Simon Wren-Lewis tries to argue for unskilled immigration to the UK.

SW-L is a former Oxford economics prof and his article is entitled “Low paid jobs for British born workers”.

He starts (first four paras) with a hypothetical scenario where half UK employees are skilled and half are unskilled, and then claims (quite rightly) that if we have only skilled immigration, that will mean the proportion of native Brits in unskilled jobs will rise to above 50%. As he puts it “That has to mean that among British born workers, less than 50% are now skilled and over 50% are unskilled.” And that apparently is to be deplored.

But what exactly is wrong with a higher proportion of unskilled natives having jobs? Darned if I know! Far from being a disaster, more jobs for the unskilled strikes me as a win win. 

Just to emphasise my point, in SW-L’s hypothetical scenario, there is NO SHIFT for native workers FROM skilled work to UNSKILLED work: all that happens is that unemployment among the unskilled section of the workforce falls.

Then later in the article, SW-L advocates a very old and far from original way of raising the pay of the unskilled: raise the minimum wage. Well no one can possibly object to that if there are few job losses for the unskilled as a result. Unfortunately the evidence on that is mixed: i.e. the exact level of minimum wage pay at which the effects on jobs for the unskilled become serious is not entirely clear. A German study found that the recent rise in the minimum wage had in fact resulted in a significant number of job losses for the low paid.

And finally SW-L appears to be totally unaware of the point that if the UK imports both skilled and unskilled people, the only net effect is an expanded population. Now given that the UK is one of the most densely populated countries in the World, and given huge rise in real house prices over the last twenty years, and the difficulty those on lowish incomes have buying a home, a rise in the population doesn’t strike me as a brilliant idea.

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Afterthought (same day, 27th Feb 2020).

It occurred to me a few hours after publishing the above that the above “win win” point needs explaining more thoroughly, so here goes.

The constraint on raising demand is basically a shortage of skilled labour or at least specific types of labour. So assuming the economy is at capacity prior to importing a set of skilled workers who have jobs lined up, i.e. who have spotted unfilled skilled vacancies in the UK, then demand can be raised when those immigrants arrive, and not just by enough to employ those immigrants, but by an additional amount: that is enough to employ however many unskilled people are needed to work alongside the latter skilled people.

Ergo, the net effect is that unemployment among unskilled native Brits declines, and with no adverse inflationary consequences. At least that is the INITIAL effect. But there’s a problem (and this is actually an additional or entirely new point, not alluded to above.)

The nature or type of skills in surplus and short supply is constantly changing. Thus there is no reason to suppose that roughly six months or a year after importing that above set of skilled immigrants, the inflationary pressures deriving from labour market inefficiencies won’t return the maximum feasible level of employment consistent with acceptable inflation back to its original level. In which case the original importation of the above original set of skilled immigrants will achieve very little apart from increasing the size of the population.

Incidentally, readers versed in economics may be wondering why I use the cumbersome phrase “maximum feasible level of employment consistent with acceptable inflation” when there is a vastly shorter acronym I could use: NAIRU. Well the reason is that over the last five years a large number of idiots have appeared out of the woodwork claiming NAIRU is nonsense, but for some bizarre reason, they’re perfectly happy if you refer the IDEA behind the acronym using different words and letters (which supports my contention that they are idiots).

It's a bit like a bunch of hypothetical people who are triggered by the word "car", but are perfectly happy with "steel box on four wheels powered by an internal combusion engine".

At any rate, mollifying idiots is always important, which is why I’m a firm believer in mollifying idiots. Incidentally and ironically SW-L himself had a go at the people who are triggered by the acronym “NAIRU”. I’m not sure how successful he was....:-)

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