Open borders and the lack of worker pricing power; a set up for more dovish US Fed policy?

Economists are paid to misdirect

Notice how mainstream economists use logic fallacies such as red herrings and the Chewbacca Defense to wow and misdirect their audiences from the sober reality about what is causing wages to lag the economy. While it may be obvious to us that these economists are promoted by the globalists and their think tanks, most do not comprehend this and are taken by the research of these experts.

Open borders enlarges the labor pool; At the same time employers offer lower pay

I came across this article from Business Insider titled, There’s one simple explanation for the wage stagnation ‘puzzle’ confounding top Fed officials, which attempts to explain why there is anemic wage growth in the United States as well as the other rich nations in Europe. Notice how these economists use a ton of obscure and esoteric terms and research to avoid the real reason wage growth continues to lag expectations for decades.

Is the US Fed really puzzled?

Federal Reserve Chairman Jerome Powell has often expressed surprise at the lack of wage growth for US workers despite a historically low jobless rate below 4%.

“I certainly would have expected wages to react more to the very significant reduction in unemployment that we’ve had,” Powell told reporters during his last press conference, held after the Federal Open Market Committee raised interest rates again in June. “So it’s a bit of a puzzle.”

Business Insider – There’s one simple explanation for the wage stagnation ‘puzzle’ confounding top Fed officials (August 30th)

I believe that the researchers in the article are correct with their theory; there is much more wage slack in the economy than the official statistics infer. While the unemployment rate may be near historically low levels the lack of wage growth demonstrates that there seems to be no inflationary pressures caused by the low unemployment rate.

Can the unemployment rate really drop to 2.5% before inflation picks up?

The Fed chairman should take a look at a new paper from David Bell of Stirling University in Scotland and David Blanchflower, former Bank of England member and Dartmouth College professor. There, Powell will find a simple and convincing answer to his puzzle: the job market is really not as hot as the headline unemployment figure makes it look, leaving workers without the requisite bargaining power to ask for raises.

Unlike Fed officials, who believe the US economy is at or beyond “full employment,” Blanchflower estimates the jobless rate could drop to as low as 2.5% before any substantive wage gains materialize.

Business Insider – There’s one simple explanation for the wage stagnation ‘puzzle’ confounding top Fed officials (August 30th)

How can this be? How can the research provided by the US Fed be so far off the mark? How come the Fed Chair, Jerome Powell, is puzzled with the lack of wage pressures?

The answer; I really doubt Mr. Powell is puzzled. In fact, I am certain all the senior Fed members know the truth. Moreover, I submit most well-known economists know the facts driving this phenomenon, but cannot objectively discuss the answers to the topic as they are verboten. Economists working for the new world order and supporting its agenda cannot mention the real cause.

The elephant in the room that no mainstream outlet can ever discuss – Open borders

We have talked at length over the past couple years why working for a wage is a losing proposition. The wage base continues to deteriorate every year, because of the open borders policy. The current immigrants entering the US and rich European nations are not like the ones who migrated to the the US over the prior 100 years. As a result they have been instrumental in driving down the wage base and suppressing wage growth. This wage growth lag when compared to the true rate of inflation and asset price growth (e.g. houses, cars, businesses, higher education) is structural and permanent.

In the new world order labor supply is unlimited – The beneficiaries of cheap labor promote open borders

…but with open borders, the new entrants into the labor pool come mostly from poor and developing nations and thus, demand less than those who are already in the labor pool.

Chris Pirnak

I could show charts that illustrate how increases in the labor supply will drive down wages and motivate employers to offer lower pay, but with open borders, the new entrants into the labor pool come mostly from developing nations and thus, demand less than those who are already in the labor pool. Many economic sectors have been permanently altered by the influx of cheap labor. Before the free trade agreements were promulgated, jobs in the manufacturing, basic services, and housing construction and remodeling sectors provided enough income to support the financial needs of many families. This is no longer the case.

The worst part is that employers enjoy this low cost of labor and offer lower wages and benefits as a result. We often hear how employers cannot find talented people to fill open positions. The problem is that they refuse to offer higher pay to attract the people they desire.

Don’t blame the weakness of the unions

Notice how Blanchflower discussed how union weakness is partly to blame. He blames this weakness on government policy, but I blame it on open borders. Why? Immigrants have been driving down the wage base domestically for decades. This has effectively rendered the concept of the labor union obsolete. The new immigrants took away any leverage the worker used to have with his employer. If the union employee demands too much the employer can hire a non-union worker for a fraction of the cost.

Two final thoughts
-The findings offer another excuse for the Fed to keep a dovish policy

The result of the research paper has definite merit and I think the US Fed is analyzing its contents. As a result, these findings may offer  more excuses to keep interest rates lower than planned. The US Fed is continuing its dovish policy and I believe it will for the intermediate future. If this is the case then income-generating assets like stocks, businesses, and real estate will continue to offer superior returns. We need to understand that it’s the income-generating aspect that is key.

– working for someone else is a losing proposition

The monetary and economic systems in the new world order are rigged against the average worker. It doesn’t matter whether we are doctors or day laborers. As long as we work for other people and rely primarily on a paycheck for our financial survival we will never be able to keep up.

In the new world order the nation-state is an anachronism. Thus, in theory, labor supply will have no restrictions on movement. We see these trends accelerate over the decades as the open-borders policies enacted worldwide have worked to drive the wage base through the floor in the developed nations. When women entered the labor force they competed against those already in the pool (primarily men) and kept a lid on wage growth. It then became necessary for most households to have two wage earners to support the expenses. Now, with open borders, two wage earners can no longer provide the same standard of living. We see how the deck is stacked against us. Moreover, the globalist-controlled educational system indoctrinates us into the wage-slave system; it tells us to seek gainful employment as our primary goal. This could not be further form the truth.

Recall that deficit spending causes asset prices to rise over the long haul. Thus, in order for us to prosper and get ahead we need to acquire income generating assets. Specifically, we should look for assets that generate income with long-term income and asset price growth potential, while providing superior income tax benefits as well as leveragability – the ability to use as collateral.  This is what the financially successful people strive for.

Working for someone is not a bad concept if we can build a retirement portfolio or if we acquire assets over the years. We can then use the tax code to our benefit as well. Our ultimate goal, however, is to acquire enough assets and businesses to provide us enough income to live. Indeed, there is nothing better than not having a boss, but we can see that non w-2 or 1099 income is usually treated much more kindly for income tax purposes. In addition, our balance sheets will continue to grow over the years as the government deficits climb.