant,” Pelosi said in a statement after May’s good-news jobs numbers were posted on Friday.
“Wall Street and wealthy corporations are … refusing to raise workers’ wages,” even while they are “on track to spend $1 trillion on dividends and stock buybacks while simultaneously announcing tens of thousands of layoffs and shipping jobs overseas,” she said.
Wages are rising, but at a remarkably slow rate given the low unemployment number. For example, normal unemployment fell to a record-breaking 3.8 percent in May, yet wages rose by a mere 0.3 percent. Conventional economic theories argue that such low unemployment would force employers to compete for workers by offering significantly higher wages.
Trump has mentioned rising wages on a few occasions, but more often has showcased the rising number of jobs, regardless of wages.
Trump only “flirts with” urging CEOs to raise white-collar and blue-collar wages before the election, says Steve Camarota, research director at the Center for Immigration Studies. “For reasons that make no sense to me, he can’t bring himself to say ‘Higher wages and a tight labor market are my goals.’”
There are many examples of companies raising wages above the 2 percent inflation rate. For example, Miles Fiberglass in Oregon City, Oregon, is raising wages as it expands from 50 employees to 85 employees, according to a report by the National Association of Manufacturers:
“We increased our starting wage by 9 percent, which bumps everyone up the chart,” [Lori] Miles-Olund said. “We’ve also implemented a new training program, ‘Learn to Earn.’ Every time employees learn a new skill, they get an hourly pay increase of $1.00, $1.50.”
More importantly, the Seattle Times reported that retail giant Costo will “increase the starting wage for its U.S. employees by $1 to as much as $14.50 an hour, while other hourly wage rates will increase 25 to 50 cents an hour.” But a 50 cent raise to a $14.00 per hour wage is a post-inflation increase of merely 1.7 percent.
In general, GOP legislators and D.C. establishment groups say these small wages raises are a gift from their tax-cut bill — and are not a consequence of Trump’s opposition to business demands for even more immigrants.
Economists argue about why wage rates are rising so slowly, especially among the major Fortune 500 companies which employ many white-collar employees.
Many economists argue wages are rising slowly because millions of Americans are unemployed — yet are not recorded in the federal unemployment rolls. This reserve army of unemployed people means there is no labor shortage — just a large group of people who employers would rather not employ because they are ill-trained, or unreliable, or ex-convicts, or drug addicts.
Some economists say that large companies face intrusive, computer-aided oversight by the investors and Wall Street advisors who want to minimize white-collar and blue-collar wages, while smaller, employee-owned companies are freer to adjust their payroll spending to match their month-to-month needs.
For example, the National Federation of Independent Business said its latest monthly report “a seasonally adjusted net 35 percent of small business owners reported increases in labor compensation as owners try to attract needed employees and retain those already on board.” In contrast, there is little or no change in wages for the white-collar people hired by Fortune 500 companies, according to Korn Ferry, a recruitment agency. The agency reported May 14 that:
while the job market is at the hottest it’s been this century, salaries for newly minted college graduates are virtually flat [in 2018] from 2017.
In more minor news, it is notable that average hourly wages for production and non-supervisory workers (which excludes managers) is up 2.8% over the last twelve months, which is faster than the 2.7% increase for all private wages.
Earlier this yr was the opposite.
— Jason Furman (@jasonfurman) June 1, 2018
Whatever the causes, House Speaker Paul Ryan and other GOP leaders are threatening to block any wage-gains in 2018 by endorsing a pre-election ‘DACA’ amnesty that would spike the labor supply by roughly 2 million illegals.
The planned amnesty would also reduce the chance for wage rases in 2019 because it would reassure CEOs and investors that they can always get a new shot of imported labor whenever they are under pressure to raise wages — even when the President is a populist outsider elected on a pro-American, lower-immigration platform.
Democrats are also pushing the DACA amnesty — and are also urging wider asylum loopholes to aid migrants from Central America. The existing asylum loopholes have added 400,000 workers to the labor force since about 2011.
Still, Pelosi’s complaint about Trump and wages also reveals Democrats know that November voters want higher wages.
Yet she offers no policy platform for raising marketplace wages, saying instead:
Democrats know that the American people deserve A Better Deal, with Better Jobs, Better Wages and a Better Future. We are committed to creating millions of new good-paying jobs and raising wages, lowering the soaring cost of living for families and giving every American the tools to succeed in the 21st Century economy. Democrats will never stop fighting for the hard-working middle class families who are the backbone of our nation.
Creating new jobs does no good for Americans if the government also flies in new immigrants to take those jobs.
Each year, federal government flies in 1 million new immigrants, just as four million young Americans enter the labor force. Those 1 million new immigrants — plus illegals and guest-workers — drive down wages by flooding the labor market.
The migrants also cluster on the coasts, shifting investment and real-estate values away from the Midwest and over to the Democratic-dominated cities on the coast.
No established Democrat — or establishment Republican — is suggesting the government should stop flooding the labor market. In fact, many GOP legislators have allied with Democrats to block Trump’s four-part immigration reforms which would gradually reduce the inflow of immigrant worker/consumers, and some GOP legislators are even demanding more foreign white-collar workers.
GOP officials tout the tax cuts as a cure-all while senior Democrats are offering band-aid plans to cover up the economic damage caused by the flood of new workers.
For example, Larry Summers, a former chief economic aide to former President Barack Obama is ignoring immigration reforms to argue that the federal government should pay companies to hire Americans at decent wages. In a May 25 op-ed in the New York Times, Summer argued:
the most direct way to encourage work is with a new wage subsidy that benefits workers and encourages companies to replace joblessness with employment.
The subsidy program should be more generous in struggling areas, like the Eastern Heartland, although even a flat nominal wage subsidy would deliver more bang in depressed areas with lower prices. Targeted employment subsidies aren’t going to reverse the tectonic trends of regional change, but they can potentially change the hard crash of regional collapse into a softer landing.
But this job-subsidy plan is essentially calling for a regional corporate-welfare program to muffle blue-collar opposition to the Democrats’ policy of favoring coastal cities via massive immigration inflows. It also does nothing to stop Midwestern employers from using the subsidies to hire cheaper migrants in place of Midwest Americans.
Amnesty advocates rely on business-funded “Nation of Immigrants” push-polls to show apparent voter support for immigration and immigrants.
But “choice” polls reveal most voters’ often-ignored preference that CEOs should hire Americans at decent wages before hiring migrants. Those Americans include many blue-collar Blacks, Latinos, and people who hide their opinions from pollsters. Similarly, the 2018 polls show that GOP voters are far more concerned about migration — more properly, the economics of migration — than they are concerned about illegal migration and MS-13, taxes, or the return of Rep. Nancy Pelosi.
The Washington-imposed economic policy of economic growth via mass-immigration shifts wealth from young people towards older people, it floods the market with foreign labor, spikes profits and Wall Street values by cutting salaries for manual and skilled labor offered by blue-collar and white-collar employees. It also drives up real estate prices, widens wealth-gaps, reduces high-tech investment, increases state and local tax burdens, hurts kids’ schools and college education, pushes Americans away from high-tech careers, and sidelines at least 5 million marginalized Americans and their families, including many who are now struggling with opioid addictions.