> The faster growth at the bottom is probably being fueled in part by recent minimum-wage increases in cities and states across the country ... wages for low-wage workers rose 13 percent in states that raised their minimum wages, compared with 8.4 percent in states that did not
Setting the price does not set demand. The only thing that makes min wage bumps sustainable is a strong economy.
Additionally, it’s easy to increase the average by eliminating people on the lower end.
If a min wage increase results in a 50% loss of jobs in that range, it’s still an average wage increase for the workers that survived. There’s just a higher unemployed pool that isn’t counted in the average.
McDonald's has eliminated a number of jobs, replacing them with kiosks. When I visit the hardware store, and others, there are noticeably fewer employees there.
They knew it was coming. McD's didn't become a global empire with fools running it. It probably accelerated their plans, though, because the kiosks were installed coincident with the rises.
Personally, I eat out a lot less due to the menu price increases attributable to the min wage increases.
True enough, but minimum wage increases can capture economic surplus to labour. So if there is an increase in economic surplus due to increased efficiency (say warehouse allocation improves to require 50 workers instead of a 100), then normally the warehouse owner gets all (well, presumably they could use that to lower prices or something as well) the surplus from that. A minimum wage increase can move some of that surplus to labour.
So if productivity rapidly rises over some period of time, it makes sense to increase minimum wage if you want some of that to go to labour. The idea being demand won't drop that much.
We do know that productivity has been rising quite a bit recently, but real wages are stagnant. This may mean that more of the surplus is going to capital. Given all that, minimum wage increases will probably not lead to diminished demand overall (it's possible some industries don't have the capacity) unless they eat up more than the surplus.
It’s no secret; tight labor markets produce higher wages. The deleterious effects of labor gluts are felt most profoundly at the bottom: the greater the number of people seeking unskilled labor, the lower the wages for “those who need it most”.
Hence, the solution to low wages is to stop importing poor foreigners who undercut American wages. Couple that with the elimination of corporate taxes, and there will be no incentive for offshoring or inverting. Become the world's biggest tax haven, and incomes will skyrocket.
The laws of economics cannot be wished away, and the lesson is clear: cut taxes, close the borders, and prosperity will result. If we could, now, substantially cut social spending – with all these people working, it should be possible to seriously reduce handouts – then we could afford to cut taxes AND pay for the sort of infrastructure program (exclusively projects of national importance) while reducing the deficit.
The comment was probably poorly received because it presents a lot of things as economic fact, when in reality the evidence is much less conclusive. Many studies have shown the the labor market is far from a simple supply/demand system, and predicting the impact of many policies - looser immigration, minimum wage - is difficult, and quite often runs contrary to the simpler models.
The 'laws' of economics are based on supply and demand.
The effects of migration and trade are based on a slew of factors, including supply/demand for labour in both the host country and the home country, wages, benefits in both countries, etc... Trade effects depend a lot on tariffs, costs in countries on each side of the trade, and those in turn are largely the effect of supply/demand both for goods and labour in countries on both sides of the trade.
In absolute terms immigration does increase prosperity. But lower income, domestic laborers would suffer in the near term. Its a matter of priorities I suppose.
Those 'laws' are untainted by contact with reality. From https://en.wikipedia.org/wiki/Comparative_advantage: " ... none of the world's most successful trading regions, including Japan, Korea, Taiwan, and now mainland China, reached their current status by adopting neoliberal trading rules."
> Those 'laws' are untainted by contact with reality. From https://en.wikipedia.org/wiki/Comparative_advantage: " ... none of the world's most successful trading regions, including Japan, Korea, Taiwan, and now mainland China, reached their current status by adopting neoliberal trading rules."
What a gross way to misrepresent that article, the source of that quote, and the established consensus. That quote is not "from Wikipedia" any more than it is from yourself (or from HN for that matter) just because you happened to copy-paste it here. That quote is from one critic whom Wikipedia happens to cite just for the sake of illustrating what counterclaims exist out there.
If you really want to quote Wikipedia, why not quote the couple paragraphs before, which actually address what the consensus is:
Several arguments have been advanced against using comparative advantage as a justification for advocating free trade, and they have gained an audience among economists. [...] However, the overwhelming consensus of the economics profession remains that while these arguments are theoretically valid under certain assumptions, these assumptions do not usually hold and should not be used to guide trade policy. Gregory Mankiw, chairman of the Harvard Economics Department, has said: ″Few propositions command as much consensus among professional economists as that open world trade increases economic growth and raises living standards.″
Now your quote doesn't look so much like an established fact, does it?
The quote may be from one critic, but it talks about fact, not 'economic consensus'. Are you saying those countries did reach their current status with neoliberal trading rules?
Noted, but that quote doesn't imply economic consensus or opinion, and it is not an argument - it is a dry statement of fact. So I don't think I misrepresented anything.
> Hence, the solution to low wages is to stop importing poor foreigners who undercut American wages. Couple that with the elimination of corporate taxes, and there will be no incentive for offshoring or inverting.
You forgot to mention that we’ll also need to kill the minimum wage and a slew of laws regarding safe working conditions.
You're thinking about the problem from the wrong perspective. Higher prices do encourage people to sell more (in this case their labor). But a price floor excludes a whole category of people (the young, unskilled, or transient) from the market. Its this category of people that would now be eligible to compete in the labor market
Labour supply is the amount of workers willing to work at a given wage. Demand for labour is the amount of workers wanted at a certain wage. If someone's excluded from the market at a certain wage, it means there isn't demand for their labour at that price.
> Labour supply is the amount of workers willing to work at a given wage. Demand for labour is the amount of workers wanted at a certain wage. If someone's excluded from the market at a certain wage, it means there isn't demand for their labour at that price.
If the person is excluded from the market, how does that show lack of demand for their labour at a certain wage? The person isn't even a market participant at that point.
The very word excluded implies that the person excluded wants to be included, otherwise we'd simply say they're outside the labour force or non-participants.
If someone is willing to work for $5, they will be willing to work for $15 [0]. The fact that they don't work is at all when the wage floor is $15 is because no one is willing to hire them at that price. Hence, it is a demand side issue.
The supply/demand curve here is a bit tricky, becauce, given a minimum wage of $15, the demand for labor at $14.99 is actually less than the demand for labor at $15, because employers are generally not willing to break the law over $0.01/hr
> ...a slew of laws regarding safe working conditions.
Not sure that's necessary, I'd be for removing ones which have no practical impact on working conditions (i.e. haven't been shown to apply to any situation where non-compliance was at some point common), but labour demand is going up quite a bit even without considerable changes to workplace safety regulations. Some of these regulations could even be argued to increase labour demand (not that that should be a goal of any workplace safety regulation).
> If we could, now, substantially cut social spending – with all these people working, it should be possible to seriously reduce handouts
What a fantastic argument in which you completely ignore the gargantuan shadow of the US War budget against our social spending programs. Cutting the programs will never come close to the money saved by producing just a few less bombs and aircraft a year.
Ask yourself, if not for market regulation + social programs, what the heck is our government even here for?
If you ask me, it's certainly not to siphon tax money out of the War budget and into politician's pockets at the expense of the general welfare of its people while engaging in a full-on disinformation campaign against them. That's such a Middle Ages approach to running a kingdom.
> What a fantastic argument in which you completely ignore the gargantuan shadow of the US War budget against our social spending programs. Cutting the programs will never come close to the money saved by producing just a few less bombs and aircraft a year.
In 2018, the "war budget" was 12% of the total. For comparison, education spending was 15%, health care 23%. I don't think the "war budget" piggy bank will go as far as you think it does.
The difference is that if taxes didn't pay for education and health care, people would still have to foot those costs out of pocket. But fewer bombs and aircraft carriers is pure cost cutting.
The difference is wealth transfers, which are approximately zero sum, and waste spending (paying people to consume raw materials do create useless things or destroy things), which is negative sum.
This only compares our actual discretionary budget, aka the money we are able to reappropriate as we see fit, which is not locked into specific channels.
This is the only comparison that makes sense; comparing a ratio of part of our discretionary budget against the entire discretionary+undiscretionary budget is not statistically sound.
And as you see in the chart I provided, in 2015 our military spending was over half of our available budget, compared to less about 1/5th of the budget being spent in total on social programs, which were like, I'm pretty sure, the point of a government.
Sure, the point of a government is also to defend its people from foreign invasion. But you can't justify our War budget that way when you consider how the money is mostly spent offensively, as we engage in countless proxy wars, paramilitary coups, and arms deals with totalitarian nations.
Surely you aren't suggesting the difference between discretionary and non-discretionary spending is "somewhat arbitrary". Pretty much every economist in the nation would disagree with you there.
Paying Social Security taxes does not entitle anyone to receive future benefit. Per the US Supreme Court (1960), Social Security taxes are no different than any other income tax. This is not a theoretical distinction, as the US can and has denied Social Security benefits to Americans that have paid Social Security taxes for arbitrary reasons. The Supreme Court ruling was based on one such case.
Why does that matter? It functions just like a regressive tax and social program. It still contributes to the deficit and is money the government needs to take out of the economy.
It’s money redistributed between consumers (progressively). Presumably the consumers will spend it on things they need, and capitalists will try to squeeze out a profit.
Unlike bullets and bombs, which is money burned.
And unlike Medicaid, which is money taken from consumers and spend specially on medical services. Which consumers may or may not need. Hence all the insurance fraud.
What does it matter what stack of money the spending comes from? Here in DC, the Metro is funded by the federal government and the states and the localities. Can we say “Metro funding is too low!” by looking at just the federal part and pretending that the other spending doesn’t exist?
