Im-Politic: It’s Americans Last for the Courts as Well as Business on Immigration

Tags

Biden, businesses, CCP Virus, coronavirus, COVID 19, guest workers, Im-Politic, immigrants, Immigration, Joe Biden, judges, labor shortages, lockdowns, recession, Reuters, Trump, unemployment, visas, wages, workers, Wuhan virus

So here I was about to give myself a day off from blogging today and spend most of it reading and then watching the big New Year’s Day college football games, but the news just keeps newsing. And I couldn’t forgive myself if I didn’t immediately seize on the opportunity to comment on today’s Reuters report titled “Trump extends immigration bans despite opposition from U.S. business groups.”

The piece wasn’t most remarkable for the kind of pro-globalist or Never Trump bias I often cover, or for the headline development. Everyone who’s followed the issue knows that the President has long favored and put into effect many measures aimed at curbing both legal and illegal immigration – and long before the CCP Virus and ensuing lockdowns-type government orders and consumer caution combined to create a genuine U.S. jobs depression.

Nor should anyone be especially struck by the observation that business groups are seeking to reopen American borders to green-card applicants (who will be seeking U.S. employment) and foreign guest workers (who enter the country in response to request from companies claiming labor shortages) even though, as the piece notes, 20 million Americans are currently receiving unemployment benefits.

No, what blew me away about the story were these two sentences:

“In October, a federal judge in California blocked Trump’s ban on foreign guest workers as it applied to hundreds of thousands of U.S. businesses that fought the policy in court.

“The judge found the ban would cause ‘irreparable harm’ to the businesses by interfering with their operations and leading them to lay off employees and close open positions.”

In other words, this judge supported allowing the number of workers overall available to American business to start growing again at a time when enormous numbers of domestic workers nationally have lost their jobs because enormous numbers of the businesses they worked for are being closed (many for good) by the aforementioned shutdown orders and consumer behavior changes.

Yet the judge’s stated reason for admitting these new (foreign) workers at a time when business are shedding enormous numbers of (domestic) workers is that enormous numbers of these same businesses would suffer “irreparable harm” – that is, harm for good – without the foreign workers. (See this post for an exceptionally intelligent discussion of the national business closure numbers, which so far are anything but from definitive.)

Even worse: The business lobbies that have opposed the Trump restrictions are the same groups that for months have condemned what they regard as overly sweeping lockdowns-type mandates for killing off enormous numbers of businesses, and threatening the survival of many others by sharply limiting the amount of customers they serve. And these business organizations insist that companies need more employees? Even though there’s every reason to believe that, at least through the winter, these shutdowns are much likelier to become tighter, not looser?

This isn’t to say that every business in this highly diverse economy during these highly difficult times is facing the same issues or dealing with the same labor market conditions. In fact, there can’t be any reasonable doubt that some companies are experiencing troubles finding the workers they need. Nor can there be any reasonable doubt that pandemic-related travel curbs are complicating their efforts to attract the necessary employees from other parts of the country, even if they raised wages strongly – the response identified by standard economic textbooks for ending labor shortages (even though this wage effect is overwhelmingly ignored by economists who use the same textbooks to support lenient immigration policies).

But how would new foreign workers solve this problem? They’d be subject to the same travel restrictions. And even if employers were willing to pay to bring them safely to their facilities, why couldn’t they extend the same services to any qualified domestic workers they could identify – if they bothered to look for them?

As for other businesses, chances are they favor reopening the immigration sluice gates now during a CCP Virus-induced economic slump for the same reason they favored it in normal times: They simply want to pump up the U.S. labor supply, and thereby drive down the price that labor can command.

Apparent President-elect Joe Biden ran as a champion of American workers. But he’s also taken many strongly pro-Open Borders positions. According to Reuters, although the Trump bans are “presidential proclamations that could be swiftly undone” and Biden has criticized them, the former Vice President “has not yet said whether he would immediately reverse them.”

