As boomers retire, there simply aren't enough young people born in the UK to replace them. That's why migrants are stepping in — and why we need them. With US evidence and UK parallels, I show how migration supports our economy, pensions, and future security.
This is the audio version:
This is the transcript:
One of the most difficult topics to talk about when it comes to economics is the economics of migration.
Now, for me, this is a personal issue. I come from a family of economic migrants. The clue is in my name, and it's not just in my name, but it's actually in my wife's name as well, because she's a hundred per cent genetically Irish and we have a very large extended family, almost all of which is in the UK and almost all of whom are economic migrants.
So I find the issue of economic migration, and a lot of the nonsense talked about it, really quite offensive because I resent any suggestion that I haven't added value to this country, and I look around my wife's family and other members of my extended family and think, we've done good things for this country, and so we need to talk about this issue of the economics of migration.
And Paul Krugman, the US-based Nobel laureate economist, did a column on this on 20th July on Substack, and he had a lot of data in that column, which is only available in the USA, but which gives clear insights into what is happening on migration in that country, and, as far as I can see, every situation that he describes is likely to be the same in the UK, and so we can use his data and his sources to understand better what the issues around the economics of migration are.
And let's be clear, the issue is deeply politicised and very often on the basis of race, and let's not ignore that, and I won't ignore that because that's personal as far as I'm concerned.
But what I want to talk about are the facts, and let's stick to those because that matters.
The reality is that the claim that migrants are somehow threatening the US labour force, or the UK labour force, is not supported by data.
And the data that we're looking at here is the increase in employment in the USA between 2019, in other words, the year before COVID, and 2024, in other words, well after COVID was becoming history in employment terms. And what you'll see is that employment in the USA rose over this period, quite significantly, and where did those new employees come from? The vast majority, as you will note, were foreign-born.
They were new migrants to the USA. And we have the same situation in the UK. Very large numbers of people entering the labour force in the UK are going to be migrants for one very simple and very straightforward reason, which is the same in both the USA and the UK.
We are not replacing our working population with new young people born in the country. In other words, as boomers - people of my age - come to retirement, they are not capable of being replaced by new young people who are their children or grandchildren because there just aren't enough of them. Therefore, if there's to be employment growth or even employment maintenance, we need migration. Without migration, in fact, economic growth in both countries would fail. It's a simple, straightforward fact.
And what is more, it wouldn't just fail. It could seriously reverse, which has massive consequences for the security of those who are entering old age, because it is the people from following generations who will supply people who are in retirement with the income that they need in order to sustain them.
So migrants are important, but they're particularly important in some economic areas. In particular, this is again true for the USA and for the UK. Migrants dominate work in tough, low-paid sectors. Let's again just look at some of this data. Migrants are most commonly found in things like construction, agriculture, food preparation, the hospitality industry and care homes.
This chart gives some indication of this. It's US data, but it will give you some indication of what we are looking at.
There are carers; there are construction workers, there are people who are cleaners and janitors, to use the US term, and so on, in that group of the highest occupations dominated by migrant workers, and the people who were born in the USA don't want to do those jobs.
So those fundamental roles, which keep the economy going, are being supported by migrant workers. Yes, they're low-paid, and yes, they appear to be those which require low qualifications, although that doesn't mean to say that the people doing them necessarily do have low qualifications, but the point is, they're also essential, and almost none of them are capable of replacement with AI.
So these jobs aren't being stolen, as some people like to claim that migrants do. They're actually genuine vacancies being created by boomers retiring that have to be filled, and there aren't people born in the country to replace those who are leaving the market because they are, as I've said, retiring.
So if you deport migrants, and of course that is the policy of the Trump regime, and I use the word regime wisely in the USA, what you actually find is that vital services and supply chains will break down.
And exactly the same thing would happen here in the UK if that were to happen.
If I look at the fields in the area around where I live in East Anglia. I won't see almost any British-born workers. These are the most productive fields in the UK. They produce more of our salad crops than anywhere. They produce more of our wheat than other parts of the country, and they are vital to the supply of potatoes in the UK, and the people who are doing that work are all migrants.
