(What’s Left of) Our Economy: U.S. Worker Pay (Momentarily?) Tops Inflation

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benefits, Biden administration, CCP Virus, Census Bureau, consumption, coronavirus, COVID 19, demand, ECI, Employment Cost Index, Immigration, labor force, labor market, labor shortage, Open Borders, Paul Krugman, production, productivity, recession, salaries, supply, Title 42, Trump administration, wages, workers, workforce, {What's Left of) Our Economy

American workers got some unambiguously good news this past week. Although it’s not all that high on the “good” scale. And it could well be short-lived.

Still, good is good, so it’s important to note that by one official measure, American workers’ earnings have at last caught up to the recent burst of inflation – and a little bit more. In the first quarter of this year, wages and salaries have risen by 0.1 percent over last year’s first quarter. (These are private sector wages and salaries, the ones economy watchers really care about. That’s because unlike public sector earnings, they’re driven predominantly by market forces, not politicians’ decisions.)

No, it’s not much, but it’s a better situation than prevailed as of the end of last year, when such compensation had fallen by 1.2 percent on year. In fact, these new results for the Employment Cost Index marked the first time since the first quarter of 2021 that, in real terms, wage and salary gains combined have moved back into the black.

This encouraging development, however, comes with two important caveats. First, when you add in the value of benefits and get numbers for total compensation for private sector workers, they’re still lagging inflation, and have since, again, the first quarter of 2021.

To be sure, by this gauge, workers are catching up. As of the first quarter of last year, total private sector compensation was down 3.5 percent on an annual basis, the worst such result in a data series going back to 2001. Now it’s trailing by just 0.2 percent. But it’s still trailing.

Second, although progress is being made on the earnings front, labor productivity growth remains weak. The best combination in terms of yielding sustainable prosperity is strong growth for both.

And like I hinted at the start, this progress may be just about over. Not only is the economy slowing – which will surely make employers more reluctant to hire than they have been, and thereby reduce the pressure they feel to keep and add workers by raising pay at whatever rate. A recession will of course leave workers with even less bargaining power.

But the supply of workers available to business, which had shriveled thanks largely to the effects of the CCP Virus, has rebounded past pre-pandemic levels. And much of this recovery stems from a strong rebound in net immigration inflows – which the U.S. Census Bureau believes have returned to pre-virus levels and to their levels before the advent of the Trump administration’s restrictive border policies.

Many immigration devotees, like Nobel Prize-winning economist and New York Times pundit Paul Krugman argue that the immigrant-driven loosening of the national labor market has kept employment up while preventing “runaway inflation” not by suppressing wages but by keeping production up – and thereby closing the CCP Virus-created gap between demand and supply.

But if you look at the economy’s growth over the year when immigration surged, that argument falls apart. It may become validated farther down the road, but in inflation-adjusted terms, but between the first quarter of 2022 and 2023, U.S. output rose a bare 1.56 percent Moreover, as I’ll be showing in a subsequent post, even this weak growth in the gross domestic product, along with the better performance of 2021-22, was led by unusually high levels of consumer spending, not by output.

As a result, the main effect to date of the immigration resurgence clearly has been undercutting wage pressures. And it’s certain to continue with the Open Borders-friendly Biden administration in office through the start of 2025 at least, with the pandemic-era Title 42 restriction program ending May 11, and the President so far deciding to respond with a plan featuring numerous provisions aimed at easing major current obstacles to legal immigration. 

So let’s all hope that American workers are enjoying this mini-near earnings recovery while they still can. For if they blink, they might miss it. 

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(What’s Left of) Our Economy: The Best Way(s) to Handle Labor Shortages

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apprenticeships, Immigration, labor shortages, productivity, The Wall Street Journal, training, wages, Will Feuer, {What's Left of) Our Economy

Could a learning curve be developing in American business about U.S. labor market issues? One hopeful sign appeared today in a Wall Street Journal report on current shortages of workers needed to build new federally funded fast internet systems for under-served rural American communities.

