The border wall effect: higher wages

The Associated Press reports today that employers in Montana can't find enough workers to fill the low-wage jobs in the area. One McDonald's restaurant owner offered $10 an hour, but "the only calls were from other business owners upset they would have to raise wages, too."

There are similar reports of jobs going begging in Utah, Idaho and Wyoming.

Baby boomers around the country are selling their homes for sums they once associated with Jeb Clampett and moving to the interior West, which is suddenly experiencing a tight labor market.

Nowhere in the story is the word "immigration" mentioned, but America Wants to Know can't help but observe that this report comes just weeks after the final immolation of the guest-worker-path-to-citizenship immigration reform embraced so enthusiastically by politicians who accept campaign contributions from businesses that benefit from cheap labor. Now the White House has announced a crackdown on employers who hire illegal immigrant workers, and in the West, wages are going up.

Sadly, this AP report may already be tacked to the wall of Fed Chairman Ben Bernanke's office. The Fed has a history of regarding higher wages as a harbinger of catastrophic inflation. The wizards who decide the critical Fed funds rate prefer to see rising "productivity," which is defined as more work out of the same people for less money.

So we can expect another Wall Street crash on the day the Fed announces it's holding the Fed funds rate steady instead of cutting it. We'll be lucky if the decision isn't accompanied by a statement hinting that they almost raised the key interest rate but didn't want to crash the real estate market too suddenly.

President Bush never tires of telling us that there has been spectacular and continuing "growth" in the economy.

But if "growth" in the economy can only happen when wages are falling, economists should write a new definition of "growth" before half the country starves to death.


Copyright 2007

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