This is not because local people don't want jobs. They really don't want to work in the fields, and migrants will.
So what we're seeing, if we have an anti-migrant policy, is a deliberate policy of economic destruction. And let's be clear about that. Once you force migrant labour out of the market, you're going to have to pay much higher prices to get other people to come in to do these jobs, which British-born workers don't want as a matter of fact. That will necessarily fuel inflation, and this is going to be one of the big consequences of the policy pursued by Trump, and which Nigel Farage would also like to pursue, and to some extent, Labour is promoting as well.
We would see food production fall.
We would see adult care facilities face crises.
We would see childcare in crisis as well.
And, we would see many other low-pay jobs, literally not having the people coming into the sector to make them function. So we have a real difficulty.
But there's still an argument to address, and that is one on productivity, because what people claim when they criticise migrant workers and claim that they reduce wages is that the migrant workers who are coming in are reducing productivity inside the labour market.
Paul Krugman addresses this issue very intelligently, which is, I guess, why he ended up with a Nobel Prize. What he says is that we can't predict how migrants react with the economy until we actually look at who they really are and what skills they have to bring. He suggests that there are four competing effects that we must consider.
The first one is that, actually, there is effectively capital dilution as a consequence of migrant workers coming in. In other words, the amount of labour per quantity of capital inside the economy increases, and therefore, productivity falls.
Now, the fact is, there's no evidence to support this, largely because capital isn't a fixed quantity. Capital is continually regenerated within the economy by new investment, and the evidence is that so long as the economy grows, and migration is feeding growth, then investment will keep up with the rates of growth, and therefore, there is no dilution, and therefore, migration is not reducing productivity. So we don't need to worry about that.
Migrant labour is not substituting for capital investment.
Then there's a claim that migrants have lower skills and therefore they're debasing the level of work in the economy, but again, there's very little evidence to support this. In fact, many migrants come in with very strong skills, but are doing work which is beneath their skill level.
But they're also doing something else, which is really important because what they're actually doing by undertaking these more menial tasks, which they tend to end up in, is releasing other people to use the skills they've got within the economy, which otherwise they couldn't do.
For example, carers who are freed up, whether it's for old-age people who are being cared for or for children who are being cared for, can work in a way that they couldn't because migrants are looking after those that they love. And that therefore increases the skillset available to the economy.
Third, there's an issue around complementary skills.
In other words, what those who are coming into the country as economic migrants do actually complements existing skills because they've been trained in different ways from those who are already in the UK.
They might well add to our skill set by bringing in different experience, and that is something that we can learn from, and actually, overall productivity rises as a consequence. In other words, migrants don't drag down the skillset in the UK economy, but it is highly likely that by bringing in their different experiences, they increase the quality of the skillset in the economy.
And finally, there's a question of motivation. Economic migrants work incredibly hard. Again, I can say this from personal experience.
I know that in my extended family, where it was by and large, the parents or grandparents who came to this country, their work effort was phenomenal. They wanted to integrate. They wanted to ensure that they could provide security for their family. And the fact that they even came here to do that was the consequence of what we might call a selection effect.
The migrants who arrive in the UK are those who are already highly motivated. It takes significant effort to get to this country. It takes a lot of effort to leave your ties behind and move to another place. And as a consequence, many of the people who come to the UK will outperform their locally born peers simply because their motivation level to 'get on' is higher than those who are already here, and we shouldn't ignore that.
We've had a surge in migration. There's no doubt about that. It's happened in the USA, it's happened in the UK, and it happened around the same time, and there are strong reasons in international relations why that has happened.
Stress in the rest of the world has created it at present.
Climate change is going to make it a lot worse.
And this trend is going to continue as a consequence, but let's be clear about it. This is not a threat, as the evidence in the US shows productivity in recent years has risen, not declined, despite having significantly higher rates of legal inward migration.