Specifically, the article by Will Feuer wasn’t dominated by thinly disguised pleas for more immigration to fill the gap. In fact, no one he interviewed – even the heads of the companies trying to put these networks in place – called for opening U.S. borders wider to boost the national pool of “fiber splicers.”

Instead – and somewhat contrary to the piece’s somewhat alarmist headline – many of the firms engaged in this endeavor are responding the way that businesses have dealt with scarce labor throughout American history – by becoming more productive. And others are trying to expand supply of possible hires domestically in various ways.

Some are making products that are simpler to work with, and therefore require fewer workers to complete a given assignment. Others are changing their business models – e.g., moving more of their installation, maintenance, and repair work on fixed broadband networks in-house, or retraining employees involved in lower-demand projects to handle the surge of new orders that will stream in as tens of billions of government dollars start getting spent to build the new systems.

Still others are conducting training programs for their own workers and sponsoring apprenticeships for potential workers – including high school students – already residing in the United States. Others are raising pay – another way to attract and retain more employees, and a screamingly obvious one, too. (In fact, one shortcoming of the report is the lack of any information on current wages in the industry and how they’ve changed over time.) And surely some are trying some or all of the above.

The broader implications, moreover, should be crystal clear.  The nation can either follow a labor force policy of balancing supply and demand in ways historically proven to raise living standards sustainably, and ensure that greater technolotical and managerial efficiencies maximize benefits for both busines and the existing domestic workforce.  Or it can pursue immigration-centric approaches whenever companies or industries claim labor shortages, and achieve race-to-the-bottom-type results.

Those Stubborn Facts: Yes, There Really is a Biden Border Crisis

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Biden administration, Biden border crisis, border security, illegal aliens, Immigration, migrants, Open Borders, Those Stubborn Facts

Number of illegal southern border migrants released into the U.S. under President Biden: at least 2.021 million

Number of illegal southern border migrants that have evaded border agents under President Biden: 1.373 million

Total number of illegal southern border migrants that have entered the U.S. under President Biden: 3.394 million

 

(Source: “Biden’s Released at Least 2,020,522 Southwest Border Migrants. And probably a lot more – plus 1.3 million known ‘got-aways,” by Andrew R. Arthur, Center for Immigration Studies, April 17, 2023, https://cis.org/Arthur/Bidens-Released-Least-2020522-Southwest-Border-Migrants )

Making News: Podcast Now On-Line of NYC Radio Interview on Leading International Crises

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border security, China, Frank Morano, Immigration, Iran, Iraq, Iraq war, ISIS, Making News, Middle East, nuclear war, Russia, Saudi Arabia, Syria, Taiwan, terrorism, The Other Side of Midnight, Ukraine, Ukraine War, WABC AM

I’m pleased to announce that the the podcast is now on-line of a panel discussion I participated in last night in the wee hours EST on Frank Morano’s popular radio show “The Other Side of Midnight” on New York City’s WABC-AM.

Click here for a free-wheeling discussion of topics including updates on global hot spots Ukraine and Taiwan, the future of U.S. policy in the still chaotic Middle East, and what lessons should be learned from the second Iraq War that the United States launched twenty years ago.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

Following Up: Podcast Now On-Line of National Radio Interview on U.S. China Strategy

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allies, Asia, Buy American, CBS Eye on the World with John Batchelor, Central America, China, decoupling, Following Up, friend-shoring, Gordon G. Chang, Immigration, Mexico, NAFTA, North American Free Trade Agreement, tariffs, Trade, U.S.-Mexico-Canada Agreement, USMCA

I’m pleased to announce that the podcast of my interview last night on John Batchelor’s nationally syndicated radio show is now on-line.

