Thursday, April 14, 2005

Wages

Brad DeLong asked the other day why real wages are not rising and advanced three theories:

1. Improvements in firms' ability to squash unions, and thus shift wage bargains toward employers (the Wal-Mart hypothesis).

2. A slack labor market--much more labor-market slack than the level of the unemployment rate would lead one to expect--in which firms find it easy to hire workers and workers find it hazardous to ask for higher wages.

3. Changes in the international economy that boost the wages of the skilled and educated (whose products can be sold abroad for more) and put downward presure on the wages of the less-skilled and less-educated (who now face much stronger competition from abroad).

Needless to say, Brad missed number 4, which should be number 1: Unlimited quantities of illegal aliens willing to do your job for peanuts. Immigration is the third rail of American politics, and it shouldn't be. I get tired especially of hearing liberal commentators of various stripes supporting illegal immigration. I'm all for using any method that would stop it, including lethal force. It's not just bad for Americans' jobs, if only one tenth of one percent of the people coming over are terrorists - we're screwed.

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