[lbo-talk] Increase the labour supply to lower its price...

Rakesh Bhandari bhandari at berkeley.edu
Wed May 30 00:52:39 PDT 2007


Baker writes: "The Post seems determined to try to obscure a relatively simple point. Increasing the supply of skilled workers lowers their wages."

It's not that simple!

The importation of foreign workers likely reduces unemployment and therewith downward pressure on wages for at least two reasons. First, foreign skilled labor makes key contributions to starting companies and keeping other companies afloat in a tough global marketplace, thereby adding to and preserving domestic employment.

Second, the low unemployment rate among skilled workers suggests that there is too few of them, and if there is too few of them, then high tech capital cannot capitalize surplus value for the population base is too small to valorize what would be the accumulated capital. In other words, a shortage of newly available workers results not in higher wages but higher unemployment. Because there are too few workers there are too many workers. The importation of foreign labor may well encourage the capitalization of surplus value within the US and thereby increases the domestic level of employment.

Rakesh



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