January 6, 2008

highlights/lowlights 1

Highlights/Lowlights Chapters 1-5 The Undercover Economist
For me, the highlight of these chapters was the brief space in the fist chapter where Hartford discuses wage competition and immigration. He represented the highly contentious issue in economic terms to show the effects on the entire workforce. His argument is based on the influx of highly skilled workers to the United Kingdom and how it affects the labor market there. Unfortunately the first chapter is more overview than anything else and this argument was little short.
In Harford’s argument, immigration is contentious because is it self interested. People will contest immigration because they are afraid of losing their own jobs. The people protesting the issue will be those who stand to lose wages or wage increases due to the influx of new workers in their field. The example is given of highly skilled workers moving to the U.K. and taking positions within the health care field. This has lead to the wage repression of those in nursing. What is happening is that the new workers are flooding the market with a supply. The increased amount of workers will keep the wages of everybody down because there could be more workers than there are jobs.
This same thing happens in the lower skill level and is the reason why so many Americans are concerned about the issue. What is interesting is that more middle class Americans are upset about the issue. It’s not that they shouldn’t care; it is that the majority of immigrants to the United States are low wage workers. The immigrants to the U.K. are more in nursing and other health care related fields. Currently, hospitals in the U.S. are experiencing a shortage of workers in these positions. The wage repression is occurring at a lower skill level, and a lower wage. This is resulting in lower prices on the consumer goods purchased by the middle class.
I felt that this is worth noting, because the increase in the number of workers in the United States is an increase in the lower skill levels. The people protesting this immigration are typically people who have a higher skill level than those immigrating. The people protesting are therefore enjoying the benefits of lower cost on the things they buy, without seeing their own wages reduced or stagnated. In the case of the U.K. the costs of acquiring new or better skills will begin to be higher than the expected payoff for those skills. When that happens, people will stop seeking to acquire those skills and spend their time and money elsewhere. In the Untied states, the current citizens are more likely to be economically capable of acquiring new skills and will be enjoy the higher wages that they receive after. The immigration issue in the United States is most often fought by the people who have the most to gain from our current situation. As long as there continues to be an influx of low skilled workers that middle class has nothing to complain about. And the American lower class is often more educated and has more skills than those immigrating. There is really little reason to complain and all the incentive to make more of an effort to acquire more skills.

1 comment:

Douglas Loeper said...

So who are you talking about Meghann when you're speaking of those that commonly oppose immigration are of the higher skill/income level? I'm not saying I disagree with you. What I am saying are that the people who we hear from that oppose immigration, who have the venue to be vocal and noticeable about it are those entrenched in the political realm. Which turns it into a talking point for them and not a concern, they are responding to the incentives that are available to them. Talk about immigration, be mad about it and ensure your place in office/income/talk show, etc...

I think that the reason why we don't hear more of the lower skill class talk about it in our country is because they aren't given a voice (more then the political ones that seem to often speak to them and not for them). My future father-in-law talks about this often actually, he is a long time machinist and is highly specialized in his field (years of experience and skill but no formal education for this position) so his job will be one of the last to be outsourced (similar in their eyes to the immigration at least from a job security stand point). He's seen the workforce at the shop he is at reduce by 75% over the last 5 years he says and it's always a concern to him that his job is going to be gone tomorrow.

I only bring this up because this is the group we'll hear more from in the near future, those on the edge of the skill level being 'invaded'. And it's further unfortunate that those who are really being effected by it are typically lacking the formal education to realize the overall effect, of what is happening and what their options are.

This is the conundrum with anything and everything that involves change and evolution. Fortunately those who support and can deal with change outnumber those who cannot at least in strength of will. Otherwise we'd all still be living on a flat planet, which the sun revolves around and performing live sacrifices for our yearly crops!!