Why closed borders mean you may finally get a bigger pay rise

Have a think about this.

The size of Australia’s “labour force” is roughly 13.8 million people.

That’s the pool of workers in the economy.

Now, imagine it can’t grow quickly.

It can only grow slowly as babies are born, and with very low levels of immigration.

In such a scenario, if there’s a shortage of skills in the economy, workers with those skills will become more valuable.

If employers want to hire them, those workers will have more “bargaining power” and can demand higher wages.

And if the economy starts growing strongly and unemployment rates decline across a range of industries, the bargaining power of lots of workers will increase.

Eventually, employers will have no choice but to pay higher wages to lots of people.

If you were an…