Establishment Media Hide Migration’s Cheap Labor Bubble

In this photo taken Monday, July 27, 2015, Arturo Ramirez, left, and other workers crowd the kitchen at an Ivar's restaurant in Seattle. After Seattle's new minimum wage law took effect last April 1, Ivar’s Seafood Restaurants announced that it was jacking up its prices by about 21 percent, eliminating …
AP Photo/Elaine Thompson

The public’s rising demand for higher wages is causing turmoil in business sectors that have become reliant on cheap labor ensured by the federal government’s high immigration, wage-cutting policies.

Michael Kanell at Georgia’s AJC.com provided an example in the restaurant sector:

Jamie Oden bought an Amici restaurant franchise in Fayetteville which she plans to open later this month. To be fully staffed, she needs about 25 people. She has fewer than 10.

“We have been struggling to find help,” she said. “No one would even apply.”

She did increase pay by $2 an hour for some cooks and food prep workers. But her business plan called for paying dishwashers $10 or $12 an hour, and at that wage, she couldn’t fill those jobs. “I had people who applied and said they just wouldn’t work for less than $16 an hour.”

New York columnist David Leonhardt wrote May 21:

When a company is struggling to find enough labor, it can solve the problem by offering to pay a higher price for that labor — also known as higher wages. More workers will then enter the labor market. Suddenly, the labor shortage will be no more.”

But Leonhardt stopped short of mentioning the obvious — that decades of government-backed migration has made employers expect a steady supply of cheap labor, noted Kevin Lynn, founder of U.S. Tech Workers. Lynn added:

What he doesn’t do is talk about the impact of immigration … since the 1970s, immigration rates have increased, the number of non-immigrant [work] visa programs have increased, and what this has done is have an damaging impact on wages.

Nearly all establishment media outlets ignore the elephant in the room — the damage to wages caused by the federal government’s deliberate inflation of the labor supply with cheap labor extracted from Central America and many other regions.

That economic policy has boosted Wall Street by allowing many entrepreneurs to create businesses that can only survive with cheap labor. In effect, the federal government’s supply of cheap labor has created a bubble in the labor-intensive sectors, such as restaurants. 

Each year, roughly four million young Americans join the workforce — and the federal government forces them to compete for jobs against one million new legal immigrants, many new illegal migrants, plus an army of more than eight million illegals and  two million white-collar and blue-collar temporary foreign workers.

But in 2021, Americans are now demanding higher wages after seeing wage gains during President Donald Trump’s lower-immigration, go-go economy, and Congress’s free-spending amid the no-migration coronavirus disaster.

President Joe Biden and his deputies are rushing to extract more cheap labor from Central America and Mexico by opening many small doors on the U.S. border. That smuggling tactic reduces the risk that the public’s deep opposition to labor migration becomes an immediate threat to Biden’s administration. In April, for example, his deputies allowed roughly 50,000 migrants into the United States while allowing roughly 40,000 more to sneak across the border.

But Biden’s cheap imported labor is not arriving fast enough to save employers from Americans’ growing opposition to low wages.

Many reporters describe Americans’ 2021 opposition to their low wages without mentioning the federal cheap labor policy, according to the Washington Post, MSNBC, or Spectrum News 1 in Kentucky.

Ben Casselman at the New York Times, for example. wrote about wages on May 18 but somehow ignored the federal inflation of the labor supply since 2000:

The first two decades of the 21st century were a parade of economic disappointments: The bursting of the dot-com bubble was followed by a recession; which was followed by a “jobless recovery”; which was followed by another burst bubble, this time in housing; and another, even worse, recession; and another, even weaker, recovery.

Reporters are under intense pressure from peers and managers to ignore the elephant, Lynn said. Journalists’ views are influenced by corporate power, he said, adding, “this corporatocracy is dominated by a philosophy where it’s all about the shareholders, as opposed to the employees.”

Leonhardt — and likely, many of his colleagues — know the immigration elephant stomps on Americans’ wages. Back in July 2019, when Trump’s low-migration policy was raising wages for marginalized Americans, Leonhardt pushed through the corporate pressure to write:

As regular readers know, I have become somewhat hawkish on immigration. I think our immigration policy should take into account the sharp rise in inequality over the last few decades. One way to do so would be to reduce, or at least hold constant, the level of immigration by people who would compete for lower- and middle-wage jobs while increasing immigration among people who would compete for higher-wage jobs.

History also makes this point. It’s not just a coincidence that the period of strongest income gains for middle-class and poor families — starting in the 1940s — followed, and overlapped with, a period of falling immigration. “Immigration restriction, by making unskilled labor more scarce, tended to shore up wage rates,” the great labor historian Irving Bernstein wrote.

Leonhardt’s new May 21 column ignores the role of immigration. But he carefully does not deny immigration’s impact as he focused blame on two other contributory causes:

If anything, wages today are historically low. They have been growing slowly for decades for every income group other than the affluent. As a share of gross domestic product, worker compensation is lower than at any point in the second half of the 20th century. Two [of the multiple] main causes are corporate consolidation and shrinking labor unions, which together have given employers more workplace power and employees less of it.

Pro-American immigration reformers are eager to spotlight the elephant in the room.

“Decades of low-skill, low-wage immigration had depressed wages and employment for workers on the bottom rung of the economic ladder,”  former official Ken Cuccinelli wrote May 24 in Newsweek.com. Cuccinelli, who was the deputy chief at the Department of Homeland Security, continued;

It’s common sense, really; maybe that’s why Washington struggles to understand it. When millions of low-skilled illegal immigrants are allowed to break the law and compete for jobs, it increases the low-skill labor supply. Economics 101 tells us that when supply increases, prices—aka wages—decrease. Of course, many special interests want wages depressed, because it helps the bottom line of their business. But there is no question it hurts America’s poor.

For an example of how these policies helped low-income Americans, particularly unemployed Black workers, just look at a small Mississippi town in 2019. After ICE raided a chicken plant employing hundreds of illegal workers, the company had a job fair to hire legal replacements. Over 200 showed up—mostly Black workers—and the fair had to extend its hours to process the applications. Juan Grant, one of the new workers, told the New York Times he got a 50% raise to begin working at the plant. Grant’s experience is evidence against the notion that there are jobs Americans won’t do.

Cuccinelli hammered the point: 

From 2016 to 2019, real median household income shot up by 9 percent, and fewer workers earned minimum wage than ever before. The lowest-earning 20 percent of households saw their real income increase by an average of 11 percent from 2018 to 2019 alone, more than any other income group. Thanks to a booming economy and a tight labor market at the lowest end of the economic scale, largely caused by Trump’s immigration policy, construction workers saw their wages soar by 6.1 percent in 2019, higher than any other industry, according to a Glassdoor report. Poverty hit an all-time low in 2019 as well, driven by record gains in Black and Hispanic communities.

The deep public opposition to labor migration is built on the widespread recognition that legal and illegal migration moves money away from most Americans’ pocketbooks and families.

Migration moves money from employees to employers, from families to investors, from young to old, from children to their parents, from homebuyers to investors, from technology to stoop labor, from red states to blue states, and from the central states to the coastal states such as New York.

Lynn offered some advice to Americans: “What Americans need to do is to look at their personal situations and say, ‘Wow, if we were to restrict [legal] immigration, how much better would that make things for me and my family?”

 

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