How can we lift wages? Wages vs unemployment and more

[HurleyHepsHird]

The Libs/Nats want the cheap labour
But what about Labor and the Greens? It goes against their ideology of workers rights.

For anyone in Sydney, go for a wander through Paddys markets and think of the millions of dollars per years being paid in cash to nearly all those workers you see in the stalls.
When you have such out in the open wage rorting, it says enforcement is not taken seriously

And yet you run into the issue of induced demand, lower immigration, it hurts the service industry, which hurts economic growth, which tilts the relationship further in favour of employers not the labour market.

Increased immigration however induces demand for goods and services and drives growth.

The issue is not in fact permanent migration, it's imported labour.

However, there are a number of sectors which have experienced decadss long skills shortage without corresponding wage rise. So the issue isn't oversupply of labour, the issue is weakening of the industrial relations framework, deregulation and insufficient oversight. Employees have lost their collective bargaining power.

 

[HurleyHepsHird]

Most of those developed economies have gone through a recession or 2 over that time though.

In the end there's never ust one reason for anything. The law of supply and demand dictates that if you increase the number of people, the price of labour is going to drop, so immigration rates are probably a factor. But the alternative might be rampant inflation which probably means wage rises, but less overall purchasing power. Given inflation is pretty low, I wouldn't call current rates of wage growth a crisis.

Those people aren't just added to the broad labour pool in isolation of all other economic drivers, again this analysis ignores induced demand driven by increased consumption.

 

[Seeds]

View attachment 590973
Wait wat?


The minimum wage in 1975 was $82.90

Ie 6.49 x the yearly minimum wage purchased the median house

Or 345 loaves of bread from a weeks wage



The minimum wage in 2018 is $694.40

Ie 23.54 x the yearly minimum wage purchases the median house

Or 244.5 loaves of bread from a weeks wage


The damage caused to low income people by people talking utter utter demonstrably false yet easily checkable facts is unbelievable.

The only thing thats cheaper for them is all the consumer s**t they cant afford as their basic needs soak up all their available income.

Instead of purchasing a house - bringing up their kids, paying it off and selling to downsize - the money gained becoming a sizeable part of their retirement - they are trapped as renters forever.

And in that quote i mention house prices as a just reason for complaint. Did you not read beyond the first two lines?

 

[DaRick]

And yet you run into the issue of induced demand, lower immigration, it hurts the service industry, which hurts economic growth, which tilts the relationship further in favour of employers not the labour market.

Increased immigration however induces demand for goods and services and drives growth.

The issue is not in fact permanent migration, it's imported labour.

However, there are a number of sectors which have experienced decadss long skills shortage without corresponding wage rise. So the issue isn't oversupply of labour, the issue is weakening of the industrial relations framework, deregulation and insufficient oversight. Employees have lost their collective bargaining power.

Increased immigration/arrival of temp foreign workers also leads to increased remittances, so the increase in demand for goods/services may not be as high as one would think. They do however increase Australia's tax base, which may be the real reason why we have such high immigration rates in light of our ageing population.

Economic migrants and temporary foreign workers are the issue. At times economic migrants are used to fill high-paying, unfilled positions in which it would be legitimately difficult to train people (e.g - endocrinologists) but often they either seem to be used by employers to 1) undercut wages or 2) avoid having to train locals, leading to a surplus of grads but a shortage of experienced workers.

The shortages you speak of would IMO mostly either be 1) in highly-paid positions where training locals might genuinely be difficult and 2) in low-paying jobs in remote locations which are unattractive to relocate for.

Federal governments could try and address the issue of employers not training people by, say, giving them a wage subsidy to take on graduates (or other disadvantaged peoples) for a variable amount of time (6 months in unskilled jobs, 2-3 years in professional ones like accounting), but the LNP won't do that. The best that they'll do is implement a half-measure like PATH which barely pays anything and provides dubious skill development/experience for participants.

 

[kranky al]

And in that quote i mention house prices as a just reason for complaint. Did you not read beyond the first two lines?

and bread prices? and milk prices? - and electricity and water and etc etc etc

Every single one of those things costs more than it did - purchasing power today for the minimum wage earner is lower than its been in living memory not higher

 

[HurleyHepsHird]

Increased immigration/arrival of temp foreign workers also leads to increased remittances, so the increase in demand for goods/services may not be as high as one would think. They do however increase Australia's tax base, which may be the real reason why we have such high immigration rates in light of our ageing population.

