Eric Ruark's picture

Published:  

  by  Eric Ruark

The March job numbers are out today and job creation is "less than expected." Less important to Wall Street but more important to most of the rest of us is news that the number of persons employed fell 37,000 from February to March. The number of unemployed also fell (-121,000), as did the civilian labor force (-158,000), leading to a significant increase in those not in the labor force (+323,000).

We discussed these statistical categories last month, and the Bureau of Labor Statistics has a very useful glossary on its website.

While disappointing, the March numbers are not a cause for alarm. Economists anticipated a slower pace of job growth due to some severe weather last month. What the report does demonstrate when put in the context of previous BLS data is a continuing trend: The U.S. economy is failing to produce enough stable, well-paying jobs to keep up with the pace of population growth.

The problem goes beyond monthly job numbers and even the labor force participation rate, as important as that may be. Case in point: The labor-force participation rate went up significantly between 1970 and 1990 as more women entered the workforce. In some cases, this was due to women wanting to more fully participate in the labor force, in jobs traditionally held by men. In many other cases, this was due to the necessity of having a dual-income household.

Immigration is not the cause of wage stagnation that began in the 1970s, but it is a cause, and it exacerbates the effects of other causes. It doesn’t help American workers who are competing with low-wage workers in China to lose their jobs to low-wage immigrant workers. It does help U.S. employers' profit margins, though, and it does "grow the economy" by the simple fact of adding millions more to the U.S. population. But, to reiterate, the aggregate gross domestic product measure is not an indicator of prosperity.

A story in The Christian Science Monitor this week is a wonderful illustration of the failure to understand that wage growth is a good thing, even if employers chafe at raising pay. In Hawaii, one state in the United States where the effects and limits of growth are immediately tangible, employers in the tourism industry are complaining that unemployment in the state is “too low.”

Are there downsides to a low unemployment rate? In Hawaii, which has the United States' lowest jobless rate at a minuscule 2.1 percent, the answer is yes. Employers are frustrated by their inability to find workers. And unfilled jobs may be slowing the state's economic growth.

It is true that economic growth may slow, but what how does this effect workers in the tourism industry?

“[M]any employers are responding to the worker shortage by offering higher pay.”

First of all, there is no worker shortage in Hawaii or any other state in the Union. A worker shortage is just that, a shortage of available workers, though that term has become shorthand for something else entirely. What the reporters mean is that in Hawaii employers are having a difficult time finding workers who are willing to accept the wages and working conditions on offer. Employers are having to raise wages. Which brings us to the second point:

NumbersUSA believes that better pay for American workers is a good thing!

Why do so many members of Congress believe otherwise?

A tightening labor market is good for workers, and the only way to continue wage gains is to stop expanding the labor pool through mass immigration. There are so many workers still on the sidelines that slack will remain for the foreseeable future. So, when employers complain about “shortages” remember they are grousing about the oversupply of workers diminishing slightly.

Wages are rising even in the agricultural industry in California, and everyone agrees this is directly tied to a drop-off in foreign workers. The attitude in the ag industry is that this should only be temporary. The default position is to use immigration as effective wage depression, while forever writing off American workers. Unfortunately, this attitude is not confined to ag producers.

Paying workers more will result in more discretionary income for those workers and paying American workers more means that extra pay would go back into the local economy, not get sent out of the country as remittances. It may slow economic growth, but that can be managed effectively if the United States slowed its population growth. The current economic model is not sustainable, and most of us recognize this fact.

Let me leave you with a piece from this week in The Week by Jeff Spross.

American companies are running out of workers. From oil drillers in West Texas to restaurants in New England, companies are telling reporters they can't find enough people to fill job openings. We're told this will result in unfilled orders, untapped markets, and ultimately slower economic growth.

Allow me to offer an entirely different take: Labor shortages are actually good.

An actual labor shortage would be devastating for the U.S. economy. Spross understands this, as well as the reality that employers are complaining about a contrived “labor shortage” that is good for workers and good for the health of the economy. And Spross raises the immigration component in a measured and informed manner.

Reporters actually have a bad habit of presenting immigration as the solution to labor shortages. No doubt, this frame is well-intentioned. It functions as a pushback against xenophobia, explaining how decency towards immigrants and refugees can even help the economy. But it contributes to the idea that we all just have to put up with low pay forever, and also implicitly presents immigration as a tool for keeping wages down. It also demeans immigrants themselves: They are "better" or "more desirable" because they don't inconvenience their employers by demanding better pay or conditions.

Well said!

ERIC RUARK is the Director of Research for NumbersUSA

Updated: Fri, Apr 20th 2018 @ 10:10am EDT

NumbersUSA's blogs are copyrighted and may be republished or reposted only if they are copied in their entirety, including this paragraph, and provide proper credit to NumbersUSA. NumbersUSA bears no responsibility for where our blogs may be republished or reposted. The views expressed in blogs do not necessarily reflect the official position of NumbersUSA.