Federal “discretionary spending” just means that money is allocated by appropriations bill rather than statutory formula. But the money is totally fungible—Congress can just as easily change the formula as it can change the appropriations bill.
Likewise, it makes no sense to ignore all the state spending. Defense is the job of the federal government, while social services are the job of the states. We spend a trillion dollars on education every year—almost none of that shows up on the federal discretionary budget. Does that mean you can ignore that spending? It comes out of everyone’s pockets and goes to teachers just the same as if it had been allocated by a federal appropriations bill.
There are legitimate arguments for cutting the defense budget. But the purpose of comparing defense costs just to discretionary expenditures is to deceive people about how much could be achieved by cutting the defense budget. If we cut defense expenditures to the NATO target, we would save $200 billion annually. That would fund some programs. But government spends more than $6.5 trillion a year already on non-defense things. Another $200 billion won’t be game changing.
I suspect one reason politicians fixate on the defense budget is that it provides a seemly large pot of money to fund social programs, distancing those proposals from the idea of tax increases. But that only works if you squint and don’t do the math. We would have to spend $1.4 trillion more annually to match Germany’s public spending as a percentage of GDP. And there is no reason to believe we’d be able to implement a European-style welfare state any more efficiently than Germany.
There's a lot to unpack here and honestly I've got stuff to do right now so I can't get into it. But I will mention one thing...
> We would have to spend $1.4 trillion more annually to match Germany’s public spending as a percentage of GDP. And there is no reason to believe we’d be able to implement a European-style welfare state any more efficiently than Germany.
The efficacy of social programs doesn't scale linearly with funding. That's not how you do the math. Each dollar spent has cumulative power. In truth we wouldn't need to come anywhere close to $1.4 trillion to match the impact of Germany's social programs.
> cut taxes, close the borders, and prosperity will result
That leads to a hot house. Targeting full employment and keeping capital local allows workers to bid up wages, which will create inflation, and investors will go on an "investment strike". It happened in the 70s.
Otoh, Open borders and targeting price stability allows capital to seek it's global return - inflation stays low, but inequality grows.
I'm not moralizing w/r/t good or bad. I pointed out conditions in which folks with significant assets start freaking out. It's not "higher wages" - it's the combination of targeting full employment and preventing unrestricted global capital flows. Wages will simply go up in that regime (in full employment, the highest workers/earners have no downside to negotiate and can leave any given job). Companies don't have a good counter. So employees win - yay. But employer/employee in not the only game in town. Since wages go up, if global capital flows are restricted (closed borders), inflation also goes up. The other game in town is what the folks with real serious assets want, and they absolutely hate high inflation, so there will be some political battle to decide how the situation is resolved. in the 70's it was resolved by the investor class winning the political battle, and switching the economy to neoliberalism - price stability over full employment, and globalizing capital to allow it to seek it's highest return.
> Hence, the solution to low wages is to stop importing poor foreigners who undercut American wages.
Couple that with the elimination of corporate taxes, and there will be no incentive for offshoring or inverting.
Become the world's biggest tax haven, and incomes will skyrocket.
what happens when you cut taxes to zero and you can’t cut anymore?
wouldn’t the effect be that they would STILL outsource to countries that have effectively zero tax rate AND lower wages?
> The laws of economics cannot be wished away...
laws of which humans have created and are hence entirely under the control of what we want to do with them... economics is not physics, and i would argue a race to the bottom is, in the end, what that type of thinking is unfortunately arguing for.
Lots of jobs can't really be moved offshore. Millions of these jobs are filled by illegal immigrants at illegally low wages. Farm workers. Domestic workers. Child care. Food service. Retail. Drivers. Massive portions of the labor force.
Current pro-illegal implicit policy is a subsidy to capital at the expense of both the illegals and displaced American workers.
that is definitely true, though i would argue ai and robotization will take huge swaths of those industries out of people’s reach in the near future
it is also absolutely true also that pro-illegal immigration only helps the business interests, but my original point was, that just blocking immigration (legal or otherwise) won’t necessarily solve everything because corporations have many options at their disposal
It's only been about a century that we've had an income tax. Prior to that, we funded the federal government on tariffs. It built the nation. People who buy local goods are unaffected. People wealthy enough to insist on exotic foreign things must pay the tariffs and thus fund our government.
thats definitely true as well... it would be interesting to see what the effects of having, say, only tariffs would do the economy and trade.
im not sure you were making this point or not, but in any case, my personal opinion is that without an income tax for at least the super wealthy we would end up with the problems we had at the end of the 18th century: robber barons and mass civil unrest.
i guess the answer to alot of these issues is very nuanced, but yes, i think tariffs are an interesting angle for sure
We got the robber barons because we hadn't learned to break up monopolies and because transportation was poor.
We may be headed back in that direction. We keep adding required functionality to cars, driving up the cost. We keep allowing mergers of phone, oil, and airline companies.
I don't think income tax plays a part. The super wealthy don't pay it. Many of them take a token salary, often just $1. It's control of a key business that matters anyway, not the wealth of an individual. Somebody could live in their open-plan office, sleeping under a desk, and still have a major impact on our lives.
This argument isn't even a little bit consistent with the facts. We don't "import poor foreigners who undercut American wages", we import products produced in countries where labor, along with human life, is valued at vanishingly low prices for abuse by capital.
Evidence is that the vast majority of immigrant labor, both skilled and unskilled, are net positives economically. There is some modest abuse in a couple of highly specialized cases where the very top end of the labor market is probably priced lower than it might be otherwise, but those are not statistically affecting the national economy.
> "Evidence is that the vast majority of immigrant labor, both skilled and unskilled, are net positives economically."
Since this is a forum with a lot of engineers I would expect people to do their research instead of simply making statements.
Exporting labor to cheaper countries (primarily China and Mexico) and importing cheap labor (through both legal and illegal immigration from low-income countries such as Mexico) and STEM imports through H1-B Visa abuses depresses wages for the working class in the former situation and among highly skilled professionals in the later.
There is a term for this: global labor arbitrage
Of course, there is a number of working class jobs replaced by automation, but in spite of automation, global labor arbitrage still exists as an independent phenomena to depress wages.
In 2001 China joined the World Trade Org (WTO) but "did not play by the rules." with the result that many Americans in working class jobs lost those jobs or ended up receiving depressed wage rates.
NAFTA has been an issue with Mexico.
The H1-B Visa abuse has been substantial with a number of organizations importing H1-B Visa labor to replace Americans (e.g. Disney, Southern CA Edison, UC San Francisco,...).
Trump has been working to stop illegal immigration as well as stemming H1-B Visa abuse. A result is that there are "labor shortages" resulting in a rising wage rate.
Another major factor impacting wage growth has been the increasing costs of healthcare which is generally paid for by employers. Higher benefits costs result in lower wages.
BTW, there are some companies that complain that they can't find workers but generally that is because 1) they are not offering market level wages and 2) they are not located in a place where people want to live.
Generally, these firms, if they are willing to locate where people want to live and if they offer market wages, they will be able to find employees.
Well both statements are true. It's just that a lot of foreign workers start from a much smaller base and therefore are happy with wages that are unsustainable for natives.
>Trump has been working to stop illegal immigration as well as stemming H1-B Visa abuse. A result is that there are "labor shortages" resulting in a rising wage rate.
Sorry, but what evidence do you have that anything Trump has done has produced this result? Or even that this is the result of stemming immigration and not, say, steadily increasing demand in the economy?
In regards to the illegal immigration, other than the small bump due to people fleeing violence associated with Honduras, illegal immigration has been at a multi-decade low. Trump talks about it a lot, but this was already a substantially smaller contributor to labor markets when he came into office.
Meanwhile, the unemployment rate has been dropping quite steadily over the past decade - it didn't adjust dramatically as a result of some Trump-related policy. This is entirely the result of the end of the Great Recession, which kicked up unemployment by a huge percentage around the world. It's now basically recovered to its pre-recession levels. A decade of GDP growth is also bringing aggregate demand where it used to be.
These systemic factors seem much more likely to me to be responsible for this tight labor market than any kind of fiddling with immigration policy, whose effects would take years to feel if they could even produce this kind of change.
> "but what evidence do you have that anything Trump has done..."
Naturally, difficult to demonstrate causality and certainly some of the tightening of labor comes from economic growth, but Trump has been careful to do away with H1-B Visa abuse, looking into having firms offer salaries above US rates.
Trump is also increasing enforcement of raiding firms for illegal alien employment.
Trump is getting rid of the H4 Visa program which Obama invented instead of passing it through Congress which helped spouses of H1-B workers to take jobs intended for Americans or others who have a legal right to work here. I think that number alone is 100,000.
Trump has reestablished a program that helps employers to check if workers are using fraudulent or stolen SSNs that Obama had stopped. Obama stopped the program apparently so to make it easier for firms to hire illegal aliens.
> "illegal immigration has been at a multi-decade low."
I'm not certain that that is true, I've been reading that the border is being rushed (in NYTimes). But you're discussing the are of illegal immigrants coming into the country and not discussing the very large number of illegal immigrants already living here.
By enforcing laws that keep illegal aliens from working here, Trump is helping to tighten the labor market leading to increased wages for the working class.
In 1970 there was about 5% of the US population that were immigrants and that number has progressively grown to 14%. Had the immigration rate remained stable at the 1970 levels there undoubtedly would be far higher wages for the working class.
I'm not against immigrants, but against illegal aliens. Probably restoring immigration to 1970 levels or a bit higher would restore some stability in long-term working class employment and wages.