Economic migrants and temporary foreign workers are the issue. At times economic migrants are used to fill high-paying, unfilled positions in which it would be legitimately difficult to train people (e.g - endocrinologists) but often they either seem to be used by employers to 1) undercut wages or 2) avoid having to train locals, leading to a surplus of grads but a shortage of experienced workers.

The shortages you speak of would IMO mostly either be 1) in highly-paid positions where training locals might genuinely be difficult and 2) in low-paying jobs in remote locations which are unattractive to relocate for.

Federal governments could try and address the issue of employers not training people by, say, giving them a wage subsidy to take on graduates (or other disadvantaged peoples) for a variable amount of time (6 months in unskilled jobs, 2-3 years in professional ones like accounting), but the LNP won't do that. The best that they'll do is implement a half-measure like PATH which barely pays anything and provides dubious skill development/experience for participants.

Yeah, and this is why it's important to parse temporary migration with permanent.

Regardless, imported labour has a marginal impact on wages outside of the fact it compounds pre-existing issues with the nations IR framework and enforcement.

Outsourcing for example has had a bigger impact on reshaping the labour pool.

However, to give an example of why immigration or even the replacement rate, so factors affecting labour pool numbers have not been responsible for the decoupling of wages from efficiency gains, simply look at Japan.

A shrinking population but similar issues with regards to wage growth. There is huge demand for workers, but wages and conditions are not improving as you would expect.

You can literally walk into a decent service sector job, without training or a college degree depending on industry, which excludes wage deflation due to depressed growth, since this applies to industries like tourism and hospitality, which have been on the up in urban centres like Tokyo.

 

[Seeds]

and bread prices? and milk prices? - and electricity and water and etc etc etc

Every single one of those things costs more than it did - purchasing power today for the minimum wage earner is lower than its been in living memory not higher

Real wages have gone up which means the price of average consumer goods and services have fallen relative to incomes. Its the very definition of a real wage rise.

 

[DaRick]

Yeah, and this is why it's important to parse temporary migration with permanent.

Regardless, imported labour has a marginal impact on wages outside of the fact it compounds pre-existing issues with the nations IR framework and enforcement.

Outsourcing for example has had a bigger impact on reshaping the labour pool.

However, to give an example of why immigration or even the replacement rate, so factors affecting labour pool numbers have not been responsible for the decoupling of wages from efficiency gains, simply look at Japan.

A shrinking population but similar issues with regards to wage growth. There is huge demand for workers, but wages and conditions are not improving as you would expect.

You can literally walk into a decent service sector job, without training or a college degree depending on industry, which excludes wage deflation due to depressed growth, since this applies to industries like tourism and hospitality, which have been on the up in urban centres like Tokyo.

Automation as well.

I do think future federal governments need to prepare for an increasingly post-employment society rather than pretend that we're living in the 1970's, with its full employment.

 

[kranky al]

Real wages have gone up which means the price of average consumer goods and services have fallen relative to incomes. Its the very definition of a real wage rise.

Saying the same thing over and over again doesnt make it so

In 1975 on minimum wage you could easily save for and purchase a house. My father did - on roberts road subiaco across from the oval - he was working part time in a minimum wage job and studying full time at night school.

Now a person working full time on minimum wage has almost zero chance of purchasing a house in any major metropolis and a far larger percentage of his wage goes on staples and bills than it did in 1975.

He doesnt care that a top of the line oled is cheaper than a top of the line box tv from 1975 - he cant afford it

The concept that consumer goods being cheap means his wage purchases more when his entire wage is taken up with just living is a specious argument.

He cant afford a house - instead of paying off an asset that he owns - he pays someone elses asset off.

When hes 60 - instead of being worth 400000 or 600000 or whatever that house will fetch at sale less the price of the unit he purchases to downsize - hes worth nothing - but still has to pay rent weekly.

Under no means at all is he better off.

