Net overseas migration hit 518,000 in the year to June 2023 — the highest on record. It's moderated since, but remains well above the pre-pandemic average of around 240,000.

The standard economic argument is that migration increases both labour supply and demand, so the net effect on wages is ambiguous. But that aggregate view masks significant sectoral variation. In industries where migrants are concentrated — hospitality, aged care, construction — the labour supply effect may dominate.

What does the evidence actually show? And is the government's migration policy consistent with its stated goal of lifting wages?

I've worked in hospitality for 12 years. The wage growth in our sector has been well below the national average. There is always someone willing to work for less, and employers know it.

I'm not anti-immigration. But when the government says it's committed to lifting wages while simultaneously running record migration into low-wage sectors, something doesn't add up.

The empirical literature on this is genuinely mixed. Studies in the US, UK, and Australia find small negative effects on wages for low-skilled workers in high-migration areas, but the effects are modest and often temporary.

The more significant issue may be housing. Record migration into a constrained housing market drives up rents, which reduces real living standards even if nominal wages are unaffected. That's a real cost that doesn't show up in wage data.

Aged care worker here. Our sector has been heavily reliant on migrant workers for years. The government's response to the aged care workforce shortage has been to increase migration rather than improve wages and conditions enough to attract domestic workers.

The Royal Commission recommended significant wage increases. The government delivered some increases, but the sector still relies on migration to fill gaps. That tells you the wages still aren't high enough to attract sufficient domestic supply.

It's worth separating different migration streams. Skilled migrants in shortage occupations — engineers, doctors, IT professionals — generally complement the domestic workforce and may increase productivity and wages overall.

Temporary migrants on student visas or working holiday visas, who have limited work rights and may be vulnerable to exploitation, are a different story. The evidence on their wage effects is more concerning.

The government's position is that migration is necessary to fill skills shortages. But skills shortages are partly a function of wages — if wages were higher, more Australians would train for and enter those occupations.

Using migration to solve skills shortages without addressing the underlying wage signal is a short-term fix that perpetuates the problem. It also means the cost of the skills shortage is borne by workers in those sectors, not by the employers who benefit from the labour supply.