UK immigration minister criticises pizza boss

Regular readers will know that I'm not a great admirer of the UK Conservative Party. Nonetheless, today I have something positive to say about one leading member of that party, the Immigration Minister Mark Harper.

It was reported yesterday that the boss of the Domino's pizza chain in the UK, Lance Batchelor, wants another mass influx of overseas workers into the UK. He claimed that he couldn't find enough staff for his pizza shops from within the UK (and the EU).

He was supported by Sir Stuart Rose, the former boss of a supermarket chain. According to him, it is right that companies offer low pay as long as there is someone round the world willing to accept the work:

the former boss of Marks & Spencer, Sir Stuart Rose, also attacked the work ethic of many Britons and said it was wrong to criticise immigrants prepared to work for lower salaries.

Sir Stuart added: "It is up to people to decide whether they want to do the work for the pay that is being offered. If they don’t, somebody else is there to do it. What’s wrong with that?...I’m a free market economist – we operate in a free market. If these people want to come here, and work the hours they are prepared to work for the wages they are prepared to work for, then so be it."

I'm afraid that Sir Stuart Rose's comments are a good example of why I am not an absolute supporter of free market economics (though I am generally sympathetic to a market economy). If Sir Stuart had his way, the wages of British workers would fall to the lowest level that any migrant from around the world would be willing to work at.

It shows a gross lack of the virtue of fidelity: he is not standing in a faithful relationship with his own countrymen and willing what is good for them.

The good news is that Mark Harper, the Immigration Minister, was having none of it and rebuked the two men:

Businesses complaining about a lack of British applicants to fill job vacancies should pay higher wages, the immigration minister declared last night.

Mark Harper said that, if firms were unable to find willing workers, they were not paying the market rate and should ‘reflect’ on the salary package they are offering.

Mr Harper said there was no question of the government relaxing immigration rules so Domino’s could ‘keep wages low’.

He pointed out that Domino’s can recruit staff from within the entire EU without restrictions – an area that covers 500million people.

Mr Harper told a committee of MPs: ‘If out of a market of hundreds of millions of people you cannot find enough people to work in your restaurant, you should look at how much you are paying.

‘Dominos should pay what the market demands to fill their roles’

There is something else that Sir Stuart Rose and Lance Batchelor should consider. It is not always laziness that leads a local worker to reject a job that an immigrant worker is willing to take. It is often the case that local workers can't afford to do so.

For instance, if you're a male British worker and are offered a job on minimal pay you are likely to harm your position when it comes to attracting a possible future wife. But for a male immigrant that wage might look good to a woman from his home country.

Similarly, a male British worker has to look for accommodation standards that the women of his own community would accept, something that transient migrant workers might not have to worry about.

It's the case too in the US that undocumented migrant workers don't have to pay tax on their earnings and can therefore live on a lower wage than a local.

I can understand a local worker looking at a substandard pay offer and wondering why it would be worth accepting if it didn't provide him with an opportunity to establish a family of his own.

Falling wages in the US

I reported earlier this month on new data showing that the median wage for men in the US has fallen since 1973.

Laura Wood has a story which helps to explain why. General Motors has decided to reopen a factory in Tennessee, instead of shifting the plant to Mexico. That's good news but it has come at a cost. Many of the workers at the factory will be re-employed on a new contract. They will be on a second-tier pay scale of only $15.00 per hour.

That is unlikely to be a living wage for a male employee. The wage would have to be supplemented by the wife also doing paid work.

I can't say I'm enthused by the idea that workers in the US have to have their wages pushed down to compete with wage levels in Mexico. It's especially problematic if the resulting wages mean that a man isn't able to support a family.

Around the time that Australia became a nation there were debates about whether there should be large scale immigration from low wage countries or whether such immigration should be restricted in favour of a high wage economy. As part of the Australian Settlement it was decided to limit such immigration and to provide industry support so that men could be paid a basic wage, sufficient to support a wife and three children.

It was a policy that was retained for the most part until the 1980s. And it seems to have worked, at least compared to elsewhere:

In the 1977 Eliot Janeway Lectures on Historical Economics at Princeton University, the Nobel Prize winning economist W Arthur Lewis pointed out that at the turn of the twentieth century the world's two leading prosperous countries at the time, Australia and Argentina, chose different paths to development. Argentina chose the laissez faire approach involving specialisation in agricultural products in line with its comparative and natural advantages; Australia opted for a broadly based economy which would spread the benefits of economic growth.

History shows we made the right choice.

But have we now made the Argentinian choice? The Australian economy seems very dependent now on mineral exports (and selling university places and some agricultural products).

I'm not an economist, so I'm open to other opinions on this subject. But it seems to me that it's unlikely to be in the interests of workers in countries like the USA and Australia to have to compete with workers in low wage economies through open borders and globalised free trade. The end result of that process is likely to be stagnant or even falling wages, as well as a loss of the economy's industrial base.

The stagnant male wage

I thought these graphs were interesting. They show the median male and female income in the US relative to real GDP per capita.

