How would Donald Trump keep jobs in America and not raise the cost of living?
Donald Trump plans to pressure companies to bring factory back to the US, by increase tax for those companies set factory over sea 35%. Increasing US job is a good thing, but I kept thinking, won't this raise the cost of living, considering US wages is higher? Won't it make more sense to give 35% tax decrease, for companies that relocate factories from oversea back to the US?
Wages and product costs are determined by supply. Deport several million mostly unskilled illegal immigrants, and the excess labor supply that has caused wages for the bottom 20% to decline in real dollars literally goes away.
Deport a few million and seal the border to more coming in, and we have fewer workers chasing the same number of jobs. I don't expect Trump to force companies to bring jobs back, but reducing regulations and high tax rates that caused many to leave will prevent the job loss from getting worse. When the economy improves, the growth results in MORE jobs.
When more people not counted as unemployed start looking for work, official unemployment will rise but the economy will improve. Note: 1/6 of working age men aren't working, historic norm is 5%. That's why the workforce participation rate was 62% in 2015, vs 66-67% before 2008.
Over a few years, tighter labor supply and growing labor demand will allow us to increase wages.
You can't raise wages when there are millions of new unskilled laborers arriving every year, and you certainly can't if there are 10-20 million illegals who can and do work under the table undercutting native born laborers.
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