Previous economic data on whether mass immigration depresses wages is congruent with this. Namely, it does a bit, especially in the most unskilled categories. But not massively. Probably the narrative about migrants taking jobs British people don't want is true!
The economic harms are that:
Cheap labour discourages skills training and capital investment, the only true sources of rising prosperity via raising output per head.
Immigration from non-similar countries impacts the social cohesion on which the modern welfare state depends. It forces us to shift from being a high-trust society (economically efficient) to a low-trust one.
Then you can add in the relationship between national economic wellbeing and cultural manifestations such as the way cousin marriage strengthens a clan system in which jobs don't go to the best people and individuals are punished for thinking outside tradition.
In other words, the economic arguments aren't simplistic ones but they're all too real.
Neil, as always, I very much appreciate the effort you go to in looking at underlying data before looking to draw inferences and conclusions. As I have noted before, I don't always agree with what you take from the data, but I do appreciate the data that I can then look at too!
My key thought from all of this is around the pace of change, linked to the performance of the underlying economy. Let me draw a parallel.
I live in the UK now, but am a Caymanian. When I moved to Cayman in 1989, the census as I arrived showed 32,000 people. The number now is upwards of 80,000 (it changes so fast even the government isn't quite sure how many live in the country now).
Immigration in Cayman is also a constant focus of the people and so politicians, though from a different direction. Immigrant labour in Cayman is a combination of the lowest paid jobs that Caymanians don't want, but also the very highest paid jobs for the offshore finance industry.
There is much to worry about with the rapid immigration to Cayman, but for decades the "Cayman Miracle" was that the growth in the economy that came with the highest skilled workers meant that, yes, trickle-down economics worked there to some degree.
In recent years, the income and asset inequality between those with the top jobs (and so the top education, top skills) and the rest has begun to create societal division and a worrying increase in relevant negative metrics, but, at least up until now, belief in the continuation of the Cayman Miracle has meant that the desire to actually slow down immigration (as opposed to politicians saying they will) has not been there.
Back to the UK, your charts show, factually, rates of change both absolute and relative by area. It certainly has been a period of really rapid increase in immigration. Yes, economists generally agree that immigration is a positive for economic growth (caveated in the UK by some of the reasons you have mentioned here and in the past. They also agree that any growth that is too fast will cause problems, whether that be economic overheating or, in this case, immigration that is too fast. I don't know what the goldilocks rate of growth is ("just right"), but it seems clear from your data that it is too fast right now.
One more key thought. If the UK economy were structured in such a way (as Cayman is) that the country sees high demand for our goods and service,s such that we are globally competitive, we would see far fewer issues with areas such as immigration, as the fast growth economy would soak all of those people up. The part that politicians seem unwilling to speak the truth about, though, is that the UK is not a fast-growth economy, and we need to make massive structural changes in order to become one. To name only one (and one you have also highlighted), our once world-leading education and university system is no longer anywhere near good enough for a country aiming to be a globally competitive economy. With this, and in general, we have had decades of politicians willing to say we need major structural change, but vanishingly rarely do we hear any openly talk about the fact that the UK is no longer a world power economically, despite the fact that they know this. The first step to solving a problem is admitting you have one.
Thanks for the interesting research. But I don’t agree with your conclusion. Rightly or wrongly our economy depends on immigrant labour to do low paid jobs. Stopping that flow would mean those jobs would either need to be done by UK workers at higher salaries or would not be done at all. It would be a cost to businesses and in some cases the businesses just couldn’t afford to be there any more. Yes, productivity would increase in the sense that average wage cost would increase, but the economy would be smaller, businesses less profitable or inflation would increase and we would all be poorer. No simple solutions.
Well that’s true. Cheap labour disincentivises capital investment and probably dampens productivity. But without tax or other incentives to tool up like this I fear most businesses would just push prices up/fail.
Not if labour shortages were addressed by capital investment. Car washes are a good example. A dozen individuals from failed states have replaced one machine serviced by a reasonably paid, probably British technician who services all the machines on his patch.
Perhaps do a TL/Dr or exec summary? Excellent work here but very data heavy and a lot to wade through to get to key takeaways. Just a suggestion and good to see rigorous analysis.