As for unemployment rates, these rates are notoriously underreporting and don't report certain categories and geographical locations which are suffering from unemployment and underemployment.
For example, GM is laying off 14,000 workers. Will they quickly be able to find jobs with comparable compensation? That would be an interesting study and I'm guessing the answer is no.
"We don't "import poor foreigners who undercut American wages", we import products produced in countries where labor, along with human life, is valued at vanishingly low prices for abuse by capital."
> Evidence is that the vast majority of immigrant labor, both skilled and unskilled, are net positives economically.
This is somewhat sleight of hand. The way the economic gain works is that by paying workers less the company can lower prices (which increases volume) at the same or greater profit margin per unit. That's an economic gain, but the gain accrues to the customers and the business while the loss accrues to the employees who either get paid less or lose their jobs. They're different people.
Moreover, even if it's net positive as measured in dollars, who gets the dollars matters rather a lot. If you turn $100 into $125 but the result is that the entire $125 goes to corporations and billionaires when the original $100 had been going to workers, that's not very helpful.
So much vague hand-waving here but one thing in particular strikes me as especially ridiculous: I don't know why you think corporations have to buy their labor in the same country(ies) where they keep their money. They'll buy it wherever it's cheapest to do so.
Are you suggesting that we close the borders to corporate capital and imports and exports, as well as immigrants? I think that ship has probably sailed, and as much as I dislike certain aspects of globalism I don't think sticking our heads in the sand is a sustainable path forward.
You haven't addressed any of these tricky second-order questions, and even through a lens of basic economics (not to mention history) what you're saying is vague and problematic. There's nothing "clear" about it, at all.
You are correct. You will notice that my comment was only meant to address "one thing in particular" about what he wrote, and I referred to the rest as "vague hand-waving". The issue you bring up fell into the latter category.
In 2018 immigrants made up about 17% of the labor force in America. These jobs are primarily the sort of thing you mention: services, agriculture, lower-end industrial and manufacturing. These jobs occupy the low end of the earnings spectrum. If there are no more immigrants then they will be filled by Americans or not at all.
So, say we close the borders. Eventually everyone doing these jobs is an American, i.e. born here. Maybe they are making a little bit more than the immigrants who held these jobs before, because there is a new constraint on the labor supply. In an instantaneous view, some of these jobs will disappear because they no longer make economic sense with the increased cost of labor.
So what have we changed? These people will not be big earners. In today's America they would not "prosper". Overall wages do not "skyrocket". We have moved the needle, sure—we've made a real change. Realistically, what second-order effects can we expect to see?
This is not an easy question. The "lesson" is not "clear". GGP, whatever fragments of truth may appear in his comment, is full of shit, and pointing that out is why I posted.
“Stop importing foreign workers.. ... cut taxes... close borders.... prosperity will result... “
- so how about importing goods from china or other countries ? Will you recommend stopping imports ? Practically everything is made in china.. almost all manufacturing jobs have moved to china or asian countries.. i hardly see anything made in USA in target or walmart or any store in any malls..
- cut taxes. Is a strong dollar a curse for unskilled/low skilled workers .. Because.. you have every company getting stuff made in china.. and you propose cutting taxes .. why would any CEO make stuff in USA when it is ridiculously cheap to make in china ? would you recommend dollar to go down ?
Your statements dont consider any of these factors... if politicians dont get back manufacturing jobs or stop importing cheap products there will be no real solution to unemployment or wage increases..
There is little or no evidence to support the statement that immigrants lower the wages for "those who need it most" in any way significantly - most research suggests immigration has a zero or very small negative effect on host employment and income with some papers even suggesting a very small positive effect.
This is because immigrants also create demand - for housing, food/consumables, transport, services, entertainment/leisure, etc. This demand raises prices in those areas. Immigrants are also more likely to be "complementary" - e.g. agricultural laborers or software engineers, for that matter, are more likely to migrate to somewhere where there are too few workers of their type available.
Most of the wealthiest countries sustain high immigration. If immigration impoverished the lower paid of the host countries, then this effect should be observable but it isn't. For example, Switzerland has over 3 times the US rate of immigration yet has one of the highest bottom quintile incomes in world.
I think the argument is right, but the evidence you cite isn't very supportive.
> Most of the wealthiest countries sustain high immigration ... Switzerland has over 3 times the US rate of immigration yet has one of the highest bottom quintile incomes in world.
Obviously economic migrants aren't going to migrate somewhere with no opportunities. It is hypothetically possible that low-skilled they choose the country to migrate to by picking the one with the highest bottom quintile income (some proxy of, given they wouldn't actually review the stats). If the host country has immigration limits the economic state of the hosting country would change slowly so the migration wouldn't immediately normalise the host countries economy with the rest of the world.
Basically, we'd expect to see that statistic even if migrants did lower the income of their quintile. They don't, but the evidence of that is a separate thing.
>Wage trends over the past half-century suggest that a 10 percent increase in the number of workers with a particular set of skills probably lowers the wage of that group by at least 3 percent. Even after the economy has fully adjusted, those skill groups that received the most immigrants will still offer lower pay relative to those that received fewer immigrants.
>Immigration redistributes wealth from those who compete with immigrants to those who use immigrants—from the employee to the employer. And the additional profits are so large that the economic pie accruing to all natives actually grows... But behind that calculation is a much larger shift from one group of Americans to another: The total wealth redistribution from the native losers to the native winners is enormous, roughly a half-trillion dollars a year. Immigrants, too, gain substantially; their total earnings far exceed what their income would have been had they not migrated.
Switzerland is not a member of the EU and is free to be very strict on education and skill requirements for its immigrants. Many US conservatives that lean libertarian are very much for increasing and streamlining legal immigration, as long as laws are enforced, immigrants are prioritized by merit rather than lottery or privilege of geographic proximity, and the welfare state is trimmed (one of the reasons why government agencies limit immigration more than a hundred years ago is due to budgetary resource projections).
Japan, South Korea, and China are among the wealthiest countries, and have very low immigration.
The US context is also exacerbated by the fact that locals cannot legally compete with illegal aliens working sub-minimum wages. In those towns wages for legal workers stagnate at the minimum wage floor due to downward pressure, and job listings are more of a custom than an honest opportunity.
This is not correct. Switzerland is no more free to restrict European immigration than any member of the the EU (or Norway for that matter) as they have signed up to EU freedom of movement 10 or 15 years ago. There is no "prioritization by merit".
I'm countering the general claim of the parent, that simple economics means that immigration impoverishes the host country's lower earners, so data-points like Japan does not validate such a general claim. I provide Switzerland as an counter-example: extremely high "unfiltered" immigration and a high earning lower quintile. There are others which cannot be explained Singapore, Australia, etc.
Consider a thought experiment: if each individual state of the US introduced restrictions on migration from other US states, would that improve or disimprove the income of the lowest quintile of US workers? I don't believe that it's an "economic principle" that such restrictions would increase the income for the lowest earners.
It's more complicated than that. When I moved there in the mid part of the first decade I needed a work permit despite coming from an EU member state. Then there has been a period of "unlimited immigration" from the EU but due to language issues and because it came about much later than other countries, most poor immigrants did not go to Switzerland but rather to the UK. British towns routinely have Polish shops on their high streets but I've never seen anything like that anywhere in Switzerland, it's simply not comparable. Differences in the welfare system and how aggressively jobs are required to move (which is technically possible under EU rules although most member states don't seem to enforce it) also cause this trend. Most "poor" immigrants to Switzerland are either from the Balkans and brought in under asylum during the Balkan conflicts, or German!
And recently a local worker preference law has been established, and the population voted to end freedom of movement with the EU. Like always with the EU, the people won the vote but lost the power, and so immigration rules weren't actually implemented. But it's still different to the experiences of other European states.
It's not really more complicated; it is strictly incorrect to claim that Switzerland has the power to restrict and filter immigrants which is what I was responding to.
Of course, it hasn't always been that way. Strictly speaking full EU freedom of movement has been in place since 2002 but like everything in Switzerland, it can take years for federal decisions to be reflected in local law.
I disagree strongly with your characterization of Swiss immigrants as being richer than those of the UK. The UK may have more (proportionally speaking) Poles, but Switzerland has a larger number of Kosovars, Serbs and other ex-Yugoslavia people who are even poorer. It also has a huge "poor" Portuguese immigrant population - mucher bigger per-capita than the Poles in the UK. On a per-capital basis, Switzerland has 3 times as many foreign-born than the UK. Both countries attract both highly paid immigrants and bottom quartile workers in large amounts.
The 2014 referendum has been already been translated into law and NO FILTERING has been introduced for EU citizens - it just means companies have to advertise the job to existing Swiss residents. Nothing substantial has changed.
The barriers to physically get in may not be high, but Switzerland is very strict on those who try to stay. Switzerland recently rejected the citizenship applications of girls who refused to swim in a communal pool with the opposite sex, and suspended the citizenship application of a family whose boys refused to shake a female teacher's hand. Migrants wearing pajamas around town and refusing to greet neighbors had their otherwise satisfactory applications rejected and were quickly deported.
> To receive Swiss citizenship, it’s not enough to show long-term residency, fluency in one of the country’s three official languages and knowledge of its history and geography. Applicant must also show they are integrated with Swiss society and their local community.
Even if not a citizen, after only 5 years of living in Switzerland, you can hold a C-permit (which is like a green card), which means you have all rights of a Swiss with the only exception that you can't vote.
This is some classic conservative dogma, here. Of course, though much of it has been demonstrated to be wrong for at least 40 years, people continue to repeat it.