Migration, therefore, does not create lower productivity. In fact, the evidence in the USA is quite the opposite. GDP is higher in the USA as a consequence of migration, and in the UK, it is at least stable per head of population, which otherwise it might well not be, as a consequence of there being no migrants.
So migrants work.
Migrants pay.
They pay into pensions and they pay into public services, as well as working in them.
They contribute to the social security system, and in the US, there's strong evidence that that system will collapse without them.
In reality, they're the people on whom we might well depend for care when we're elderly or who will be looking after our young.
The UK's pension system is absolutely desperate for them to be working in this country, because unless they come here and sacrifice part of their income to keep a generation who do not include their parents, in their case, because their parents will be elsewhere, then the elderly will be in deep trouble in the future.
We could reduce migration, but if we did, we would massively increase fiscal pressure as a consequence. We would not reduce it.
The big picture is this: economic necessity and justice demand that we treat migrants fairly.
As do, of course, human rights demand that we do just that. These people are our equals, and in international law, they'll have a right to be here.
The vast majority of people who migrate to this country come on visas and will be welcomed as a consequence.
Many of those who arrive in small boats will also end up here because they can prove their right to asylum.
A tiny number are actually the reason why there's a massive anti-migrant hysteria in this country, and it's almost wholly misplaced.
Migration is not a burden on the UK. It's the foundation of our future, and for that reason, we need to have a positive acceptance of migration and a discussion about how we can integrate people into this country for our long-term benefit.
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The debate at the moment is primarily on illegal migrants arriving on small boats from France who then claim asylum. Most people are not overly bothered about legal migrants on work visas stamped no recourse to public funds. I would not conflate them myself. But let’s say you’re right that the illegals are net economic and cultural contributors and Britain will lose out by returning them to France. That’s what most voters want, and if a country votes to be poorer then demos should prevail.
Why?
The UN Convention on Refugees (of which the UK is a signatory) says refugees seeking asylum can arrive in a country by any means and do not require passports or any other documentation. So I fail to understand why people arriving in small boats are continually referred to as “illegal” in certain quarters.
They aren’t
The claim they are is a lie
Graham,
Voters might be given the option to deny basic human rights to migrants but that option has no validity, either legally or morally. The fact that the option is available for representative politicians to offer is yet another indicator of the fundamentally broken nature of parliamentary democracy.
Most of the migrants arriving on small boats succeed in their asylum claim so they have a right to be here and voters do not have a right to deny them.
Agreed
Agreed, especially with the last line – the integration ‘policies’ are terrible to non-existent given the state of local government finances over the years.
What makes it worse is austerity and inequality stemming from that austerity. Austerity is the problem, the British government / Whitehall’s addiction to it, their problem. You can only have successful migration in my view in a socially stable country with a ruler that is pro-active at intervening in economically disruptive inputs.
In the UK, we are all migrants …. Its only a matter of how far back we go – there’s a sign at Nairobi airport saying “Welcome Home”. More recently, my family were (mistreated) migrant Irish Catholics. I “got on my bike” in the late 80’s.
I think RMs argument misses a key aspect of the austerity context. Migration is being used to fill low paid jobs with highly skilled and highly motivated “others”. But I don’t know that the people who are not doing those roles (by choice or not) are “offering their skills” in other ways. In austerity Britain workforce training or out of workforce training isn’t being used to reskill these non-working residents.
I have no doubt that migrants are a massive threat to many in the UK who lack the skills, flexibility, motivation (hunger) of many migrants. Combine that with an opportunist austerity environment which doesn’t invest in reskilling, high quality education, housing, health and we manufacture resentful residents who feel they are ‘downward socially mobile’.
It’s not “migrants” ….. But great excuse for blame! Couple this with policies that really are leaving people behind, and we have a breeding ground for fascists…..
Great post.
If people could afford housing , they would probably have more children. The cost of housing is a major disincentive. And why is it so expensive? De-regulation of finance and neo-liberalism plus the failure of the Thatcherite housing policy and lack of social house building.