Click here for a timely discussion – with co-host Gordon G. Chang – on whether President Biden’s Trump-y Buy American-focused trade policies are undermining his efforts to build effective global alliances to contain China.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

Making News: Back on National Radio Examining the U.S.’ China Containment Strategy

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Asia, CBS Eye on the World with John Batchelor, Central America, China, decoupling, DR-CAFTA, friend-shoring, Gordon G. Chang, Immigration, Latin America, Making News, manufacturing, Mexico, NAFTA, national security, North American Free Trade Agreement, tariffs, Trade, U.S.-Mexico-Canada Agreement, USMCA

I’m pleased to announce that I’m scheduled to be back tonight on the nationally syndicated “CBS Eye on the World with John Batchelor.” Our subject – whether the trade and security elements of America’s strategy for countering the China threat are too often tripping over each other.

No specific air time had been set when the segment was recorded this morning. But the show – also featuring co-host Gordon G. Chang – is broadcast beginning at 10 PM EST, the entire program is always compelling, and you can listen live at links like this. As always, moreover, I’ll post a link to the podcast as soon as one’s available.

And keep on checking in with RealityChek for news of upcoming media appearances and other developments.

Im-Politic: The Regime Media’s Illegal Aliens Cover-Up Continues

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Biden border crisis, child labor, Financial Times, illegal aliens, Im-Politic, Immigration, labor productivity, Mainstream Media, meatpacking, productivity, Regime Media, UniParty, Washington Post, workers

The evidence keeps mounting that the Uniparty’s Regime Media will stop at almost nothing to cover up the costs of illegal immigration to the U.S. economy and American society. Just yesterday, as I tweeted, the Financial Times published a report claiming that a labor shortage fueled in large measure by flows of legal and illegal immigrants allegedly so inadequate that resulting worker shortages are imperiling President Biden’s infrastructure and manufacturing revival plans.

Only one problem: The reporter and her editors completely failed to mention that the wages offered by U.S. construction firms have gone exactly nowhere at best lately – which is hard to square with the idea that they’re desperate to hire.

And this morning, I noticed a Washington Post report on the shameful reappearance of illegal child labor in the United States – including child employees exposed to dangerous working conditions – that buried unmistakable signs that continuing inflows of illegal aliens obviously enabled by President Biden’s lax border enforcement policies bear at least much of the blame.

In the fifth paragraph, the article states that

“Child labor violations have been on the rise in the United States since 2015. The number of minors found to be employed in violation of child labor laws shot up by 37 percent between 2021 and 2022. The number of children found to be illegally employed in hazardous occupations, such as meatpacking and construction, spiked by 93 percent over the past seven years.”

That’s certainly important to know. And in the following graph, readers learn that “Experts say a historically tight labor market could be fueling this rise in violations, with employers tapping into new labor pools to fill vacancies across a variety of industries.”

But it’s not until paragraph seventeen that the piece even obliquely mentions the illegal aliens angle:

“Many of the children [working at the meatpacking facilities focused on in the article] spoke only Spanish, and at least some Labor Department interviews with minors were conducted in Spanish, investigators [who were probing labor law violations for the federal government] said.”

Yet the article still never disclosed why these unilingual children are in the country to begin with – no doubt because their presence is surely unlawful, and a testament to the humanitarian impact of the Open Borders-friendly immigration policies pushed so avidly and for so long by major U.S. news organizations.

Also conspicuously overlooked in this Post report – the harmful economic impact of the long-time absence of sensible immigration policies. In this case, strong productivity growth is the casualty, which matters decisively because ever greater efficiency is a key – and probably the most important key – to America’s ability to generate high and rising living standards. And the evidence could not be clearer that the ready availability of illegal alien labor has enabled the nation’s meat-processing industry to remain profitable without automating or shaking up management or reconfiguring its production lines or taking any other major steps to modernize.

I last looked at that sector’s lagging performance in labor productivity (where the data is most up to date) in May, 2020, and here’s where the situation stands now: In the non-durable manufacturing sector, where meat processing is found, from the first quarter of 1987 through the fourth quarter of last year improved by 71.62 percent. But between 1987 and 2021, it rose in “animal slaughtering and processing” by just 13.98 percent.

