Mass migration is spiking inflation in Canada because migrants increase rents and housing prices, say Canadian economists.
The Canadian admission contradicts repeated claims by U.S. lobby groups that migration cuts inflation by lowering wages.
The admission is important for U.S. politics because it shows Americans how President Joe Biden’s easy-migration policy is fuelling the unpopular inflation that is impoverishing many millions of Americans. “Wages are NOT keeping up … Since President Biden took office, the average worker has lost over $4,900 in real wages,” said a June 26 report by the GOP-led House Budget Committee.
The key point for economists is that legal and illegal migrants are not just cheap wage-cutting workers; they are also consumers who raise prices by competing to buy housing, used autos, and many other goods and services.
When migrants arrive, “the extra spending and the extra demand for housing is almost instantaneous, whereas it might take a new [wage-cutting] worker a little bit of time to really act as a dampener on inflation,” Bank of Montreal Chief Economist Doug Porter told Bloomberg Businessweek for a July 17 article.
“The short-term impact does tend to lift inflation,” he admitted.
Bloomberg showed how a mass inrush of migrants has created an inflationary shock in Canada’s housing market:
Roughly every 1% rise in population translates to a 3% increase in real home prices across the 18 countries analyzed over the past two decades, according to Porter. Soaring housing costs and rents are captured in shelter inflation, which has the biggest weight in Canada’s consumer price basket. Shelter rose 4.7% in May from a year ago and rents jumped 5.7%.
On July 17, Canada’s Financial Post reported similar comments from Tiff Macklem, the governor at the Bank of Canada:
He said that while newcomers filling job vacancies has been good for company [profits,] easing inflationary pressures, new entrants are also increasing demand for housing, helping boost rent and home prices. It’s “hard to know exactly” the net effect on the economy, he added, but the main message is that immigration is adding to both demand and supply.
Macklem’s bank has raised Canada’s interest rates to combat the inflation spurred by migration, he told the Financial Post. “What we’re seeing is that the excess demand in the economy is more persistent than we thought and so we’ve raised rates in June and July.”
An increase in immigration could be one complicating factor keeping inflation higher for longer and stoking demand, Bank of Nova Scotia economist Rebekah Young said. “… newcomers [immigrants] are a part of that story,” she said. “They are certainly adding to what could be keeping (Macklem) up at night.”
“The fact that the bank raised rates again suggested that they put a significant emphasis on demand coming from immigration,” Rishi Mishra, an analyst at Futures First Canada Inc., said in an interview … “Rapid population growth is also part of the reason why inflation is expected to stay elevated longer and why growth outlook is stronger.”
Canada’s Prime Minister, Justin Trudeau, is accelerating migration in Canada so much that the likely inflow in 2023 is nearly ten times the number of annual births in the nation.
“It is becoming increasingly difficult to ignore Canada’s widening real GDP per capita gap versus other major economies,” economist Marc Ercolao told Canada’s Financial Post for a July 17 article headlined, “Posthaste: Canada’s standard of living is falling behind the rest of the developed world.”
Many investors, their lobbyists, and the media in Canada and the United States want to import more migrant workers each year. But they also insist that migration is good because it cuts inflation.
For example, in May 2022, Goldman Sachs declared:
There are reasons to believe some liberalization of immigration policies could be politically beneficial [because] Inflation ranks as a higher priority than immigration among voters of all parties, with the greatest difference among Democrats.
“The U.S. has too few immigrants — not too many,” said the May headline on an article by Catherine Rampell, a pro-migration writer for the Washington Post. “An alternative strategy [to reduce inflation] might involve ramping up supply [of workers], allowing in more immigrants legally authorized to work.”
“Taking hundreds of thousands out of the labor force will further fuel inflation, exacerbate supply chain challenges and tip the economy into recession,” a group of business executives said in a June letter to GOP politicians. An amnesty for illegal migrants “is not only morally right; it is also absolutely crucial to addressing labor shortages, reducing food prices and creating jobs for all American families,” said the American Business Immigration Coalition.
“Exit polls of voters confirmed that inflation remains a top voter concern … Congress can actually help by increasing legal immigration [and] expanding the number of work visas in sectors that face worker shortages,” Sen. Mitt Romney (R-UT) said in November 2022.
The donor-funded Republican National Committee is spotlighting the damage done to “real hourly wages” by Biden’s inflation but does not admit the impact of donor-backed migration:
Top Biden economic advisor Jared Bernstein says workers' "pay is up 1.6% over the past year" and "up almost 3% since pre-pandemic."
FACT CHECK: Since February 2021, real hourly wages have declined by 3% and real average weekly earnings have declined by 3.6%. pic.twitter.com/4AODOlhqO8
— RNC Research (@RNCResearch) July 16, 2023
In the United States, “what we see is this inflation in rents, inflation in home values, and it just makes it harder for middle-class Americans to get by,” along with wage cuts and job displacement, said Kevin Lynn, founder of Progressives for Immigration Reform. He told Breitbart News:
The only reason it’s being allowed to happen by voters is that they’re all being gaslighted into thinking that there are employment vacancies and there is a demand for labor that only immigrants can fill.
“That’s just rubbish,” he added.
The federal government has long operated an unpopular economic policy of Extraction Migration. This colonialism-like policy extracts vast amounts of human resources from needy countries, reduces beneficial trade, and uses the imported workers, renters, and consumers to grow Wall Street and the economy.
The migrant inflow has successfully forced down Americans’ wages and also boosted rents and housing prices. The inflow has also pushed many native-born Americans out of careers in a wide variety of business sectors and contributed to the rising death rate of poor Americans.
The population inflow also reduces the political clout of native-born Americans because the population replacement allows elites to divorce themselves from the needs and interests of ordinary Americans and from the growing chaos and poverty of American society.
In many speeches, border chief Alejandro Mayorkas says he is building a mass migration system to deliver workers to wealthy employers and investors and “equity” to poor foreigners. The nation’s border laws are subordinate to elite opinion about “the values of our country,” Mayorkas claims.
Related — Biden’s Border Chief Rejects Economic Concerns on Migration: “This Is a Nation of Immigrants”C-SPAN
Migration — and especially labor migration — is unpopular among swing voters. A 54 percent majority of Americans say Biden is allowing a southern border invasion, according to an August 2022 poll commissioned by the left-of-center National Public Radio (NPR). The 54 percent “Invasion” majority included 76 percent of Republicans, 46 percent of independents, and even 40 percent of Democrats.