Previous economic data on whether mass immigration depresses wages is congruent with this. Namely, it does a bit, especially in the most unskilled categories. But not massively. Probably the narrative about migrants taking jobs British people don't want is true!
The economic harms are that:
Cheap labour discourages skills training and capital investment, the only true sources of rising prosperity via raising output per head.
Immigration from non-similar countries impacts the social cohesion on which the modern welfare state depends. It forces us to shift from being a high-trust society (economically efficient) to a low-trust one.
Then you can add in the relationship between national economic wellbeing and cultural manifestations such as the way cousin marriage strengthens a clan system in which jobs don't go to the best people and individuals are punished for thinking outside tradition.
In other words, the economic arguments aren't simplistic ones but they're all too real.
Neil, as always, I very much appreciate the effort you go to in looking at underlying data before looking to draw inferences and conclusions. As I have noted before, I don't always agree with what you take from the data, but I do appreciate the data that I can then look at too!
My key thought from all of this is around the pace of change, linked to the performance of the underlying economy. Let me draw a parallel.
I live in the UK now, but am a Caymanian. When I moved to Cayman in 1989, the census as I arrived showed 32,000 people. The number now is upwards of 80,000 (it changes so fast even the government isn't quite sure how many live in the country now).
Immigration in Cayman is also a constant focus of the people and so politicians, though from a different direction. Immigrant labour in Cayman is a combination of the lowest paid jobs that Caymanians don't want, but also the very highest paid jobs for the offshore finance industry.
There is much to worry about with the rapid immigration to Cayman, but for decades the "Cayman Miracle" was that the growth in the economy that came with the highest skilled workers meant that, yes, trickle-down economics worked there to some degree.
In recent years, the income and asset inequality between those with the top jobs (and so the top education, top skills) and the rest has begun to create societal division and a worrying increase in relevant negative metrics, but, at least up until now, belief in the continuation of the Cayman Miracle has meant that the desire to actually slow down immigration (as opposed to politicians saying they will) has not been there.
Back to the UK, your charts show, factually, rates of change both absolute and relative by area. It certainly has been a period of really rapid increase in immigration. Yes, economists generally agree that immigration is a positive for economic growth (caveated in the UK by some of the reasons you have mentioned here and in the past. They also agree that any growth that is too fast will cause problems, whether that be economic overheating or, in this case, immigration that is too fast. I don't know what the goldilocks rate of growth is ("just right"), but it seems clear from your data that it is too fast right now.
One more key thought. If the UK economy were structured in such a way (as Cayman is) that the country sees high demand for our goods and service,s such that we are globally competitive, we would see far fewer issues with areas such as immigration, as the fast growth economy would soak all of those people up. The part that politicians seem unwilling to speak the truth about, though, is that the UK is not a fast-growth economy, and we need to make massive structural changes in order to become one. To name only one (and one you have also highlighted), our once world-leading education and university system is no longer anywhere near good enough for a country aiming to be a globally competitive economy. With this, and in general, we have had decades of politicians willing to say we need major structural change, but vanishingly rarely do we hear any openly talk about the fact that the UK is no longer a world power economically, despite the fact that they know this. The first step to solving a problem is admitting you have one.
Thanks for the interesting research. But I don’t agree with your conclusion. Rightly or wrongly our economy depends on immigrant labour to do low paid jobs. Stopping that flow would mean those jobs would either need to be done by UK workers at higher salaries or would not be done at all. It would be a cost to businesses and in some cases the businesses just couldn’t afford to be there any more. Yes, productivity would increase in the sense that average wage cost would increase, but the economy would be smaller, businesses less profitable or inflation would increase and we would all be poorer. No simple solutions.
Well that’s true. Cheap labour disincentivises capital investment and probably dampens productivity. But without tax or other incentives to tool up like this I fear most businesses would just push prices up/fail.
Not if labour shortages were addressed by capital investment. Car washes are a good example. A dozen individuals from failed states have replaced one machine serviced by a reasonably paid, probably British technician who services all the machines on his patch.
It’s amazing how much work you have to do to prove what we all knew already 😅. Seriously though, thanks for the work providing evidence 🙏🏻.
Huge uptick for this and all the other carefully researched posts.
Perhaps do a TL/Dr or exec summary? Excellent work here but very data heavy and a lot to wade through to get to key takeaways. Just a suggestion and good to see rigorous analysis.