But if he – not to mention the judge and the business groups – were really concerned about business survival, they’d all focus more on rolling back unjustified lockdown measures and securing more federal aid for struggling enterprises rather than delivering yet another immigration-related slap in the face to an already historically hammered domestic workforce.

(What’s Left of) Our Economy: Tech’s Cheap Labor Quest Just Got More Brazen & Fact-Free

Tags

(What' Left of) Our Economy, Bloomberg.com, CCP Virus, Cheap Labor Lobby, CompTIA, coronavirus, COVID 19, H1B, immigrants, Indeed Hiring Lab, information technology, job openings, Jobs, labor shortages, recession, tech, tech jobs, U.S. Chamber of Commerce, unemployment rate, visas, Wuhan virus

Just went you think that many major U.S. business groups and their members couldn’t get any greedier or out of touch or both, check out this news on the immigration front: Some of the biggest of these organizations, containing most of the country’s most gigantic companies, have just sued the Trump administration seeking to freeze or block visas for immigrant workers in various job categories.

In other words, they’re trying to swell the American workforce with foreign workers at a time when literally tens of millions of Americans who want them can’t find jobs. And adding insult to injury, in the midst of this jobs-pocalypse, these companies are justifying their demands by claiming they face labor shortages. The obvious objective: pump up the national supply of workers, and thereby drive down the price – i.e., wage – these workers can command.

Worse, their contentions that they can’t find the employees they need continue to include the tech sector, even though the U.S. economy’s CCP Virus-induced downturn has been so bad that it’s spurring major job-shedding even in those industries and occupations. (The final word in the previous sentence is meant to remind that many non-tech businesses employ workers with tech specializations.)

According to the one of the major plaintiffs, the U.S. Chamber of Commerce,

“Our lawsuit seeks to overturn these sweeping and unlawful immigration restrictions that are an unequivocal ‘not welcome’ sign to the engineers, executives, IT [information technology] experts, doctors, nurses and other critical workers who help drive the American economy.”

Indeed, the plaintiffs insist that these kinds of workers are currently so scarce in the United States that if the restrictions remain in place, they’ll need to secure them by investing more in their foreign operations.

These shortage claims, whether involving labor or skills, are anything but new, and have been bogus even in good economic times – as proved in devastating detail by this recent Bloomberg.com analysis of the tech sector’s longstanding drive to import more workers under the H1B visa program. Thus you should be Laughing Out Loud at the notion that the human assets companies need simply don’t exist in the 50 states during American economy’s worst stretch since the Great Depression of the 1930s.

But the shortage-mongers (who I like to call collectively the Cheap Labor Lobby, since) aren’t only fighting common sense, or even simply a U.S. President’s broad authority to control foreign entry into the country. They’re fighting the data.

For example, CompTIA, which describes itself as “the world’s leading tech association,” reports that information technology “occupations in all sectors of the [U.S.] economy declined by an estimated 134,000 jobs” between June and July. And although the organization judges that such employment is up by more than 203,000 since the CCP Virus broke out in America, the 4.4 percent tech unemployment rate it cites – however much lower than the economy -wide jobless rate – is still much higher than the 1.3 percent it estimated in July, 2019.

In addition, the widely followed consulting firm Indeed Hiring Lab has found that between mid-May and late July, “tech job postings have trended below overall job postings” in the United States, and as the graph below shows, the gap is getting much wider. Also clear: Since mid-May, these tech job postings have been stagnant at this very low level.    

The information technology sector of course has long been one of the U.S. economy’s biggest bright spots, so far be it for this tech dinosaur to offer it advice. But I still can’t help but wonder how much better it could do if it didn’t spend so much time spreading misinformation about the country’s labor markets.

Glad I Didn’t Say That! A Mixed Media Message on U.S. Farm Labor Shortages

Tags

agriculture, automation, farm workers, Glad I Didn't Say That!, illegal aliens, Immigration, Jobs, labor shortages, Mainstream Media, robots

“With fewer undocumented workers to hire, U.S. farmers are fueling a surge in the number of legal guest workers”

– The Washington Post, February 21, 2019

 

“One February afternoon, they work about an acre apart on a farm the size of 454 football fields: dozens of pickers collecting produce the way people have for centuries — and a robot that engineers say could replace most of them as soon as next year.”