And for those doubting the illegal immigrant connection, this 2021 Fact Sheet, issued by an organization bent on highlighting “the many different ways that undocumented immigrants contribute to the food supply chain in the United States,” puts the number of illegal alien workers in slaughtering and processing companies at 82,700 in 2019. If that’s accurate, then according to the official employment data for that sector, that came to nearly one in every five employees at year!

The bottom line:  The resumed illegal immigration tide fostered by the Biden administration has helpd bring about resumed economic woes and exploitation. If I was shilling for the Cheap Labor Lobby, or ideologically wed to Open Borders, I guess I’d want to cover that up, too.   

(What’s Left of) Our Economy: 2022 Saw More U.S. Trade Deficits but More Secure Supply Chains

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Advanced Technology Products, ATP, Biden adminstration, Canada, Central America, Dominican Republic, European Union, friendshoring, Germany, Immigration, Japan, manufacturing, Mexico, offshoring, South Korea, supply chains, Taiwan, Trade, Trade Deficits, U.S.-Mexico-Canada Agreement, USMCA, Vietnam, {What's Left of) Our Economy

Sometimes the best-laid plans of mice and men etc etc. So this second look by RealityChek at the final (for now) year-end 2022 official U.S. trade figures is coming out today, rather than yesterday, as I expected.

The big takeaways: First, record deficits were set practically everywhere the eye can see – and on top of sizable increases – when it comes to trade flows in manufacturing, advanced technology products (ATP), and with nearly all of America’s major trade partners (except China, which was covered Friday).

Second, and more encouragingly, regionalization of U.S. trade within the Western Hemisphere kept growing, which is (a) surely making supply chains more secure; and (b) creating more economic opportunity in countries that have long sent the United States large numbers of migrants. In other words, the Biden administration goal of “friendshoring” keeps becoming a thing. 

The biggest absolute numbers were turned in by U.S. manufacturing, which saw its huge, chronic deficit rise by 13.46 percent, from $1.32544 trillion to a twelfth straight record $1.50379 trillion. (Unless otherwise specified, all figures in this post will be in pre-inflation dollars, which are the trade data most closely followed by students of the economy.)

And in context, these figures look just as bad. Although full-year, 2022 results won’t be available until late March, when the pre-inflation manufacturing output numbers come out, as of the third quarter, the manufacturing shortfall stood at 53.09 percent of its value-added production (a measure that avoids significant double counting for complex goods made up of lots of parts and components). That marks the first time this number has topped fifty percent.

Moreover, it could well climb further, since in inflation-adjusted terms, manufacturing output has weakened significantly in the fourth quarter.

The only remotely optimistic development: The growth rate of the manufacturing trade deficit last year slowed from 2021’s 18.84 percent.

The trade gap in advanced technology products widened even faster last year – by 24.58 percent, from $195.95 billion to a sixth consecutive all-time high $244.11 billion.

An even stronger goods trade deficit increase was registered by America’s partners in the United States-Mexico-Canada Agreement (USMCA) – the successor to the North American Free Trade Agreement (NAFTA). This shortfall worsened by 34.12 percent, from $158.19 billion to a second straight record .$212.17 billion.

The most dramatic USMCA deficit change came in U.S-Canada goods trade. Here, the gap soared by 63.14 percent, from $50.03 billion to $81.62 billion. That new record deficit was the highest since 2005’s $78.49 billion..

The goods trade deficit with Mexico surged more slowly – by 20.73 percent. But 2022’s $130.55 billion total was a new all-time high as well, surpassing 2020’s $112.08 billion.

American trade with the European Union (EU) was an exception to the 2022 pattern. The goods shortfall fell by 6.78 percent, from $218.74 billion to $203.91 billion, largely reflecting supercharged American exports of natural gas to the continent to make up for reduced post-Ukraine war Russian supplies.

But the goods deficit with the EU’s largest economy, Germany, increased by 5.44 percent, from $69.88 billion to $73.69 billion.

Turning to U.S. goods trade with Asia, the deficit with Japan grew by 12.80 percent on year, from $60.30 billion to $68.01 billion.