 

[HurleyHepsHird]

Saying the same thing over and over again doesnt make it so

In 1975 on minimum wage you could easily save for and purchase a house. My father did - on roberts road subiaco across from the oval - he was working part time in a minimum wage job and studying full time at night school.

Now a person working full time on minimum wage has almost zero chance of purchasing a house in any major metropolis and a far larger percentage of his wage goes on staples and bills than it did in 1975.

He doesnt care that a top of the line oled is cheaper than a top of the line box tv from 1975 - he cant afford it

The concept that consumer goods being cheap means his wage purchases more when his entire wage is taken up with just living is a specious argument.

He cant afford a house - instead of paying off an asset that he owns - he pays someone elses asset off.

When hes 60 - instead of being worth 400000 or 600000 or whatever that house will fetch at sale less the price of the unit he purchases to downsize - hes worth nothing - but still has to pay rent weekly.

Under no means at all is he better off.

Wage growth has not kept pace with returns on capital.

One biproduct is greatly inflated propert prices, which are massively more expensive comparatively now, than in the 70's. Rise in certain asset prices though is destinct from the specific relationship between wages and some consumer goods. Cost of some services though, like power prices have seen a real relative increase.

It's not that real wages have declined, it's that the rate of growth has stalled. It has also massively been outstripped by capital growth, hence rising inequality.

 

[Nuggs Bunny]

I’m a slave

Improve irrigation, improve water capture and storage, improve water management and division, mobility of farming land, mobility of pasture, storage of food stock, drought resistant crops, water transportation, and finally but most important, find out whoever the rich assholes are and mitigate their affects.

You can always pick the people who've never ventured more than 50km outside of a major city unless they're travelling on a major highway when they make statements like these.

I mean, it's not your fault. You probably don't know any better. But do you really think that farmers can afford to snap their fingers and improve their irrigation system to the standard that they can produce a greater volume of product with less water so they can break even like they could twenty years ago? Like, at what point did you think farmers were ever getting paid so excessively for what they produced that they had the ability to squirrel away a multi-million dollar warchest for irrigation improvement further down the line?

You don't realise it, but what you're saying is basically the equivalent of standing over a homeless person and saying their unwashed clothes are the reason they can't get a job.

 

[RupieDupie]

You can always pick the people who've never ventured more than 50km outside of a major city unless they're travelling on a major highway when they make statements like these.

I mean, it's not your fault. You probably don't know any better. But do you really think that farmers can afford to snap their fingers and improve their irrigation system to the standard that they can produce a greater volume of product with less water so they can break even like they could twenty years ago? Like, at what point did you think farmers were ever getting paid so excessively for what they produced that they had the ability to squirrel away a multi-million dollar warchest for irrigation improvement further down the line?

You don't realise it, but what you're saying is basically the equivalent of standing over a homeless person and saying their unwashed clothes are the reason they can't get a job.

I was asked what I would do, instead of pray for rain, I suggested we should look into drought proofing the Murray Darling basin, which was different from the Federal government giving $800K into a ministers bank account, the slashing of funding to the CSIRO, the current politics around water division, and suggesting we should pray for rain.

Farmers shouldn’t be responsible for building the infrastructure, the government should.

What’s the issue here?

 

[Nuggs Bunny]

I was asked what I would do, instead of pray for rain, I suggested we should look into drought proofing the Murray Darling basin, which was different from the Federal government giving $800K into a ministers bank account, the slashing of funding to the CSIRO, the current politics around water division, and suggesting we should pray for rain.

Farmers shouldn’t be responsible for building the infrastructure, the government should.

What’s the issue here?

The farmers own the infrastructure, so it is their responsibility. The government has a fund which provides financial support for farmers to do things like line water channels and install new digitally controlled gates, but at the present the situation is exceptionally dire and the money is often being used to simply get by.

Drought-proofing is fanciful; there's no such thing. People say pray for rain because rain is literally all that's going to help at this point. You're more than welcome to use pray in a metaphorical sense if you're not a religious person.

 

[RupieDupie]

The farmers own the infrastructure, so it is their responsibility. The government has a fund which provides financial support for farmers to do things like line water channels and install new digitally controlled gates, but at the present the situation is exceptionally dire and the money is often being used to simply get by.