All policies Reform would continue while banging the anti-migrant drum.
Dusting off my PhD in the bleeding obvious……………
1. We have problem with Productivity in the UK economy that remains unaddressed
2. There is then the issue of Neets, Nedds or whatever you call them, young people who have basically been failed by the school system and ending up as a liability not an assett. Would it be radical to suggest that if we have a declining birth rate we need to make sure that the young people we have get the best possible start in life and thats not getting involved in crime and anti social behaviour
3. Finally given that the key indicator is the number of retirees per worker. That should allow Governments to set some sort of quota for migrants. Possibly we could even start doing what was done in the immediate post WW2 era and recruit migrants in their home countries?
Sounds like some sort of a plan.Points 1 & 2 are of course things that we should be doing anyway
Thanks Richard. You may be aware already but Gary Stevenson is singing your praises in his latest You Tube video (out today)!
Really? I had better watch….
There have been emails, I admit….
Richard,
In a recent video Gary Stevenson talked about knowing what was wrong with the system but not necessarily knowing what to do about it, suggesting that was up to economists. I posted a comment including a link to your Taxing Wealth Report and noticed a few others had done the same. I heard Gary interviewed by Andrew Marr last week where he talked about reforming the tax system to tax gains from wealth in response to a question from Marr about wealth taxes not working and being abandoned by others who have tried before, blah blah. It was good to hear Gary respond in this way and great to hear you’re in contact!
PS I’m a 64 year old with no prior knowledge or understanding of economics. I decided to change this during lockdown and came across your blog, which is very informative, including some great commentary. I often quote you to friends and family. The tide is slowly turning (I hope!). Thanks for all you do.
He plugs me about 23 minutes in to his video out today
And, thank you
One of the problems I find with critics of the current system, political, social, economic, is that they identify everything wrong and dedicated little of their books or lectures on solutions. Your blog and YouTube channel, Richard, actually suggests, or outright points out the obvious solutions. It’s like if an economist was paid to do their job rather than spout doctrine. It makes it easier to explain to people too. I can’t explain MMT to people without seeming mad, so I point them here.
Thank you.
I hate whining without solutions. I’m not naming you Joe Stiglitz, or most NGOs, but I try hard to do things differently.
With migration, the old adage that a simple but wrong statement defeats a complex but right one is insightful. It’s very easy to believe that if I can’t get a job, but the migrant down the road has one, he took my job; it’s much harder to see that by contributing to the general level of activity in the economy, the migrant working down the road is helping me get a job.
Agreed
I was very impressed with this post and will use it in future communications regarding the solutions I have outlined to you in past posts. All of the components of Collaborative Circular Migration are designed to create win-win situations where both the country of origin and its citizens as well as the UK and UK citizens would benefit from the program. I hope that at some point you will find the time to review all of these concise documents and offer your valued critique of the suggestions that I have made.
I strongly believe that the last Tory Government deliberately trimmed down the Home Office staff evaluating claims in order to grind asylum applications to a halt while restricting all safe and legal routes to come to the UK. By disallowing asylum seekers any legal right to work, it was inevitable that this highly motivated cohort would seek illegal employment in the black market economy. This continues to serve a number of core Tory objectives: it facilitates exploitation in unsafe workplaces, and undocumented workers will compete with those paying taxes, driving down wages to break the power of our unions. This also creates a vulnerable population that can be targeted as the sole cause of our government created poverty, inequality and austerity.
I have proposed a specialized Earn, Learn and Return (ELR) Visa for so-called economic migrants that would be open to all asylum seekers using newly created safe and legal routes. It would also apply to all those who have already arrived here by boat as no one is an illegal asylum seeker under international law. My plan would empty the migrant hotels and hopefully stop future dangerous channel crossings. As a person who has travelled extensively and who, in my youth, worked in numerous foreign countries, not always totally legally, I fully understand the basic needs and motivations of those who move for economic reasons.
