An overabundance of labor

Unless other forces intervene, an overabundance of labour will tend to drive down its price, which naturally means that workers and their families have less to live on. One of the most important forces affecting the labour supply in the US has been immigration, and it turns out that immigration, as measured by the proportion of the population who were born abroad, has changed in a cyclical manner just like inequality. In fact, the periods of high immigration coincided with the periods of stagnating wages. The Great Compression, meanwhile, unfolded under a low-immigration regime. This tallies with work by the Harvard economist George Borjas, who argues that immigration plays an important role in depressing wages, especially for those unskilled workers who compete most directly with new arrivals.

Immigration is only one part of a complex story. Another reason why the labour supply in the US went up in the 19th century is, not to put too fine a point on it, sex. The native-born population was growing at what were, at the time, unprecedented rates: a 2.9 per cent growth per year in the 1800s, only gradually declining after that. By 1850 there was no available farmland in Eastern Seaboard states. Many from that ‘population surplus’ moved west, but others ended up in eastern cities where, of course, they competed for jobs with new immigrants.

This connection between the oversupply of labour and plummeting living standards for the poor is one of the more robust generalisations in history. Consider the case of medieval England. The population of England doubled between 1150 and 1300. There was little possibility of overseas emigration, so the ‘surplus’ peasants flocked to the cities, causing the population of London to balloon from 20,000 to 80,000. Too many hungry mouths and too many idle hands resulted in a fourfold increase in food prices and a halving of real wages.

(source)

But don’t the economists disagree?

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5 responses to “An overabundance of labor

  1. Pingback: An overabundance of labor | Reaction Times

  2. secede August 27, 2014 at 4:11 am

    @The population of England doubled between 1150 and 1300.

    and at least halved by 1350 via the black plauge. the next few hundred years saw labor costs rise.

    perhaps ebola has a silver lining?

  3. A440 August 27, 2014 at 10:48 pm

    No, the economists don’t disagree. CF. the repugnant conclusion.

  4. Exfernal August 29, 2014 at 2:24 am

    Well… the demand for human labor is likely to shrink nearly by half in the near future. Will it revert to ‘panem et circenses’ again?

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