For the most current example, we can look at the recent tax cuts, which lowered corporate taxes significantly. We heard no end of promises of reinvestment in the US, higher wages, etc. We got stock buybacks instead. No need to believe all the left economists like Krugman that said this would happen - the ratings agencies predicted it as well [1]. Skyrocketing incomes indeed - for the owner class.
You advise closing the borders, which not only goes against American principles, but would reduce business creation -
> “Immigrants are about twice as likely as natives to start new businesses,” says Arnobio Morelix, an analyst at the Kauffman Foundation, which promotes entrepreneurship. [2]
> 216 companies on the Fortune 500 were founded by immigrants or their children [3]
Frankly, I would expect that one of America's continuing strengths is that the people willing to make the journey here are driven folk, willing to travel hundreds or thousands of miles to start a new life in an unfamiliar place, even if they have to work endlessly when they get here.
And truly, I am confused why zeroing corporate taxes would reduce offshoring. If I can pay someone in a different country 1/10 of what I need to pay here to make my goods, corporate tax rates have no impact that I can see on this calculation, and the offshoring would be done regardless.
Is there a reason we need to reduce social spending? Or reduce taxes, as was demonstrated to have little effect in 2001, and 2009 [4], and 2017 [1]? Perhaps if you clarified what you meant by handouts, we could get to some kind of useful discussion - but then it seems frequent that "handouts" is used for a catch-all with no real meaning, and when it comes to nuts-and-bolts changes to government spending, people that advocate for reductions never seem to actually pull it off - I think we can look at Paul Ryan as the most recent example (tax cuts now, we'll figure out spending cuts later, or maybe never).
"If the question is when markets will recover, a first-pass answer is never."
When someone cannot get even the most basic things right (Economy will inevitably collapse after Trump's election), why should their opinion matter on anything remotely complex?
Yeah, wow, holy shit. "Stop taxing corporations and wages will skyrocket!"
We all know what corporations do when they get huge tax breaks. They buy back their own stock. Great. Also, if corporations didn't want to be taxed on profit, they would just pay that money to their workers already because they already aren't taxed on expenses.
Any time people say things about HN, it's good to ask whether the same would be true of any sufficiently large group of humans in general. HN consists of millions of people; of course we're going to get all kinds of ideas here, good, bad, nuts, whatever. Making that into a generalization about "this forum" adds no information.
This turned out to be quite an angry post, so a quick preface: All of this is a knee-jerk response to a single sentence in your post. So, you know, please take with a grain of salt, not personally, etc..
I have to admit, it's a little bit depressing to see someone just use a straight-out lump of labor argument against immigration.
I can deal with people who believe immigrants tend to be criminal and who are concerned for their family's safety - they're wrong, but they're afraid, and fear's got a way of overriding statistical reason. I can deal with people who believe immigrants will bring poor institutions from their countries of origin - I think their evidence is weak, but I realize there's a lot at stake in keeping the global North rich and well-run, so I can see at least some reason for caution. I can even deal with the racists by letting my eyes glaze over for a while. People who think that brain drain hurts the country of origin too much... believe in a greater amount of responsibility that individuals have for their nations of birth than I do, but okay, at least they're coming from what they believe is a position of compassion. And so forth - I can sympathize with, understand, or at least ignore most arguments against more open immigration, even if I disagree with them.
But just "stop importing poor foreigners who undercut American wages"? What do you think makes your work valuable in the first place? I mean, I assume that like with most people in a modern economy, very little of what you consume comes from what you yourself produced. Your work is valuable because other people have demand for its results, and will exchange some of their own surplus for it. The more surplus there is to go around, the more there is for you to get. You might have to specialize more to compete in a bigger market, but you're surely capable of it. Even the poor generally are. If nothing else, in case of immigration to the USA, the natives tend to have the distinct advantage of being literate and generally conversable in English.
So please at least have the rational selfishness to ask for more surplus! Yes, the one guy who moves in to your tiny geographic area and works in the minuscule sliver of what you produce in the economy will make your life more complicated, because now you'll have to compete with them. But for that guy, there'll be thousands of others whose greater productivity you will now get to enjoy. Maybe if you were the Immigration Czar, you could be very selfish and decide that that person doesn't get to move in but everyone else does. But if you want to make a policy that lets all selfish people benefit, then you have to let everyone face more competition and get more surplus.
To in fact not undercut my own point: I'm not claiming that that's the whole story. You might believe that maybe there will in fact be less surplus overall in the long run if you open up immigration, or you might believe that the fruits of greater productivity will go to people who don't deserve them. Again, those are concerns that I can in fact see reason in. Not that many people actually believe that they live in a world where the only difference between labor in a rich country and labor in a poor country is that the former are more productive because of where they live. In more advanced territory, I might even have to deploy moral arguments, like how unconscionable it is to not let people - individuals of just as much moral worth and agency as you or I, or indeed us behind the veil of ignorance - work in your country because they were born on the wrong side of a border. But I won't do it for lump-of-labor. It doesn't show enough understanding of economics to be worth a moral argument.
Is there any value to citing wages as opposed to real wages? It even says "Not adjusted for inflation" in the chart showing the increase in average hourly earnings.
Real wages have increased +1.5% March 2018 - March 2019, which the article would do well to point out. Citing that growth has topped 3% for nine months is almost in some ways misleading if it turns out that growth doesn't confer a similar increase in purchasing power.
The BLS tracks real wages which is where I got my 1.5% figure. To further put things in perspective, from March 2018 through March 2019 average paychecks increased by about $30 a week. At the same time, real average weekly earnings only increased by about $5.
I don't get why they would avoid (edit: less so "avoid" more like "miss/omit") this subject completely.
Yeah, the chart is pretty strange. It is the yearly increase rate for wages not adjusted for inflation. Even if this is somehow a reasonable proxy for increases in real median wages, it seems unnecessary given that you could just have a chart of real median wages instead.
I suspect a factor is that actual changes in income have been quite small and it's nicer to have an image that shows something dramatic instead of the marginal blip that we've actually seen.
Possibly. But "inflation" is a slippery concept. It is often published as a single number but it is not. Prices do not rise in the same way for all people. Relative costs and prices across the things money is used for. A poor family is buying different things from a middle class one.
Nominal wages matter a lot. And these days prices are not moving much and it is recognised that it is very important that they go up, a lot, for those at the bottom.
Nominal wages are almost completely irrelevant, that is why real wages exist as a concept.
Inflation is slippery but arguing that nominal wages matter is pushing it too far. The official inflation rate is a polite fabrication in the sense that strictly speaking there aren't a lot of people who experience the official inflation rate in a year. But it is measuring an all too real effect that needs to be factored in to everything to have a serious debate about what is happening in the real world. I'm not even sure how to rebut the idea because I don't know any arguments in favour of using nominal wages over real that aren't straw man arguments.
> And these days prices are not moving much and it is recognised that it is very important that they go up, a lot, for those at the bottom.
I'm not totally sure I'm reading this right, but I assume you mean nominal prices for people who are poor. If so, this is a horrible idea. Nobody but nobody should want to raise the real or even nominal cost of living for poor people. It is obviously a brutal thing to do, and as a social group they don't command enough money to get a worthwhile effect from squeezing them.
> But it is measuring an all too real effect that needs to be factored in to everything to have a serious debate about what is happening in the real world.
Well, sort of. The major thing this doesn't apply to is borrowed money. If both prices and wages increased by 10% then adjusting for inflation you would say there has been no gain, but tell that to the person with a mortgage or student loans who is now paying back the same nominal principal amount while earning more nominal dollars.
Correct, if the interest rate is fixed. Otherwise the same market forces captured by the inflation rate is also pressuring the interest rate paid on loans.
Put simply, if tomorrow’s money is worth less than today’s money, interest rates must increase correspondingly.
That's assuming interest rates are set by the market rather than the Fed. In the latter case it's often the opposite which is true -- the Fed sets a low interest rate which in principle causes inflation and wage growth as people borrow money and spend it.
Moreover, the bank doesn't care that much that you're paying back the loan in less valuable money because they never actually had the money they loaned you to begin with. Having money in a bank account is you loaning the bank money, taking out a loan is the bank loaning you money, so as long as the money they loaned you is still in somebody's bank account they just cancel out. It's the person holding the cash in their account, not the bank, who is eating the currency devaluation.
Counter well sort of (and I'm going to be very US-centric here because they lead the show) - Fed interest rates have been following a pretty visible downtrend for the last 40 years [0]. M2 growth looks quite predictable [1] and the amount of all this that seeps down to consumers seems quite consistent [2].
After 40 years, it seems likely that the lenders have identified all this and are accounting for what is happening in their lending policies. The borrowers would enjoy the feeling of the loan lightening, but their loans would have had a little heaviness built in already in anticipation of rates being lowered.
Looking at [0], I'd lend on the assumption that rates are heading back to 0 in the next 5 years, even though interest rates have been ticking up for years. I'm sure the banks have a more sophisticated model, but the trend is a bit too obvious now.
Nominal wages matter a lot. And these days prices are not moving much and it is recognised that it is very important that they go up, a lot, for those at the bottom.
This is a contradictory argument. Real wages are the standard. If prices aren't changing much, then nominal wages are close to real wages and so they can't matter a lot as separate factor. The way nominal wages could matter is just if they are distinction from real wages and are able to give a (false) psychological feeling of wealth (things that go under the "wealth effect").
Standard for what? What are real wages? There is no "real wage" that can be compared across sectors very meaningfully.