The ELR Visa could target areas of low skilled labour with migrants legally working in ‘all found’ employment. Farms would need to set-up communal accommodation, while care homes and hotels would offer shared rooms, with all places providing basic meals as part of the payment for work. This ‘all found’ offer allows the greatest possibility to save most of the money that is earned after deductions. I know this because it was my short-term tactic of sacrificing the privacy of independent living to accumulate funds for my travels.
A specialized bank account should be made available to ELR Visa holders to incentivise the accumulation of funds using a type of savings bond that would pay out at a generous higher amount, but only in a country of origin. Additionally these accounts could be used to facilitate the charge-free transfer of remittance money to a home country. Migrant workers would also be incentivised to participate in brief learning opportunities in targeted subjects required in their country of origin, with payment for completion added to their bond account. The subjects might include anything from vector control, water and sanitation, mechanical or sewing skills etc to care in the community for care home staff or basic math and English for those whose education was disrupted by war.
When considering how our government should fund this program it is important to remember a number of things. Our current system of supporting migrants languishing in hotels for upwards of a year or more at huge cost. This money is disgracefully extracted from our dwindling foreign aid budget to profit wealthy hotel chain owners. However, those gainfully employed in needy sectors of our economy will eliminate this cost by rerouting our foreign aid funds to where they should rightfully be spent overseas. All funds channelled through an ELR account would be paid out in the country of origin, thus a justifiable component of our Foreign Aid budget while also incentivising migrants to return home.
All too often Foreign Aid money allows developing governments to reduce spending on the basics like healthcare and education while channeling money into excessive military spending. The ELR Visa program would drip feed funding directly into communities where it could be of most benefit to the stabilization that averts crisis and conflict. We can help a lot more people to improve their lives by issuing a fixed term ELR Visa than by rescuing only the most desperate migrants willing to risk their lives in small boats! The market for such passages would decrease once a viable alternative was put in place. UK citizens would have a greatly diminished cause for anger if migrants were working to support their stay here in their places of employment.
Impoverished developing countries become less and less stable as the exodus increases; this is a vicious cycle that feeds even more desperate journeys. All of the migrants who settled here permanently will one day become old and require care and pensions; this should be reserved for those who cannot safely return. The climate crisis will create migrants who have no home to return to.
Scavenging the so-called ‘Best and the Brightest’ from countries who could ill afford to train them is a morally bankrupt policy which must end ASAP. It was in response to my ten country tour of hospitals in Sub-Saharan Africa that I was inspired to formulate the first of my Collaborative Circular Migration policies which involves training our medics overseas. Richard, I sincerely hope that you will please consider reading all of the quite concise Collaborative Circular Migration files that I sent to you some time ago; many thanks in advance.
Thanks
I fully accept your arguments for migration and having grown up in multicultural London enjoy the richness this brings to our country. I’m also approaching retirement and see the need for younger workers to do the jobs to support our growing older population. However, post Brexit and Covid we’ve had very different migrants. Whereas previously there was a large contingent of Europeans in their 20s and 30s, many of whom came for a limited period of time. Now thanks to Brexit it’s harder for Europeans to come and it seems to be more Asians and Africans, who rightly want to bring their families with them with a view to settling longer term. I’m now in mid Devon and 10 years ago it was very white, but we now have sufficient diversity that new international food shop has opened up. I love that I can now buy spices etc. I love closer to home, but it’s a very noticeable change for old Devonians, not used to such diversity.
They need to get used to it then.
It’s that or they have no future.
Have to mention that my birth certificate first name is “John-Patrick” – Irish grandfather!
Can I recommend Tom Russell’s excellent song Who’s Gonna Build Your Wall at:
https://www.youtube.com/watch?v=LZkAoosVLkA
In regards to migrant skills, I can tell you that the construction industry relies on foreign labour. We don’t have enough joiners or steel fixers, and I haven’t been on a site without Indian workers for 10 years. On the professional side too, engineers, designers, surveyors, they are from all over the Europe and commonwealth countries. our infrastructure would have collapsed by now without migrant labour.