Drought-proofing is fanciful; there's no such thing. People say pray for rain because rain is literally all that's going to help at this point. You're more than welcome to use pray in a metaphorical sense if you're not a religious person.

You’re kidding me right... jokes on RupieDupie

If the PM / state governments made the announcement tomorrow

“Our 20 year plan for the Murray Darling Basin is to do nothing, but we will pray for rain during droughts”

They’ll get your vote...?

Sounds like from what you’re saying the government has/is neglecting the farmers of the Murray Darling Basin, and I agree with you that something should be done. Drought proofing can be looked into in a myriad of ways, some practical now (financial investment in infrastructure), some practical in the future (drought resistant crops).

 

[Rotayjay]

View attachment 590973
Wait wat?


The minimum wage in 1975 was $82.90

Ie 6.49 x the yearly minimum wage purchased the median house

Or 345 loaves of bread from a weeks wage



The minimum wage in 2018 is $694.40

Ie 23.54 x the yearly minimum wage purchases the median house

Or 244.5 loaves of bread from a weeks wage


The damage caused to low income people by people talking utter utter demonstrably false yet easily checkable facts is unbelievable.

The only thing thats cheaper for them is all the consumer s**t they cant afford as their basic needs soak up all their available income.

Instead of purchasing a house - bringing up their kids, paying it off and selling to downsize - the money gained becoming a sizeable part of their retirement - they are trapped as renters forever.

That is why housing affordability is an issue of fundamental intergenerational justice. Why should some generations have a place to call their own, make a stack of money from a boom, while all future generations have to pay rent (and someone else's bills) and can never have their own roof over their heads?

 

[Frank Bunn]

I posted an article in another thread about this yesterday
I think its worth sharing here again...

New research: Australia’s immigration system undercuts workers
Yesterday, a group of labour academics released a book, entitled The Wages Crisis in Australia, which bemoans Australia’s anaemic wages growth and offers policy prescriptions.

Locked away in chapters 13 and 14 are incendiary analyses on the great Australian migrant wage rort, which is unambiguously lowering employment standards and undercutting local workers.

"...Ultimately, Australia’s so-called skilled immigration system is one giant rort that’s all about lowering labour costs for employers by crushing wages and abrogating their responsibility for training, while also feeding the growth lobby more consumers.

It needs root-and-branch reform, starting with dramatically lowering the overall permanent migrant intake, as well as setting a wage floor for ‘skilled’ migrants at the 80th to 90th percentile of earnings, thus ensuring the scheme is used sparingly by employers on only the highest skilled migrants, not as a general labour market tool for accessing cheap foreign labour."

Below are key excepts from Chapter 13 entitled Temporary migrant workers (TMWs), underpayment and predatory business models, written by Iain Campbell:
https://www.macrobusiness.com.au/2018/11/australias-immigration-system-undercuts-australian-workers/

Both the 457 visa system and now the Temporary Skill Shortage (TSS) visa have been exploited to provide cheap labour rather than meet actual skills shortages. The way it typically works is that Australian employees with good skills and experience are made redundant. The roles are then outsourced to an American consultancy company, headquartered in Ireland or Bermuda to avoid paying tax, nearly all the employees come from India because of the low wage rate. The Indians are brought to work in Australia offices on TSS visas, earning base salaries up to $50,000 less than the Australian average.

Whole departments in Australian companies are now unavailable to Australian workers. And those jobs that are available can be filled at lower rate because of the imbalance in applicants to jobs.

THOUSANDS of foreign computer workers are being imported on low wages while Australians struggle to find jobs, according to a new report.

Previously unpublished data reveals that many of the IT experts, mostly Indians on 457 visas working in Melbourne and Sydney, are earning base salaries up to $46,000 less than the Australian average.

Indian IT firms are using the 457 system to send workers for contracts won in Australia, and are then taking as much of the work as possible back to low-cost India.

The practice has been exposed by the Australian Population Research Institute in its report, Immigration Overflow: Why it Matters.

The study said that in 2015-16, a total of 7452 computer analysts, programmers and networkers were given the 457 visa, which doesn’t require employers to check first if local workers are available.

A further 9733 computer professionals came to Australia on permanent skilled visas last year, pushing the total IT intake to more than 17,000

Report lead author Dr Bob Birrell said it was a scandal that the Federal Government was importing so many IT professionals into a soft job market.