The gap with South Korea jumped by 51.39 percent, from $28.98 billion to a third straight record $43.87 billion.

In swelling by 19.65 percent, from $40.23 billion to $48.13 billion, the goods shortfall with Taiwan set recorded its fourth consecutive all-time high.

And consistent with its growing role as an alternative to offshoring export-oriented production to China, the U.S. goods deficit with Vietnam ballooned by 27.77 percent, setting a thirteenth straight record in the process.

At the same time, these geographic trade statistics show that despite the emergence of Asia altenatives to China, U.S. goods trade is becoming increasingly concentrated within the Western Hemisphere.

Between 2021 and 2022, two-way U.S. goods trade with Canada and Mexico combined as a share of total U.S. goods trade rose from 28.76 percent to 29.33 percent. And in 2019, the last full-year before the pandemic’s arrival state-side, this share was just 25.71 percent.

The numbers for Dominican Republic and Central America are much smaller but the trends more dramatic. Between 2021 and 2022, their share of total U.S. goods trade improved from 5.25 percent to 5.34 percent, but since 2019, it’s way up from 1.23 percent.   

 

Making News: National Radio Podcast Now On-Line on Fingering the World’s Real Protectionists…& More!

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CBS Eye on the World with John Batchelor, China, economics, Following Up, global economy, Global Imbalances, globalization, Gordon G. Chang, Immigration, Jeremy Beck, labor shortages, NumbersUSA, protectionism, Trade

I’m pleased to announce that the podcast of my interview last night on John Batchelor’s nationally syndicated radio show is now on-line.

Click here for a timely discussion – with co-host Gordon G. Chang – on the crucial issue of whether recent U.S. moves bythe Trump and Biden administrations represent a worrisome new lurch toward destructive trade protectionism, or efforts to defend and promote legitimate American – and sometimes global – interests.

In addition, on January 10, in his blog for the immigration realist organization NumbersUSA, Jeremy Beck quoted from my December 29 post debunking the numerous recent claims blaming the labor shortages that have popped up in many U.S. industries on policies that have enabled too few foreigners to join the American labor force. 

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

Im-Politic: The New York Times’ DeSantis Hatchet Job Flunks Even the Competence Test

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demographics, Florida, Im-Politic, Immigration, journalism, Lulu Garcia-Navarro, Mainstream Media, MSM, Regime Media, Ron DeSantis, The New York Times

Memo to New York Times podcaster Lulu Garcia-Navarro, her editors at the paper’s opinion section, and indeed all journalists: If you’re going to do a takedown piece on a major politician, or anyone, try to display at least minimal competence.

Had Garcia-Navarro and her editors followed this advice, they’d have never published a recent hatchet job on Ron DeSantis, the Florida Republican governor and possible 2024 presidential candidate, that’s a monument to factual cherry- picking and outright misinformation trafficking, and a disgrace even to the increasingly debased practice of opinion writing.

Garcia-Navarro concentrates on debunking the claims of DeSantis and his supporters that the governor “has overseen a growing economy” and that. “Florida now has the fastest-growing population in the country.” (I reported on the latter and related developments here.)

Actually, the author claims,

“Florida is not a model for the nation, unless the nation wants to become unaffordable for everyone except rich snowbirds.

“While my home state’s popularity might indeed seem like good news for a governor with presidential ambitions, a closer look shows that Florida is underwater demographically. Most of those flocking there are aging boomers with deep pockets, adding to the demographic imbalance for what is already one of the grayest populations in the nation. This means that Florida won’t have the younger workers needed to care for all those seniors. And while other places understand that immigrants, who often work in the service sector and agriculture, two of Florida’s main industries, are vital to replenishing aging populations, Mr. DeSantis and the state G.O.P. are not exactly immigrant-friendly, enacting legislation to limit the ability of people with uncertain legal status to work in the state.”