What really matters is access to the resources needed to live a fulfilled and healthy life. "Real wages" as measured by discounting nominal wages with a number called "inflation" is a indication of that access. It is imperfect because the measure of inflation is far from perfect. Duh!
Social policy matters much more. Does society care about housing, education, health care, nutrition...? In many places accommodation cost inflation has wiped out many families. Proper housing policy would knock that on the head but in anglophone countries (and now it seems in West Germany too) it has been abandoned. But this study is not about that.
Back to the point: Incomes matter. Wages are one indication of income. Purchasing power matters. Real wages are a indication of that. But a lot else matters. And studying nominal wages on their own is not a pointless task. Nominal wages can be compared across all sectors that use the same currency. Inflation, as a single number, can not. So looking at the changes in prices people face would be interesting too. But that is not what this study is about.
probably because the article is written from the perspective of labour/macro- economics rather than welfare economics.
It's true it touches on where the wage gains are going (although to me that looked rather inconclusive frankly), but I think it's primarily concerned with notions of wage stickiness in labour markets, not measures of productivity or real-wage gains or welfare.
And to be fair, if the US is anything like here, official bodies have been having trouble modeling/predicting nominal wage growth and inflation over recent history.
Do you know of any resources that lay out how the post inflation numbers compare when you take into account years where wage growth was less than inflation? For example, how do wages after this growth compare to the 70s and 80s?
> "Perhaps the job market wasn’t as good as the unemployment rate made it look."
so basically, the politically expedient version of unemployment, u3, doesn't have explanatory power in the economy. instead we should use u6, which includes the underemployed and the discouraged [0].
so the slack of the un-/under- employed has now been eaten up and competition in the labor force is driving up prices.
Unfortunately, all the self-proclaimed fact checkers spent the last presidential election campaign bravely defending democracy by insisting that U3 was the one true measure of unemployment and that anyone who didn't believe what it said was a filthy liar.
Perhaps there's a magic number which is the unemployment rate in a healthy economy[0], and when you get close to that magic number then competition has a much greater effect. If you think the magic number is very small, say 2%, then the choice between U1, U3, and U6 obviously affects whether you've hit it or not.
If there is such a number (which there almost certainly is; literal 0 unemployment strikes me as very unhealthy), then you obviously need to specify which version of unemployment you are stating it against. As long as they continue to move in lock-step, they are effectivly measuring the same thing.
Whaddaya know, a businessman who ran hundreds of companies over the course of his 50-year business career knows how to do business.
It's as if Trump is not a total dummy CNN wants to portray him as, and he's instead a pretty decent executive who knows what to do and who to hire (and fire) to make things run better, economy-wise, and stimulate competition for the lower end of the labor market. Wait until he also starts a crackdown on employers who offer jobs (illegally) to illegal migrants. That $15 minimum wage will become irrelevant overnight as employers will be fighting to get Americans and legal immigrants to do the jobs. Then there's also substantial growth (highest in the last 30 years) in well-paying manufacturing jobs and employment among minorities.
But that goes against the narrative, so I'm sure this will be downvoted into oblivion. Unsurprisingly, there's no mention of Trump in the article at all. :-)
I'd like to see where that 70% of job growth being from California comes from. Not that I'm trying to be argumentative, but seems to be wildly unlikely.
The top "growth" in terms of average number of employed increase doesn't seem to back that up:
Wages are rising, unemployment is low, the stock market is near an all-time high.
It's probably smart to consider the broad economic landscape and make appropriate moves in the personal finance arena. In a while we'll probably consider these to be very good times, economically. (But they won't last forever.)
Why is the focus always on "closing the border" or other actions taken on the immigrants themselves and not on cracking down - hard - on the companies that illegally employee and abuse them?
Trying to stop or even slow down immigration without addressing the incentives that drive them to leave home and come to the US seems like a doomed and inefficient game of whack a mole...
Politically expediency. Neither the democrats nor the republicans want to go after the elites. So naturally they take turns attacking illegal immigrants. But it's all lipservice. Neither the republicans nor democrats want to stop illegal immigration. They want to use it to get votes.
Stopping immigration isn't an inefficient game of whack a mole. It's been done before through american history. And it's been done in most countries around the world. If the political and business elites wanted to end illegal immigration today, we'd end it easily. It's really not difficult to stop illegal immigration if we wanted to.
>It appears as if that is exactly what is happening. In recent months, more than 70 percent of people getting jobs had not been counted as unemployed the previous month. That is well above historical levels, and a sign that the strong labor market is drawing people off the sidelines.
Interesting. If you run the numbers you will basically see that if someone isn't counted as looking for jobs and then gets a job they barely shift the unemployment figures at all compared to someone who declares himself as unemployed but is counted as looking for jobs.
The idealized scenario with a 10% unemployment rate and 100 workers would look like this.
90/100
-> 1 worker who "seeks job" gets a job
-> 91/100
-> unemployment down to 9% (-1% change)
But reality looks closer to this.
90/100
-> 1 worker who "stopped looking for jobs" gets a job
-> 91/101
-> unemployment down to 9.9% (-0.1% change)
In other words you have to be insane to base any political decisions on this number.
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[ 2.6 ms ] story [ 168 ms ] thread"Blue states" saw a much bigger bump
Additionally, it’s easy to increase the average by eliminating people on the lower end.
If a min wage increase results in a 50% loss of jobs in that range, it’s still an average wage increase for the workers that survived. There’s just a higher unemployed pool that isn’t counted in the average.
Personally, I eat out a lot less due to the menu price increases attributable to the min wage increases.
https://foodinstitute.com/blog/nyc-restaurants-feel-the-sque...
No job loss, right?
That is a huge "if". Is there anywhere that actually happened?
https://www.researchgate.net/publication/266495645_Effects_o...
So if productivity rapidly rises over some period of time, it makes sense to increase minimum wage if you want some of that to go to labour. The idea being demand won't drop that much.
We do know that productivity has been rising quite a bit recently, but real wages are stagnant. This may mean that more of the surplus is going to capital. Given all that, minimum wage increases will probably not lead to diminished demand overall (it's possible some industries don't have the capacity) unless they eat up more than the surplus.
Hence, the solution to low wages is to stop importing poor foreigners who undercut American wages. Couple that with the elimination of corporate taxes, and there will be no incentive for offshoring or inverting. Become the world's biggest tax haven, and incomes will skyrocket.
The laws of economics cannot be wished away, and the lesson is clear: cut taxes, close the borders, and prosperity will result. If we could, now, substantially cut social spending – with all these people working, it should be possible to seriously reduce handouts – then we could afford to cut taxes AND pay for the sort of infrastructure program (exclusively projects of national importance) while reducing the deficit.
The effects of migration and trade are based on a slew of factors, including supply/demand for labour in both the host country and the home country, wages, benefits in both countries, etc... Trade effects depend a lot on tariffs, costs in countries on each side of the trade, and those in turn are largely the effect of supply/demand both for goods and labour in countries on both sides of the trade.
What a gross way to misrepresent that article, the source of that quote, and the established consensus. That quote is not "from Wikipedia" any more than it is from yourself (or from HN for that matter) just because you happened to copy-paste it here. That quote is from one critic whom Wikipedia happens to cite just for the sake of illustrating what counterclaims exist out there.
If you really want to quote Wikipedia, why not quote the couple paragraphs before, which actually address what the consensus is:
Several arguments have been advanced against using comparative advantage as a justification for advocating free trade, and they have gained an audience among economists. [...] However, the overwhelming consensus of the economics profession remains that while these arguments are theoretically valid under certain assumptions, these assumptions do not usually hold and should not be used to guide trade policy. Gregory Mankiw, chairman of the Harvard Economics Department, has said: ″Few propositions command as much consensus among professional economists as that open world trade increases economic growth and raises living standards.″
Now your quote doesn't look so much like an established fact, does it?
The one and only thing I'm saying here is that you need to represent your sources and the sides of an argument honestly.
You forgot to mention that we’ll also need to kill the minimum wage and a slew of laws regarding safe working conditions.
And sanctions, tariffs, penalties, fees, fines, lawsuits, and prison time are major incentives not to move labor out of the country.
Labour supply is the amount of workers willing to work at a given wage. Demand for labour is the amount of workers wanted at a certain wage. If someone's excluded from the market at a certain wage, it means there isn't demand for their labour at that price.
> Labour supply is the amount of workers willing to work at a given wage. Demand for labour is the amount of workers wanted at a certain wage. If someone's excluded from the market at a certain wage, it means there isn't demand for their labour at that price.
If the person is excluded from the market, how does that show lack of demand for their labour at a certain wage? The person isn't even a market participant at that point.
The supply/demand curve here is a bit tricky, becauce, given a minimum wage of $15, the demand for labor at $14.99 is actually less than the demand for labor at $15, because employers are generally not willing to break the law over $0.01/hr
Not sure that's necessary, I'd be for removing ones which have no practical impact on working conditions (i.e. haven't been shown to apply to any situation where non-compliance was at some point common), but labour demand is going up quite a bit even without considerable changes to workplace safety regulations. Some of these regulations could even be argued to increase labour demand (not that that should be a goal of any workplace safety regulation).
What a fantastic argument in which you completely ignore the gargantuan shadow of the US War budget against our social spending programs. Cutting the programs will never come close to the money saved by producing just a few less bombs and aircraft a year.
Ask yourself, if not for market regulation + social programs, what the heck is our government even here for?
If you ask me, it's certainly not to siphon tax money out of the War budget and into politician's pockets at the expense of the general welfare of its people while engaging in a full-on disinformation campaign against them. That's such a Middle Ages approach to running a kingdom.
https://en.wikipedia.org/wiki/Government_spending_in_the_Uni...
