Immigration and low pay

In an earlier post, I commented that “people at the bottom of the pile, resentful at the opportunities they feel they don’t have, are the ones who would lose most if these migrants stopped coming (or ‘went home’)”. I’d like to unpack this.

At first sight, challenging this seems counter-intuitive. In 2013, UKIP were spreading stories of 350,000-400,000 likely migrants from Romania and Bulgaria when restrictions on emigration were lifted. In reality, the number of EU migrants employed in the UK actually fell in the subsequent few months.

It’s hard to measure the effect of immigrants on wages, which makes the case hard to prove either way. “Immigrants took my job” or “immigrants are pushing down my pay” are easy things to say, and much harder to prove. They express how people feel, which is not the same as saying this is the cause.

The minimum wage (and pressure for the living wage) limit how far pay can be pushed down.

Where this one gets tricky is that there are plenty of stories of illegal immigrants being exploited — working in bad conditions for low pay. But the key word here is illegal: these people are already being ill-treated, and the answer is to enforce the legislation we already have on migration. Whether people are here legally or not, if they are being underpaid or ill-treated we already have legislation to protect workers. The concern here is the effect on wages of the illegal exploitation of migrants, not of the migrants themselves.

It is worth noting that the TUC have been signalling concern that leaving the EU could undermine workers rights — those rights are there partly out of respect for people, and partly to stop unfair exploitation of workers that would distort the single market.

That is a highly relevant point. Wages and cost of living do vary across the EU, but the lowest-paid workers in the UK do struggle to make ends meet — if someone is being paid appreciably more for a menial job in the UK than they would in Eastern Europe, the reality is that their living costs are also much higher.

On top of this, economic migrants come because there is work. Unemployment levels in the UK are low. If it gets too low, then the danger is that pay has to go up and inflation rises, which has the nasty habit of ending up with business struggling and people losing their jobs.

Education is a huge cost to the state. Immigrants are workers whose education was paid for in another country. A steady flow of migrants actually reduces what we need to pay in taxes for education.

We have an ageing population. We might actually need people to come and plug that gap. Low-paid roles like cleaners and care assistants might feel threatened by migrants, but demand is rising. Things would feel very different if the costs of social care went up substantially because of a labour shortage and our elderly ended up going without care.

An ageing population also needs immigrants to come and pay taxes to fund the pensions of those who are retired.

Economic growth is boosted by trade and the free movement of people is a key component of the single market. For those on low incomes it is galling to see others earning more. But the sharp question is that, if the economy were doing less well, and there were fewer people earning more, would the person on low income still be where they were, or would they be out of a job?

“Immigrants taking our jobs” is a powerful rallying cry. The snag is that reality doesn’t quite match this. It would be tragic if reacting to that fear actually hurt the people who are afraid because of their financial weakness.

See also Migrants not affecting wages