One Simple Trick for Raising Wages

The Economics of Labor Supply and the Role of Immigration Policy

A Guide to Labor Supply

For more than half a century, productivity, GDP, and profit have risen together. Wages have not followed suit.

Jobs Americans Would Do

A more productive conversation about raising workers’ wages

Policy Brief: Mandatory E-Verify

Maintaining tight labor markets for American workers

Policy Brief: Guestworker Phasedowns

Ending temporary worker programs that depress American wages


Conservative economics, with its central goal of generating family-supporting jobs for the nation’s workers, implicates any number of policy levers. Some focus on the investments that businesses make and models they pursue, and thus what types of jobs they will create. Trade and industrial policy that seek to bring imports and exports into balance, and increase investment in sectors like manufacturing, have the potential to return a wide range of high-productivity economic activities to a wide range of left-behind places. Efforts to limit financialization would drive business talent and capital back toward employing workers in the pursuit of profit. Other policies focus on workers, for instance, education reform to prepare them for the workplace and labor reform to give them voice and representation within it.

The success of all these policies hinges to some extent on a tight labor market. A worker’s worth may be innate, but the price he can command in the labor market is dictated by supply and demand. Profit-maximizing employers will only offer the wages and conditions necessary to retain the workers they need. Both employers and pro-business economists see cheap labor as vital to economic growth and so are quick to declare a “labor shortage” at the first sign of typical workers receiving real wage increases. This helps explain why real wages have risen by 1% over the past 50 years, while productivity rose by 141% and corporate profits per capita by 185%. Policymakers must reject this logic, and such results, and seek instead to tighten the labor market further, especially for the lower-wage workers who have not shared in recent decades of growth.

Several tools exist for this purpose, including monetary policy that seeks to keep the market running “hot,” even at the expense of some inflation, and family policy that supports homemaking rather than only offering childcare subsidies to push both parents toward the workforce. But the most potent tool is immigration. Immigrants have accounted for more than half the growth in America’s labor force over the past 15 years and their presence is most pronounced in the lowest-wage occupations. Illegal immigrants are often missing from that data and tend to be even further concentrated in those occupations. Rather than lament all the “jobs Americans won’t do,” which exist only because the law provides non-Americans to do them, policymakers should leave employers no choice but to create jobs Americans will do. That is how capitalism is supposed to work, and the only conditions under which it will.