“This extraordinary outcome is occurring at a time when there is an oversupply of resident graduates and when the government is encouraging local students to enrol in IT courses,” he said.

His report, co-written with Ernest Healy and Bob Kinnaird, revealed that three-quarters of all IT workers (5671 people) given 457 visas last year were Indian.

While the average Australian salary for non-manager computer professionals was $100,000 in 2014, more than 60 per cent of the Indians earned under $70,180 — and 28 per cent less than $53,900. Dr Birrell said the Immigration Department data contradicted industry claims the 457 workers were paid market rates, when in fact their much lower pay gave Indian service companies an enormous competitive advantage in tendering for IT work.

“Their success here also means they are in a good position to provide clients with the low-cost option of moving the operations they have installed to their offshore offices,” he said.

The report also took aim at the “myth” that the 128,000-plus permanent skilled migrants arriving each year were “highly trained”.

It said Australia’s migration points test used soft selection criteria for overseas applicants, while foreign students who applied after graduating from Australian universities did not need local job experience.

http://www.heraldsun.com.au/news/vi...k/news-story/9d9aa8ed5ee2473607513ad26c7819ad

 

[Frank Bunn]

Then there is the policy of running a high immigration program, at a time when there is already high levels of labour market underutilisation.

There's a couple of terms that are often used that hide what's really going on.

The Federal government, and recently we saw in the Victorian state election, that they like to boast that the economy is strong because of 'growth'. High immigration levels will always lead to higher GDP. For the Victorian government they are happy to rake in stamp duty from property sales and higher GST distributions - the results of which they can sell as their being fiscally sound. But the real measure of whether we are better off is GDP per capita. Economic growth per person remains low.

Then there's 'unemployment'. The unemployment rate is about 5.3%, the lowest level in six years. However, there has been a significant proportion of the population looking for work in some capacity - ie underemployment. The sum of the unemployment rate and the underemployment rate gives the underutilisation rate. It currently sits at 14%, close to its highest point since the late 1990s.

 

[kranky al]

Then there is the policy of running a high immigration program, at a time when there is already high levels of labour market underutilisation.

There's a couple of terms that are often used that hide what's really going on.

The Federal government, and recently we saw in the Victorian state election, that they like to boast that the economy is strong because of 'growth'. High immigration levels will always lead to higher GDP. For the Victorian government they are happy to rake in stamp duty from property sales and higher GST distributions - the results of which they can sell as their being fiscally sound. But the real measure of whether we are better off is GDP per capita. Economic growth per person remains low.

Then there's 'unemployment'. The unemployment rate is about 5.3%, the lowest level in six years. However, there has been a significant proportion of the population looking for work in some capacity - ie underemployment. The sum of the unemployment rate and the underemployment rate gives the underutilisation rate. It currently sits at 14%, close to its highest point since the late 1990s.

Jobzngrowth:angryemoticon:

 

[Frank Bunn]

Jobzngrowth:angryemoticon:

Dontgetmestarted:angryemoticon:

Engineers Australia, which carries out the migration skills assessments on behalf of the Department of Immigration, earned $8.8 million last financial year from the assessments - which represented 18 per cent of their total revenue. Not surprisingly they support keeping engineers on the skilled occupations list.

Similarly the Australian Computer Society have a nice little earner going charging up to $550 a pop for their assessments.

Edit : posted a dead link. Try these.

https://www.engineersaustralia.org.au/For-Migrants/Migration-Skills-Assessment/Migration-Fees

https://www.acs.org.au/msa/information-for-agents.html

 

[Bombermania]

Saying the same thing over and over again doesnt make it so

In 1975 on minimum wage you could easily save for and purchase a house. My father did - on roberts road subiaco across from the oval - he was working part time in a minimum wage job and studying full time at night school.

Now a person working full time on minimum wage has almost zero chance of purchasing a house in any major metropolis and a far larger percentage of his wage goes on staples and bills than it did in 1975.

He doesnt care that a top of the line oled is cheaper than a top of the line box tv from 1975 - he cant afford it

The concept that consumer goods being cheap means his wage purchases more when his entire wage is taken up with just living is a specious argument.

