In the meantime, here are a few thoughts on this news cycle's political dust up here in the UK. Ed Miliband, leader of the opposition Labour Party, has recently taken a stance to eliminate a loophole that allows agencies to pay EU immigrants less than their Briish counterparts. The fear is that as more Romanian and Bulgarian immigrants come in, this could lower British wages.
My thinking:
1) The agencies' practices are deemed "exploitative" because they are paid less than UK counterparts for the "same job". Whenever the term "same job" is bandied about, complexities are being ignored. Are factors such as experience, language skills, and education accounted for? It could be that the immigrants are paid less because they are less productive.
2) Ed Miliband is worried about Britain's cost of living and understandably wants higher wages. He notes that low wage immigrants work in the food and packaging industries. What are some major determinants of the cost of living? The cost of food and the cost of shipping, which impacts the cost of everything else!
3) Mr. Miliband correctly notes that cheap immigrant labor creates some winners and some losers. Native workers in those industries have some competition, but all other Britons enjoy lower prices. Mr. Miliband wants to switch the winners and losers. What makes him think his selection is better? Who knows! The current arrangement, however, can be defended by volumes of economic literature on how prices adjust towards an efficient equilibrium.
4) I'm sure Mr. Miliband is far from concerned about the fate of Britain's current and potential immigrants, but they are people too and worth considering. If they're accepting these low wage jobs, they must be tremendous improvements over their current opportunities. What will the cost be to these immigrants if the law makes it more difficult for agencies to hire them? They will likely lose an important path out of serious poverty.