One obvious reason for doubting Garcia-Navarro’s arguments is the lack of documentation. That’s likely because had the author decided to present the principal facts, or had her editors insisted upon this, they ‘d have watched this indictment melt away.

A balanced picture of Florida’s demographics would have begun by noting that DeSantis has only occupied the state house in Tallahassee since the beginning of 2019. Anyone familiar with the Sunshine States knows that it’s been a popular retirement destination for decades.

It’s possible that DeSantis has had such a powerful impact on Florida’s demographics that these patterns have changed dramatically in the last four years? Well, yes. But the statistics surely have been distorted – like virtually all U.S. data – by the CCP Virus.

In any event, Florida’s own state government shows that the state’s (higher-than-the-U.S. Average) median age rose 0.71 percent between 2019-2021 (the latest figures available) while that of the nation as a whole increased by 0.52 percent. For comparison’s sake, during the two years before 2019, Florida’s median age advanced by 0.48 percent versus the 1.05 percent for the entire United States.

So these limited samples do show that Florida has been aging at a relatively fast pace under DeSantis, both versus its own pre-DeSantis pace and that of all of America. But the none of gaps or the changes between them is the least bit dramatic.

Between 2017 and 2019, Florida’s median age dipped from 110 percent of its total U.S. counterpart to 109.375 percent. By 2021, it bounced all the way back to …109.585 percent. In other words, big whoop.

As for Garcia-Navarro’s charge that DeSantis’ governorship has benefited only “rich snowbirds” economically, that’s hard to square with what the exit polls told us about his 2022 reelection results. Specifically, fully 41 percent of Floridians who voted last year lived in households that earned $50,000 annually or less. Thirty-eight percent of these voters’ households earned between $50,000 and $99,000 per year. And 21 percent earned more than $100,000 each year. So clearly, lots of DeSantis voters weren’t one percenters or five percenters or ten percenters or even close.

It’s true that DeSantis clobbered his Democratic opponent among voters aged 45 or older – by 63 percent to 36 percent. But that group includes lots of non-geezers. And among the 18-44-year olds, DeSantis trailed by just 50-48 percent. So clearly lots of DeSanti voters weren’t wealthy seniors, either. Either all these non-super-rich and young and midde aged Floridians are too stupid to vote in thei own economic self-interest, or they know something that Garcia-Navarro and her editors don’t.

And has DeSantis really shut off the flow of desperately needed immigrants into Florida? Despite his efforts to “limit the ability of people with uncertain legal status to work in the state” (love that latest euphemism for illegal aliens!), U.S. Census data show that the answer is emphatically “No.”

For example, from July, 2021 to July, 2022 (the latest official data available), slightly fewer immigrants moved into Florida on a net basis (125,629) than into California (125,715). And that’s even though California’s estimated population last year (39.03 million) was much larger than Florida’s (22.24 million), and even though California is a self-proclaimed sanctuary state. (See the the fourth xls table downloadable from this Census link.) 

These data don’t distinguish between legal and illegal immigrants, but for the purposes of this post, who cares? Indeed, do the (not rocket science) math, and even if you believe that more immigrants (includin those with “uncertain legal status) are essential for adequate senior care, it turns out that Florida is in much better shape because it’s receiving nearly as many of the foreign born as California even though its population includes many fewer (4.69 million) seniors in absolute terms than California (5.93 million).

Moreover, these numbers are little changed in a relative sense from those of the last pre-DeSantis year.  In fact, the data in the fifth xls table available at this Census link show that from July, 2018 to July, 2019, more immigrants came to Florida (88,678) than to California (74,028) even though more seniors (just over six million) lived in the latter than in the former (4.54 million).  (Note:  this last data describes the situation as of April, 2020. These were the closest Census figures that seem to be available.)   

I was able to find all these highly relevant figures without undue difficulty. Why couldn’t Garcia-Navarro? Or her editors? No doubt because their intent was not to englighten but to smear. As a result, I feel better than ever about changing my nomenclature for such established news organizations from “Mainstream Media” to “Regime Media.”