On a USA Today post earlier today, a blogger gensmahaut wrote, "Saying that poor unskilled Americans don't want to do the work mexicans do is like saying American programmers and engineers don't want to do the work Indians do. It's complete and utter nonsense. People are ready to do any kind of work in America, at a living wage. Americans are extremely hard working people, I've found in my travels around the world. Take a look at the state of Mexico and you'll see they're by no means any harder working than Americans. Pay a decent wage and Americans will work in agriculture, service sector, just like they have in this country for centuries. There has been no magical disappearance of the work ethic of America's underdogs, on the backs of whom this country rose to great wealth." I call the purple highlighted text a brain spark since it made me wonder, is this a case of the economy working at it's comparative advantage?
In other words, Mexicans and Indians can work at a lower opportunity cost than US workers and the wages reflect the differences. If the wage increases for occupations that foreign labor is employed, then the higher wage will attract domestic workers and foreign labor will be displaced. The market will clear at a higher wage rate.
Why would they raise wages though if the market is already clearing? The companies that find workers willing to work at a lower wage make more profit; and when they make more they save more which keeps money out of circulation and keeps inflation from occuring doesn't it? If they paid their workers more, the workers would demand more and the demand shift would increase the CPI and that would hurt everyone whose wages weren't increased, no?
ReplyDeletemy immediate answer, without using a graph is to say there's an increase in the number of workers who'll supply their labor so the supply curve shifts...i agree with everything you said, but if those who will not work at $3 will work for $10, then the market will clear at $10 since the demand for labor is a downward sloping demand curve....more later
ReplyDelete