In 2018, the "war budget" was 12% of the total. For comparison, education spending was 15%, health care 23%. I don't think the "war budget" piggy bank will go as far as you think it does.
https://www.nationalpriorities.org/budget-basics/federal-bud...
This only compares our actual discretionary budget, aka the money we are able to reappropriate as we see fit, which is not locked into specific channels.
This is the only comparison that makes sense; comparing a ratio of part of our discretionary budget against the entire discretionary+undiscretionary budget is not statistically sound.
And as you see in the chart I provided, in 2015 our military spending was over half of our available budget, compared to less about 1/5th of the budget being spent in total on social programs, which were like, I'm pretty sure, the point of a government.
Sure, the point of a government is also to defend its people from foreign invasion. But you can't justify our War budget that way when you consider how the money is mostly spent offensively, as we engage in countless proxy wars, paramilitary coups, and arms deals with totalitarian nations.
We've been hoodwinked.
There are no "mandatory taxes" or "discretionary taxes".
For 2017 the budgets were:
Social Security was $939 billion.
Medicare was $591 billion.
Medicaid was $353 billion.
The defense budget was $590 billion.
So Medicare, Medicaid, and Social Security together are about 3 times larger than the Defense budget.
https://en.wikipedia.org/wiki/Expenditures_in_the_United_Sta...
https://www.nasi.org/learn/socialsecurity/benefits-compare-e...
Unlike bullets and bombs, which is money burned.
And unlike Medicaid, which is money taken from consumers and spend specially on medical services. Which consumers may or may not need. Hence all the insurance fraud.
The defense budget is about $680 billion. Total government expenditures are 10 times that, over $7 trillion.
The numbers you provide simply aren't comparable because we're dealing with two separate stacks of cash.
Federal “discretionary spending” just means that money is allocated by appropriations bill rather than statutory formula. But the money is totally fungible—Congress can just as easily change the formula as it can change the appropriations bill.
Likewise, it makes no sense to ignore all the state spending. Defense is the job of the federal government, while social services are the job of the states. We spend a trillion dollars on education every year—almost none of that shows up on the federal discretionary budget. Does that mean you can ignore that spending? It comes out of everyone’s pockets and goes to teachers just the same as if it had been allocated by a federal appropriations bill.
There are legitimate arguments for cutting the defense budget. But the purpose of comparing defense costs just to discretionary expenditures is to deceive people about how much could be achieved by cutting the defense budget. If we cut defense expenditures to the NATO target, we would save $200 billion annually. That would fund some programs. But government spends more than $6.5 trillion a year already on non-defense things. Another $200 billion won’t be game changing.
I suspect one reason politicians fixate on the defense budget is that it provides a seemly large pot of money to fund social programs, distancing those proposals from the idea of tax increases. But that only works if you squint and don’t do the math. We would have to spend $1.4 trillion more annually to match Germany’s public spending as a percentage of GDP. And there is no reason to believe we’d be able to implement a European-style welfare state any more efficiently than Germany.
> We would have to spend $1.4 trillion more annually to match Germany’s public spending as a percentage of GDP. And there is no reason to believe we’d be able to implement a European-style welfare state any more efficiently than Germany.
The efficacy of social programs doesn't scale linearly with funding. That's not how you do the math. Each dollar spent has cumulative power. In truth we wouldn't need to come anywhere close to $1.4 trillion to match the impact of Germany's social programs.
That leads to a hot house. Targeting full employment and keeping capital local allows workers to bid up wages, which will create inflation, and investors will go on an "investment strike". It happened in the 70s.
Otoh, Open borders and targeting price stability allows capital to seek it's global return - inflation stays low, but inequality grows.
Pick one.
* explain yourselves, downvoters
Is this phrase suggesting higher wages for workers is bad? Care to spell out your argument in a few more sentences?
what happens when you cut taxes to zero and you can’t cut anymore? wouldn’t the effect be that they would STILL outsource to countries that have effectively zero tax rate AND lower wages?
> The laws of economics cannot be wished away...
laws of which humans have created and are hence entirely under the control of what we want to do with them... economics is not physics, and i would argue a race to the bottom is, in the end, what that type of thinking is unfortunately arguing for.
[edit] formatting, grammar
Current pro-illegal implicit policy is a subsidy to capital at the expense of both the illegals and displaced American workers.
it is also absolutely true also that pro-illegal immigration only helps the business interests, but my original point was, that just blocking immigration (legal or otherwise) won’t necessarily solve everything because corporations have many options at their disposal
It's only been about a century that we've had an income tax. Prior to that, we funded the federal government on tariffs. It built the nation. People who buy local goods are unaffected. People wealthy enough to insist on exotic foreign things must pay the tariffs and thus fund our government.
im not sure you were making this point or not, but in any case, my personal opinion is that without an income tax for at least the super wealthy we would end up with the problems we had at the end of the 18th century: robber barons and mass civil unrest.
i guess the answer to alot of these issues is very nuanced, but yes, i think tariffs are an interesting angle for sure
We may be headed back in that direction. We keep adding required functionality to cars, driving up the cost. We keep allowing mergers of phone, oil, and airline companies.
I don't think income tax plays a part. The super wealthy don't pay it. Many of them take a token salary, often just $1. It's control of a key business that matters anyway, not the wealth of an individual. Somebody could live in their open-plan office, sleeping under a desk, and still have a major impact on our lives.
Evidence is that the vast majority of immigrant labor, both skilled and unskilled, are net positives economically. There is some modest abuse in a couple of highly specialized cases where the very top end of the labor market is probably priced lower than it might be otherwise, but those are not statistically affecting the national economy.
Since this is a forum with a lot of engineers I would expect people to do their research instead of simply making statements.
Exporting labor to cheaper countries (primarily China and Mexico) and importing cheap labor (through both legal and illegal immigration from low-income countries such as Mexico) and STEM imports through H1-B Visa abuses depresses wages for the working class in the former situation and among highly skilled professionals in the later.
There is a term for this: global labor arbitrage
Of course, there is a number of working class jobs replaced by automation, but in spite of automation, global labor arbitrage still exists as an independent phenomena to depress wages.
In 2001 China joined the World Trade Org (WTO) but "did not play by the rules." with the result that many Americans in working class jobs lost those jobs or ended up receiving depressed wage rates.
NAFTA has been an issue with Mexico.
The H1-B Visa abuse has been substantial with a number of organizations importing H1-B Visa labor to replace Americans (e.g. Disney, Southern CA Edison, UC San Francisco,...).
Trump has been working to stop illegal immigration as well as stemming H1-B Visa abuse. A result is that there are "labor shortages" resulting in a rising wage rate.
Another major factor impacting wage growth has been the increasing costs of healthcare which is generally paid for by employers. Higher benefits costs result in lower wages.
BTW, there are some companies that complain that they can't find workers but generally that is because 1) they are not offering market level wages and 2) they are not located in a place where people want to live.
Generally, these firms, if they are willing to locate where people want to live and if they offer market wages, they will be able to find employees.
This is a conjecture you put forward. It is on the same lines of let-them-eat-cake as:
> Generally, these workers, if they are willing to work hard and raise their skills, they will be able to increase their wages.
Sorry, but what evidence do you have that anything Trump has done has produced this result? Or even that this is the result of stemming immigration and not, say, steadily increasing demand in the economy?
In regards to the illegal immigration, other than the small bump due to people fleeing violence associated with Honduras, illegal immigration has been at a multi-decade low. Trump talks about it a lot, but this was already a substantially smaller contributor to labor markets when he came into office.
Meanwhile, the unemployment rate has been dropping quite steadily over the past decade - it didn't adjust dramatically as a result of some Trump-related policy. This is entirely the result of the end of the Great Recession, which kicked up unemployment by a huge percentage around the world. It's now basically recovered to its pre-recession levels. A decade of GDP growth is also bringing aggregate demand where it used to be.
These systemic factors seem much more likely to me to be responsible for this tight labor market than any kind of fiddling with immigration policy, whose effects would take years to feel if they could even produce this kind of change.
Naturally, difficult to demonstrate causality and certainly some of the tightening of labor comes from economic growth, but Trump has been careful to do away with H1-B Visa abuse, looking into having firms offer salaries above US rates.
Trump is also increasing enforcement of raiding firms for illegal alien employment.
Trump is getting rid of the H4 Visa program which Obama invented instead of passing it through Congress which helped spouses of H1-B workers to take jobs intended for Americans or others who have a legal right to work here. I think that number alone is 100,000.
Trump has reestablished a program that helps employers to check if workers are using fraudulent or stolen SSNs that Obama had stopped. Obama stopped the program apparently so to make it easier for firms to hire illegal aliens.
> "illegal immigration has been at a multi-decade low."
I'm not certain that that is true, I've been reading that the border is being rushed (in NYTimes). But you're discussing the are of illegal immigrants coming into the country and not discussing the very large number of illegal immigrants already living here.
By enforcing laws that keep illegal aliens from working here, Trump is helping to tighten the labor market leading to increased wages for the working class.
In 1970 there was about 5% of the US population that were immigrants and that number has progressively grown to 14%. Had the immigration rate remained stable at the 1970 levels there undoubtedly would be far higher wages for the working class.
I'm not against immigrants, but against illegal aliens. Probably restoring immigration to 1970 levels or a bit higher would restore some stability in long-term working class employment and wages.
As for unemployment rates, these rates are notoriously underreporting and don't report certain categories and geographical locations which are suffering from unemployment and underemployment.