Here's the male median income:

As you can see the median male income has stagnated since the early 1970s, whilst real GDP per capita has risen steadily. Now here's the female median:

Unlike male income, the median female income has risen steadily alongside the growth in real GDP per capita.

So it seems that large numbers of men haven't benefited from the growth in the US economy since the 1970s.

(Hat tip: Laura Grace Robins)

So who is getting the axe?

This is Waleed Aly writing in the Melbourne Age a few months ago:

In a financial crisis the axe falls on those who have played the least part in its creation - women and migrants.

No clear, consistent ideological principle seems to explain this, which suggests it has just as much to do with the differing values we assign to people.

It is difficult to resist the suspicion that the key determinant of winners and losers in this crisis will not simply be sound policy. It will be social policy.

Waleed Aly's argument is that the decision to axe workers in a recession is not made on economic but on social grounds: those who are treated in society as lesser human beings are those who will lose their jobs.

Interesting then that axe has fallen most heavily, in the US at least, on blue collar male workers:

Rodney Ringler is an unemployed blue collar male without a college degree. He's hardly alone. Men like him have been the main victims of the current recession in the United States.

"I haven't worked since December of 2007, around the time this recession started," Ringler, a 49-year-old computer technician, said as he walked his dog in a Dallas suburb.

One statistic that stands out in America's recession-stung economy is the unemployment rate for adult men: in April for the second month in a row it surged ahead of the national average to 9.4 percent versus 8.9 percent for all workers. The jobless rate for adult women was 7.1 percent.

... "In the 2001 recession, 51 percent of all job losses were for men. It was evenly split. But in this recession 80 percent of the jobs that have been lost have been men's," said Andrew Sum, a labor economics professor at Northeastern University who has studied this issue in detail.

Men also incurred about 80 percent of the job losses in the 1990-91 recession ...

So by Waleed Aly's logic it is men, particularly blue collar men, who are treated as having lesser value. It is men who bore the brunt of job losses in the 1990-90 recession as well as the current one.

This completely upsets the image of society Waleed Aly was trying to convey. He wants us to accept the idea that white males are an oppressor class who have taken a privileged place in society, with a higher human value, at the expense of others - with this being a fundamental breach of human equality.

This image of the privileged oppressor male hides what has really been happening for several decades. Even in economic terms men have been losing ground, with the value of real wages for men declining since the 1970s:

The fact that American males without a college degree are especially vulnerable in this cycle point to more hard times ahead for the U.S. working class, which has endured stagnant and declining wages for the last three decades.

The skilled and semi-skilled jobs they traditionally held have been moving overseas to places like China and Vietnam. The jobs that remain pay less, amid declining union membership.

One study by Julia Isaacs of the Brookings Institution think-tank found median U.S. family income rose to $53,280 by the middle of this decade in 2004 dollars from $37,384 in 1964. But for males aged 30 to 39, average annual personal income fell from the mid-1970s by around $5,000 to $35,000.

American men are now being paid significantly less than their fathers were. At the same time they have to put up with a hostile view that they are enjoying an unearned privilege which belongs to others.

Going backwards

One of the most significant measures in this year's Federal Budget is the increase in the retirement age from 65 to 67.

I can remember when it was assumed that people would increasingly work less and have more leisure time. Some people even panicked that there would be too little work for people to do.

The assumption was a reasonable one given the long-term trend. Back in 1900 around 85% of 65-year-old men were still working. That percentage dropped in a very even line during the course of the twentieth century, so that in 1980 only about 10% of 65-year-old men were still working.

In my profession, teaching, there was even a retirement scheme that kicked in just before the age of 55.

During the same decades the number of hours worked per week also gradually fell. In 1913 the benchmark was a 49 hour week; by 1947 it was 40 hours; and by the early 1980s, a 38 hour week was the general standard. However, by 2001 the average working week had crept back up to 46 hours.

Real wages also grew quickly and steadily after WWII but the growth peaked in 1974. There is some variation in how wages growth is reported since then, but one demographer, Andrew Beveridge, has charted median wages in America for those in their 20s and found that while the female wage has remained steady, the median male wage has declined since 1970.

There is a political dimension to this. Liberalism has failed in many important respects, but for a period of time it succeeded in increasing the amount of leisure time and real wages for the average person. Each new generation of young people could expect to experience an improvement in the material conditions of life compared to the parents' generation.

This just doesn't seem now to be the case. A baby boomer man could raise a family of three or four on his own wage and still pay off his mortgage and invest in shares and property. Although this is still not an impossible scenario, it's more common for both the husband and wife to work, to raise only one or two children, and to find it difficult to repay the mortgage let alone to invest as successfully as their parents.

The rise in the retirement age from 65 to 67 fits the pattern of a decline in the material conditions of life.

I doubt if this will lead too many people to reconsider their allegiance to liberalism. The sense of decline, though, might help to dissolve a naive faith in liberalism as a source of material progress.