He cant afford a house - instead of paying off an asset that he owns - he pays someone elses asset off.

When hes 60 - instead of being worth 400000 or 600000 or whatever that house will fetch at sale less the price of the unit he purchases to downsize - hes worth nothing - but still has to pay rent weekly.

Under no means at all is he better off.

I have to question the bolded part, I am not saying he didn't buy such a property but that story sounds unlikely as lending standards were tighter in the 1970s and if it was so easy for low income earners and maybe Perth was difference to Melbourne but people on low incomes in the 1970s were either renting or living in boarding houses unless they had backing from family or were friends with the bank manager.

 

[pazza]

The reality is that most workers now haven't had a pay rise in nearly a decade. Some have had marginal increases. For me a 73c an hour increase annually.

 

[kranky al]

I have to question the bolded part, I am not saying he didn't buy such a property but that story sounds unlikely as lending standards were tighter in the 1970s and if it was so easy for low income earners and maybe Perth was difference to Melbourne but people on low incomes in the 1970s were either renting or living in boarding houses unless they had backing from family or were friends with the bank manager.

You couldnt just get a loan off the bank for sure, you had to save pretty much what the mortgage was per week for the deposit to prove you could swing it.


When we moved from there to duncraig it was all young families 2 parents 2 kids - new 4 bed cookie cutter houses. Noone had money - the people who did moved into fully decked out houses, we moved into a place with no curtains, carpet, garage door or anything like that. Had newspaper on the windows and a rug in the lounge and did the place bit by bit.

 

[Carn The Berries]

You couldnt just get a loan off the bank for sure, you had to save pretty much what the mortgage was per week for the deposit to prove you could swing it.


When we moved from there to duncraig it was all young families 2 parents 2 kids - new 4 bed cookie cutter houses. Noone had money - the people who did moved into fully decked out houses, we moved into a place with no curtains, carpet, garage door or anything like that. Had newspaper on the windows and a rug in the lounge and did the place bit by bit.

I think this story is a really interesting piece of the housing debate. We're now at a point where the necessary urban sprawl in metropolitan areas is moving at a rate that is so much faster than the associated transport infrastructure or industry shift that it is impeding people's ability to enter the property market.

Simple supply and demand dictates that the rate of capital appreciation on housing assets will continue to outstrip general growth within the economy because the most valuable real estate is in sufficient proximity to CBDs and other core areas of industry that there is associated economic currency in living there.

Each generation, at least in its 20/30/40s is finding itself having to move further out to enter into the housing market. My grandparents were in Surrey Hills & Blackburn, parents and their friends were Nunawading, East Burwood, Bayswater and Mitcham and my generation is Boronia, Ferntree Gully and further out. We are so predisposed to the 4x2 with a nice backyard that this is a necessity and the result is skyrocketing house prices as the demand for that grows (and new development fails to keep pace, for a wide variety of reasons). As long as our business epicentres are centralised this phenomenon won't stop. Yes the current rate of investment properties contributes to this as well but I don't see that restricting this is going to have a meaningful effect.

Joondalup in Perth is a good example of what Government's are trying to do to create suburban "hubs" that will allow people to live further out and still have access to the types of josb they are trained/qualified for. Unless these sorts of experiments succeed or proper infrastructure investments are made to shift people into central areas from further out better (Andrews in Vic is starting on the journey in this regard, but it is far from the panacea) I can't see that the pressure on the housing market will stop. Yes the bubbles may not be quite as big, particularly if investment rules are reformed, but the underlying supply/demand mis-match will still be there.

 

[Ned_Flanders]

Just on jobs being centralised to the Melbourne CBD, I got this from Crikey who got it from the census data:

In 2016, 79.5% of jobs in Greater Melbourne were outside the municipality of Melbourne, down slightly from 80.8% ten years earlier. In fact, most jobs – around 70% – are more than 5 km from the city centre and half are more than 13 km from the centre.

 

[Frank Bunn]

The reality is that most workers now haven't had a pay rise in nearly a decade. Some have had marginal increases. For me a 73c an hour increase annually.

You should have been working for the public service. The VPS pay rises of 3.25% a year allow the Andrew's government to claim Victorian wage rises are the highest in the country, while private sector wages in the state have stagnated.