For example, GM is laying off 14,000 workers. Will they quickly be able to find jobs with comparable compensation? That would be an interesting study and I'm guessing the answer is no.
We do both. They are not mutually exclusive.
I don’t necessarily disagree, but the way you say it here this is not “evidence,” it’s a conclusion you’ve made without presenting any evidence.
This is somewhat sleight of hand. The way the economic gain works is that by paying workers less the company can lower prices (which increases volume) at the same or greater profit margin per unit. That's an economic gain, but the gain accrues to the customers and the business while the loss accrues to the employees who either get paid less or lose their jobs. They're different people.
Moreover, even if it's net positive as measured in dollars, who gets the dollars matters rather a lot. If you turn $100 into $125 but the result is that the entire $125 goes to corporations and billionaires when the original $100 had been going to workers, that's not very helpful.
Bullshit.
So much vague hand-waving here but one thing in particular strikes me as especially ridiculous: I don't know why you think corporations have to buy their labor in the same country(ies) where they keep their money. They'll buy it wherever it's cheapest to do so.
Are you suggesting that we close the borders to corporate capital and imports and exports, as well as immigrants? I think that ship has probably sailed, and as much as I dislike certain aspects of globalism I don't think sticking our heads in the sand is a sustainable path forward.
You haven't addressed any of these tricky second-order questions, and even through a lens of basic economics (not to mention history) what you're saying is vague and problematic. There's nothing "clear" about it, at all.
These are huge portions of the workforce. Not every job is manufacturing or call centers.
In 2018 immigrants made up about 17% of the labor force in America. These jobs are primarily the sort of thing you mention: services, agriculture, lower-end industrial and manufacturing. These jobs occupy the low end of the earnings spectrum. If there are no more immigrants then they will be filled by Americans or not at all.
So, say we close the borders. Eventually everyone doing these jobs is an American, i.e. born here. Maybe they are making a little bit more than the immigrants who held these jobs before, because there is a new constraint on the labor supply. In an instantaneous view, some of these jobs will disappear because they no longer make economic sense with the increased cost of labor.
So what have we changed? These people will not be big earners. In today's America they would not "prosper". Overall wages do not "skyrocket". We have moved the needle, sure—we've made a real change. Realistically, what second-order effects can we expect to see?
This is not an easy question. The "lesson" is not "clear". GGP, whatever fragments of truth may appear in his comment, is full of shit, and pointing that out is why I posted.
- so how about importing goods from china or other countries ? Will you recommend stopping imports ? Practically everything is made in china.. almost all manufacturing jobs have moved to china or asian countries.. i hardly see anything made in USA in target or walmart or any store in any malls..
- cut taxes. Is a strong dollar a curse for unskilled/low skilled workers .. Because.. you have every company getting stuff made in china.. and you propose cutting taxes .. why would any CEO make stuff in USA when it is ridiculously cheap to make in china ? would you recommend dollar to go down ?
Your statements dont consider any of these factors... if politicians dont get back manufacturing jobs or stop importing cheap products there will be no real solution to unemployment or wage increases..
This is because immigrants also create demand - for housing, food/consumables, transport, services, entertainment/leisure, etc. This demand raises prices in those areas. Immigrants are also more likely to be "complementary" - e.g. agricultural laborers or software engineers, for that matter, are more likely to migrate to somewhere where there are too few workers of their type available.
Most of the wealthiest countries sustain high immigration. If immigration impoverished the lower paid of the host countries, then this effect should be observable but it isn't. For example, Switzerland has over 3 times the US rate of immigration yet has one of the highest bottom quintile incomes in world.
> Most of the wealthiest countries sustain high immigration ... Switzerland has over 3 times the US rate of immigration yet has one of the highest bottom quintile incomes in world.
Obviously economic migrants aren't going to migrate somewhere with no opportunities. It is hypothetically possible that low-skilled they choose the country to migrate to by picking the one with the highest bottom quintile income (some proxy of, given they wouldn't actually review the stats). If the host country has immigration limits the economic state of the hosting country would change slowly so the migration wouldn't immediately normalise the host countries economy with the rest of the world.
Basically, we'd expect to see that statistic even if migrants did lower the income of their quintile. They don't, but the evidence of that is a separate thing.
>Immigration redistributes wealth from those who compete with immigrants to those who use immigrants—from the employee to the employer. And the additional profits are so large that the economic pie accruing to all natives actually grows... But behind that calculation is a much larger shift from one group of Americans to another: The total wealth redistribution from the native losers to the native winners is enormous, roughly a half-trillion dollars a year. Immigrants, too, gain substantially; their total earnings far exceed what their income would have been had they not migrated.
https://www.politico.com/magazine/story/2016/09/trump-clinto...
Japan, South Korea, and China are among the wealthiest countries, and have very low immigration.
The US context is also exacerbated by the fact that locals cannot legally compete with illegal aliens working sub-minimum wages. In those towns wages for legal workers stagnate at the minimum wage floor due to downward pressure, and job listings are more of a custom than an honest opportunity.
I'm countering the general claim of the parent, that simple economics means that immigration impoverishes the host country's lower earners, so data-points like Japan does not validate such a general claim. I provide Switzerland as an counter-example: extremely high "unfiltered" immigration and a high earning lower quintile. There are others which cannot be explained Singapore, Australia, etc.
Consider a thought experiment: if each individual state of the US introduced restrictions on migration from other US states, would that improve or disimprove the income of the lowest quintile of US workers? I don't believe that it's an "economic principle" that such restrictions would increase the income for the lowest earners.
And recently a local worker preference law has been established, and the population voted to end freedom of movement with the EU. Like always with the EU, the people won the vote but lost the power, and so immigration rules weren't actually implemented. But it's still different to the experiences of other European states.
Of course, it hasn't always been that way. Strictly speaking full EU freedom of movement has been in place since 2002 but like everything in Switzerland, it can take years for federal decisions to be reflected in local law.
I disagree strongly with your characterization of Swiss immigrants as being richer than those of the UK. The UK may have more (proportionally speaking) Poles, but Switzerland has a larger number of Kosovars, Serbs and other ex-Yugoslavia people who are even poorer. It also has a huge "poor" Portuguese immigrant population - mucher bigger per-capita than the Poles in the UK. On a per-capital basis, Switzerland has 3 times as many foreign-born than the UK. Both countries attract both highly paid immigrants and bottom quartile workers in large amounts.
The 2014 referendum has been already been translated into law and NO FILTERING has been introduced for EU citizens - it just means companies have to advertise the job to existing Swiss residents. Nothing substantial has changed.
> To receive Swiss citizenship, it’s not enough to show long-term residency, fluency in one of the country’s three official languages and knowledge of its history and geography. Applicant must also show they are integrated with Swiss society and their local community.
https://qz.com/720908/switzerland-denied-citizenship-to-musl...
For the most current example, we can look at the recent tax cuts, which lowered corporate taxes significantly. We heard no end of promises of reinvestment in the US, higher wages, etc. We got stock buybacks instead. No need to believe all the left economists like Krugman that said this would happen - the ratings agencies predicted it as well [1]. Skyrocketing incomes indeed - for the owner class.
You advise closing the borders, which not only goes against American principles, but would reduce business creation -
> “Immigrants are about twice as likely as natives to start new businesses,” says Arnobio Morelix, an analyst at the Kauffman Foundation, which promotes entrepreneurship. [2]
> 216 companies on the Fortune 500 were founded by immigrants or their children [3]
Frankly, I would expect that one of America's continuing strengths is that the people willing to make the journey here are driven folk, willing to travel hundreds or thousands of miles to start a new life in an unfamiliar place, even if they have to work endlessly when they get here.
And truly, I am confused why zeroing corporate taxes would reduce offshoring. If I can pay someone in a different country 1/10 of what I need to pay here to make my goods, corporate tax rates have no impact that I can see on this calculation, and the offshoring would be done regardless.
Is there a reason we need to reduce social spending? Or reduce taxes, as was demonstrated to have little effect in 2001, and 2009 [4], and 2017 [1]? Perhaps if you clarified what you meant by handouts, we could get to some kind of useful discussion - but then it seems frequent that "handouts" is used for a catch-all with no real meaning, and when it comes to nuts-and-bolts changes to government spending, people that advocate for reductions never seem to actually pull it off - I think we can look at Paul Ryan as the most recent example (tax cuts now, we'll figure out spending cuts later, or maybe never).
[1] https://www.axios.com/trump-tax-cuts-companies-stock-buyback...
[2] https://www.apnews.com/ab44ff583d194070a5eae431231c4450
[3] https://qz.com/1151689/216-companies-on-the-fortune-500-were...
[4] https://www.americanprogress.org/issues/economy/reports/2011...
"If the question is when markets will recover, a first-pass answer is never."
When someone cannot get even the most basic things right (Economy will inevitably collapse after Trump's election), why should their opinion matter on anything remotely complex?
We all know what corporations do when they get huge tax breaks. They buy back their own stock. Great. Also, if corporations didn't want to be taxed on profit, they would just pay that money to their workers already because they already aren't taxed on expenses.
I have to admit, it's a little bit depressing to see someone just use a straight-out lump of labor argument against immigration.
I can deal with people who believe immigrants tend to be criminal and who are concerned for their family's safety - they're wrong, but they're afraid, and fear's got a way of overriding statistical reason. I can deal with people who believe immigrants will bring poor institutions from their countries of origin - I think their evidence is weak, but I realize there's a lot at stake in keeping the global North rich and well-run, so I can see at least some reason for caution. I can even deal with the racists by letting my eyes glaze over for a while. People who think that brain drain hurts the country of origin too much... believe in a greater amount of responsibility that individuals have for their nations of birth than I do, but okay, at least they're coming from what they believe is a position of compassion. And so forth - I can sympathize with, understand, or at least ignore most arguments against more open immigration, even if I disagree with them.
