Wage Raises: Donald Trump, Nancy Pelosi Tout Rival Plans

US President Donald Trump walks alongside Speaker of the House Nancy Pelosi as he departs following the Friends of Ireland Luncheon in honor of Irish Prime Minister Leo Varadkar at the US Capitol in Washington, DC, March 14, 2019. (Photo by SAUL LOEB / AFP) (Photo credit should read SAUL …
SAUL LOEB/AFP/Getty Images

Americans’ wages need to grow faster, says House Speaker Nancy Pelosi.

Jobs “are not producing the wages that people need to meet their needs,” Pelosi said at a Washington Post event. She continued:

And people still feel scarred by what happened in 2008 when their home [mortages] were underwater, their pensions were at risk, they were living off their savings, their children’s education [was] in doubt. So there’s still that concern and 40 percent of the American people — you’ve seen the figures over and over again – cannot withstand a $500 unforeseen cost — whether it is a [broken] water heater, a carburetor or whatever happens to be.

The Post published video of the event; Pelosi’s comments on the subject start around the 40:00 mark.

The call for higher wages reflects an effort by Pelosi to use kitchen table issues to win swing voters back from President Donald Trump amid furious media coverage about partisan fights in Washington, DC, over special investigations, congressional subpoenas, and tax bills.

Pelosi’s proposed fix, however, is more socialist-style rhetoric and regulation of the economy:

We think … we have to have equal pay for equal work … a $15 minimum wage — fight for $15 — which we will be sending [to the Senate] soon. But you have to do something big, like an infrastructure challenge … health care is a very big piece of their financial security … increasing their paycheck is very important.

But Trump has plenty of ammunition for this political battle because his low immigration, “Hire American” policy helped nudge up free market wages for blue-collar Americans by roughly four percent in 2018.

This small government labor policy has raised wages for restaurant workers in Indiana, boosted farm companies’ investment in labor-saving machinery, helped women switch to higher-wage careers, forced up Americans’ productivity, and spiked pay offers to new hires nationwide — and may help elect Trump in 2020.

Wages are expected to keep rising in 2019 despite the huge influx of new workers who are taking advantage of Congress’s loose border laws to migrate from Central America.

The Wall Street Journal reported May 9:

Most private-sector forecasters surveyed in recent days by The Wall Street Journal—63.6%—expect wages will grow at a somewhat faster rate over the next year, while a further 5.5% of economists said wages will grow at a substantially faster rate.

“We continue to hear from manufacturers about how difficult it is to attract talent in the tight labor market, a challenge that we do not see changing in the near future,” said Chad Moutray, chief economist at the National Association of Manufacturers.

Just under a quarter of economists, 23.6%, expect wages to grow at the same 3.2% year-over-year pace seen in April. Just 7.3% expect the pace will slow over the next year.

But the recent wage gains have not made up for the massive losses since the 1970s when the 1965 immigration law ended the era of tight labor markets and rising wages by providing employers with a flood of foreign workers each year.

Trump rarely talks about wages to reporters in Washington, DC. But at his May 8 rally in Panama City Beach, Trump got an enthusiastic response when he touted the gains:

After many years of stagnation, wages are rising very fast. Hasn’t happened in 20 years! And they’re rising fastest — which makes me feel very good – for blue-coller workers. Fastest proportionally. And driving our whole agenda is a jobs boom that is historic. Hasn’t happened like this in many, many years. if at all.

 We’re reducing burdens in our businesses but in return we expect American companies to invest in America — which is what we’re demanding — to raise wages in America, — which is happening — and to hire American workers to do the job. That’s what we want.

Trump’s deputies also say they plan to protect Americans’ wages as they move forward with an immigration plan that would repair border security problems and shift the focus of immigration from blue-collar labor jobs to white-collar, college-credential jobs.

“We have a lot of objectives … Number one, [Trump] wants to protect American wages,” White House senior counselor Jared Kushner said April 23.

One official said the plan “would cumulatively increase wages in the U.S.,” Politico reported May 7. Officials have not explained if “cumulatively increase” is the same as a per-capita increase.

In turn, Pelosi and Democrats are likely to portray the wage gains as minor compared to gains made by investors. At the Washington Post event, she said:

Wages are not rising in the way that they should by some of the indicators out there and employment is low, but … jobs are not producing the wages that people need to meet their needs … So while the president’s one percent is doing beautifully … you can’t measure the economic well-being of our country as to how it affects the one percent.

“We are concerned about the kitchen table [issues] … They are ‘Trickle down,’ we are ‘Bubble up'” Pelosi said.

Each year, roughly four million young Americans join the workforce after graduating from high school or university.

But the federal government then imports about 1.1 million legal immigrants and refreshes a resident population of roughly 1.5 million white-collar visa workers — including roughly one million H-1B workers — and approximately 500,000 blue-collar visa workers.

The government also prints out more than one million work permits for foreigners, tolerates about eight million illegal workers, and does not punish companies for employing the hundreds of thousands of illegal migrants who sneak across the border or overstay their legal visas.

This policy of inflating the labor supply boosts economic growth for investors because it ensures that employers do not have to compete for American workers by offering higher wages and better working conditions.

This policy of flooding the market with cheap foreign white-collar graduates and blue-collar labor shifts enormous wealth from young employees towards older investors even as it also widens wealth gaps, reduces high-tech investment, increases state and local tax burdens, and hurts children’s schools and college educations. It also pushes Americans away from high-tech careers and sidelines millions of marginalized Americans, including many who are now struggling with fentanyl addictions. The labor policy also moves business investment from the heartland to the coasts, explodes rents, shrivels real estate values in the Midwest and rewards investors for creating low tech, labor-intensive workplaces.

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