National Review, September 16, 2023
In his book We Wanted Workers, Harvard economist George Borjas says the main question in immigration policy is “Who are you rooting for?” (It should be “whom,” of course, but I think we’ve lost that fight.) Every government policy results in winners and losers, those who benefit from it and those who be hurt. Our preferences will be based, at least in part, on who the winners and losers are likely to be.
One of those choices is whether we should favor a tighter or a looser labor market. In a looser labor market, workers have to hustle to find jobs; by contrast, in a tighter labor market, it’s employers who have to hustle to recruit and retain workers. Different people benefit depending on which approach policy takes, but any and all decisions will tip the balance one way or the other.
Those favoring realism and restraint in immigration policy — lower levels of legal immigration and more vigorous enforcement against the illegal kind — are rooting for ordinary workers, especially those without college degrees, and so seek to tighten the labor market to increase their bargaining power. You might call this a Preferential Option for Less-Skilled Workers (to adapt the Roman Church’s terminology).
This week we saw a refreshingly frank display of the opposite perspective, a Preferential Option for the Employer. Tim Gurner, CEO of the Gurner Group, an Australian firm that builds luxury apartments, said the quiet part out loud Tuesday at a conference in Sydney. When asked whether immigration was worsening Australia’s housing crisis (it is), he prefaced his response this way: “We absolutely have to have immigration. Australia doesn’t work without immigration, and if we’re not growing, we’re dead.”
Continuing that thought, he said that “tradies” (Aussie for tradesmen, like carpenters, electricians, et al.) have too much labor-market power as a result of the economic dislocations stemming from Covid and needed to be put in their place. I am not making this up:
We need to see unemployment rise. Unemployment has to jump 40, 50 percent in my view. We need to see pain in the economy. We need to remind people that they work for the employer, not the other way around.
There’s been a systematic change where employees feel the employer is extremely lucky to have them, as opposed to the other way around. It’s a dynamic that has to change, we’ve got to kill that attitude, and that has to come through hurting the economy.
His goal is “less arrogance in the employment market” — less arrogance on the part of workers, that is.
Listen for yourself:
Gurner Group founder Tim Gurner tells the Financial Review Property Summit workers have become "arrogant" since COVID and "We've got to kill that attitude." https://t.co/lcX3CCxGuj pic.twitter.com/f9HK2YZRRE
— Financial Review (@FinancialReview) September 12, 2023
Sure, he later apologized for his “deeply insensitive” comments, but Gurner’s self-interest is clear: As a real-estate developer whose goal per his firm’s website is to build “a world of unadulterated luxury akin to the globe’s finest 6-star hotels”, Gurner wants a looser labor market so he can pay his workers less and demand more.
Employers are free to make that case, but the rest of us have to judge whether that perspective serves the broader national interest. Australians can decide that for their country, but America can certainly benefit from a rebalancing of economic bargaining power through tighter immigration policies, something that cannot happen if the current widespread calls for increased immigration are heeded.
We’ve actually run a sort of natural experiment to test this. Immigration, both legal and illegal, fell substantially from 2016 to 2019 because of a certain Orange Man. As my colleague Steven Camarota wrote in these pages:
If immigration enthusiasts were right, the economy should have sputtered, but that’s not what happened. In fact, GDP grew, inflation remained low, and — perhaps most significantly — wages for less educated American workers not only grew but grew at a faster rate than for high-skill workers.
With today’s relatively low unemployment rate, it might seem that we still have a tight labor market, but, as Camarota has shown more recently, the share of working-age Americans who aren’t even looking for work (and are thus not counted as “unemployed”) is larger than ever, even among men in their prime working years. There are many ways to approach this problem of low labor-force participation (which contributes to a variety of social dysfunctions), but none of them can succeed if we adopt the Gurner approach to the labor market.
The inchoate party realignment on the issue of supporting non-college workers continues to unfold. Even as unlimited immigration has become an immutable value of the Left, Republican politicians have started to embrace the Preferential Option for the Less-Skilled Worker, and the need for less immigration to tighten the labor market. Senator Marco Rubio recently released a paper entitled “The State of the Working (And Non-Working) Man.” Among the issues it addresses is “Mass Immigration,” the section on which begins like this:
When businesses couldn’t export their operations overseas to lower labor costs, they have sought to import cheaper labor—legal and illegal alike. This surge in low-skilled immigration has also contributed to the decline in work for American men.
We’ve come a long way from the Gang of Eight.
Also this week, Senators Cotton and Romney, joined by Vance, Collins, Capito, and Cassidy, introduced legislation that combines a phased-in increase in the minimum wage to $11 with a mandate to use E-Verify for all new hires to turn off the jobs magnet for illegal immigration. Senator Cotton observed that “American workers today compete against millions of illegal immigrants for too few jobs with wages that are too low—that’s unfair.”
The goal is obviously not socialism. Rather, since it is unavoidable that government policy will put a metaphorical thumb on one side of the scale or the other, we should put it on the side of workers. Conservatism can prevail only by turning away from the perspective that the market power of employers should be protected through continued mass immigration.