But just "stop importing poor foreigners who undercut American wages"? What do you think makes your work valuable in the first place? I mean, I assume that like with most people in a modern economy, very little of what you consume comes from what you yourself produced. Your work is valuable because other people have demand for its results, and will exchange some of their own surplus for it. The more surplus there is to go around, the more there is for you to get. You might have to specialize more to compete in a bigger market, but you're surely capable of it. Even the poor generally are. If nothing else, in case of immigration to the USA, the natives tend to have the distinct advantage of being literate and generally conversable in English.
So please at least have the rational selfishness to ask for more surplus! Yes, the one guy who moves in to your tiny geographic area and works in the minuscule sliver of what you produce in the economy will make your life more complicated, because now you'll have to compete with them. But for that guy, there'll be thousands of others whose greater productivity you will now get to enjoy. Maybe if you were the Immigration Czar, you could be very selfish and decide that that person doesn't get to move in but everyone else does. But if you want to make a policy that lets all selfish people benefit, then you have to let everyone face more competition and get more surplus.
To in fact not undercut my own point: I'm not claiming that that's the whole story. You might believe that maybe there will in fact be less surplus overall in the long run if you open up immigration, or you might believe that the fruits of greater productivity will go to people who don't deserve them. Again, those are concerns that I can in fact see reason in. Not that many people actually believe that they live in a world where the only difference between labor in a rich country and labor in a poor country is that the former are more productive because of where they live. In more advanced territory, I might even have to deploy moral arguments, like how unconscionable it is to not let people - individuals of just as much moral worth and agency as you or I, or indeed us behind the veil of ignorance - work in your country because they were born on the wrong side of a border. But I won't do it for lump-of-labor. It doesn't show enough understanding of economics to be worth a moral argument.
Real wages have increased +1.5% March 2018 - March 2019, which the article would do well to point out. Citing that growth has topped 3% for nine months is almost in some ways misleading if it turns out that growth doesn't confer a similar increase in purchasing power.
The BLS tracks real wages which is where I got my 1.5% figure. To further put things in perspective, from March 2018 through March 2019 average paychecks increased by about $30 a week. At the same time, real average weekly earnings only increased by about $5.
I don't get why they would avoid (edit: less so "avoid" more like "miss/omit") this subject completely.
I suspect a factor is that actual changes in income have been quite small and it's nicer to have an image that shows something dramatic instead of the marginal blip that we've actually seen.
Nominal wages matter a lot. And these days prices are not moving much and it is recognised that it is very important that they go up, a lot, for those at the bottom.
Inflation is slippery but arguing that nominal wages matter is pushing it too far. The official inflation rate is a polite fabrication in the sense that strictly speaking there aren't a lot of people who experience the official inflation rate in a year. But it is measuring an all too real effect that needs to be factored in to everything to have a serious debate about what is happening in the real world. I'm not even sure how to rebut the idea because I don't know any arguments in favour of using nominal wages over real that aren't straw man arguments.
> And these days prices are not moving much and it is recognised that it is very important that they go up, a lot, for those at the bottom.
I'm not totally sure I'm reading this right, but I assume you mean nominal prices for people who are poor. If so, this is a horrible idea. Nobody but nobody should want to raise the real or even nominal cost of living for poor people. It is obviously a brutal thing to do, and as a social group they don't command enough money to get a worthwhile effect from squeezing them.
Oops. I meant nominal wages must go up, and nominal prices are not moving much.
Well, sort of. The major thing this doesn't apply to is borrowed money. If both prices and wages increased by 10% then adjusting for inflation you would say there has been no gain, but tell that to the person with a mortgage or student loans who is now paying back the same nominal principal amount while earning more nominal dollars.
Put simply, if tomorrow’s money is worth less than today’s money, interest rates must increase correspondingly.
Moreover, the bank doesn't care that much that you're paying back the loan in less valuable money because they never actually had the money they loaned you to begin with. Having money in a bank account is you loaning the bank money, taking out a loan is the bank loaning you money, so as long as the money they loaned you is still in somebody's bank account they just cancel out. It's the person holding the cash in their account, not the bank, who is eating the currency devaluation.
After 40 years, it seems likely that the lenders have identified all this and are accounting for what is happening in their lending policies. The borrowers would enjoy the feeling of the loan lightening, but their loans would have had a little heaviness built in already in anticipation of rates being lowered.
Looking at [0], I'd lend on the assumption that rates are heading back to 0 in the next 5 years, even though interest rates have been ticking up for years. I'm sure the banks have a more sophisticated model, but the trend is a bit too obvious now.
[0] https://tradingeconomics.com/united-states/interest-rate [1] https://fred.stlouisfed.org/series/M2 [2] https://tradingeconomics.com/united-states/inflation-cpi
This is a contradictory argument. Real wages are the standard. If prices aren't changing much, then nominal wages are close to real wages and so they can't matter a lot as separate factor. The way nominal wages could matter is just if they are distinction from real wages and are able to give a (false) psychological feeling of wealth (things that go under the "wealth effect").
Standard for what? What are real wages? There is no "real wage" that can be compared across sectors very meaningfully.
What really matters is access to the resources needed to live a fulfilled and healthy life. "Real wages" as measured by discounting nominal wages with a number called "inflation" is a indication of that access. It is imperfect because the measure of inflation is far from perfect. Duh!
Social policy matters much more. Does society care about housing, education, health care, nutrition...? In many places accommodation cost inflation has wiped out many families. Proper housing policy would knock that on the head but in anglophone countries (and now it seems in West Germany too) it has been abandoned. But this study is not about that.
Back to the point: Incomes matter. Wages are one indication of income. Purchasing power matters. Real wages are a indication of that. But a lot else matters. And studying nominal wages on their own is not a pointless task. Nominal wages can be compared across all sectors that use the same currency. Inflation, as a single number, can not. So looking at the changes in prices people face would be interesting too. But that is not what this study is about.
https://en.wikipedia.org/wiki/Purchasing_power_parity
It's true it touches on where the wage gains are going (although to me that looked rather inconclusive frankly), but I think it's primarily concerned with notions of wage stickiness in labour markets, not measures of productivity or real-wage gains or welfare.
And to be fair, if the US is anything like here, official bodies have been having trouble modeling/predicting nominal wage growth and inflation over recent history.
> "Perhaps the job market wasn’t as good as the unemployment rate made it look."
so basically, the politically expedient version of unemployment, u3, doesn't have explanatory power in the economy. instead we should use u6, which includes the underemployed and the discouraged [0].
so the slack of the un-/under- employed has now been eaten up and competition in the labor force is driving up prices.
[0] https://en.wikipedia.org/wiki/Unemployment#cite_ref-47
https://upload.wikimedia.org/wikipedia/commons/thumb/9/9b/US...
[0] perhaps mean_time_to_find_job / (mean_time_to_find_job + mean_job_duration + mean_time_not_working), or something
https://en.wikipedia.org/wiki/Full_employment
I.e. Supply & Demand
(It's the law!)
It's as if Trump is not a total dummy CNN wants to portray him as, and he's instead a pretty decent executive who knows what to do and who to hire (and fire) to make things run better, economy-wise, and stimulate competition for the lower end of the labor market. Wait until he also starts a crackdown on employers who offer jobs (illegally) to illegal migrants. That $15 minimum wage will become irrelevant overnight as employers will be fighting to get Americans and legal immigrants to do the jobs. Then there's also substantial growth (highest in the last 30 years) in well-paying manufacturing jobs and employment among minorities.
But that goes against the narrative, so I'm sure this will be downvoted into oblivion. Unsurprisingly, there's no mention of Trump in the article at all. :-)
I read something recently like 70% of all jobs added were in California. And the vast majority of the rest was all in solid blue territory.
The real question is where is Texas on this? It's pretty much the only "red" state that ever posts job growth.
The top "growth" in terms of average number of employed increase doesn't seem to back that up:
https://www.governing.com/topics/mgmt/gov-states-strongest-j...
In terms of raw job additions it looks like it goes: Washington, California, Texas with all similar raw numbers.
https://www.deptofnumbers.com/employment/states/
It's probably smart to consider the broad economic landscape and make appropriate moves in the personal finance arena. In a while we'll probably consider these to be very good times, economically. (But they won't last forever.)
Trying to stop or even slow down immigration without addressing the incentives that drive them to leave home and come to the US seems like a doomed and inefficient game of whack a mole...
Stopping immigration isn't an inefficient game of whack a mole. It's been done before through american history. And it's been done in most countries around the world. If the political and business elites wanted to end illegal immigration today, we'd end it easily. It's really not difficult to stop illegal immigration if we wanted to.
Interesting. If you run the numbers you will basically see that if someone isn't counted as looking for jobs and then gets a job they barely shift the unemployment figures at all compared to someone who declares himself as unemployed but is counted as looking for jobs.
The idealized scenario with a 10% unemployment rate and 100 workers would look like this. 90/100 -> 1 worker who "seeks job" gets a job -> 91/100 -> unemployment down to 9% (-1% change)
But reality looks closer to this. 90/100 -> 1 worker who "stopped looking for jobs" gets a job -> 91/101 -> unemployment down to 9.9% (-0.1% change)
In other words you have to be insane to base any political decisions on this number.