– The Washington Post, February 17, 2019

 

(Sources: “With fewer undocumented workers to hire, U.S. farmers are fueling a surve in the number of legal guest workers,” by Kevin Sieff and Annie Gowen, The Washington Post, February 21, 2019, https://www.washingtonpost.com/world/the_americas/with-fewer-undocumented-workers-to-hire-us-farmers-are-fueling-a-surge-in-the-number-of-legal-guest-workers/2019/02/21/2b066876-1e5f-11e9-a759-2b8541bbbe20_story.html?utm_term=.225cc2cc55fe; and “Farmworker vs Robot,” by Danielle Paquette, The Washington Post, February 17, 2019, https://www.washingtonpost.com/news/national/wp/2019/02/17/feature/inside-the-race-to-replace-farmworkers-with-robots/?utm_term=.24166019b5dc)

(What’s Left of) Our Economy: “Tariff Victim” US Industries Remain Full of Job Openings

Tags

business, China, durable goods, employers, job openings, Jobs, JOLTS, labor shortages, manufacturing, metals tariffs, metals-using industries, private sector, quits, tariffs, Trade, Trump, workers, {What's Left of) Our Economy

If today’s government data on U.S. jobs openings don’t prompt loud mea culpas and apologies from the tariff-alarmists in the Mainstream Media and elsewhere in America’s globalization cheerleading establishment, I don’t know what will.

Recall that Americans have been swamped in recent months with reports that President Trump’s trade curbs have already been decimating American manufacturing.  And since they have been in place the longest, his metals tariffs (on most steel and aluminum imports) have been treated as prime examples, with metals-using industries being the prime victims.

But the new figures on job openings in major sectors of the economy (contained in the latest monthly release of the “JOLTS” numbers – the “job openings and labor turnover series”) are simply the latest statistics thoroughly debunking these claims.

Here are the results for job openings from April (because the metals tariffs began to be imposed in late March) through September (the most recent month covered by the JOLTS reports):

private sector:     +2.30 percent

manufacturing:   +7.08 percent

durable goods:   +7.47 percent

As has been the case with so much other data, the durable goods super-sector of manufacturing – the portion of industry containing the biggest metals-using industries – outperformed the rest of manufacturing and the entire economy in the number of employment opportunities it claimed were available.

And although the number of job openings in durable goods dipped from August to September (whose figures are still preliminary), they fell much less than in the rest of the economy.

private sector:     -2.85 percent

manufacturing     -4.72 percent

durable goods     -0.66 percent

Moreover, the 302,000 durable goods jobs openings reported preliminarily in September were the second largest number on record (going back to late 2000). The all-time high? August’s 304,000.

Some critics maintain that employers have incentives to exaggerate their claims of job vacancies. The motives cited include reinforcing contentions of “skills gaps” and other forms of labor shortages; rationalizing the persistence of high unemployment rates or sluggish wage growth; and pushing government or schools to take on worker training responsibilities (and expenses) that employers are loathe to assume. It’s also easy to see how exaggerated job openings claims can be used to bolster arguments for more immigration – which of course is also a tempting strategy for keeping wages down by increasing labor supply relative to demand.

But even if such exaggeration is rife, why would it be so much more important in durable goods manufacturing than in the rest of the economy? Further, why would employers have any reason to overstate the number of vacancies they’re trying to fill if they believed that their businesses were being swamped by steep, tariffs-led costs increases, or were about to? Wouldn’t they be trying to shed payroll instead? As a result, it’s hard to escape the conclusion that the JOLTS openings numbers simply add to the evidence that, despite the claims of actual or impending tariffs-mageddon, metals-using industries continue to be faring just fine.

Interestingly, workers in durable goods sectors don’t appear to share this optimism fully, according to the JOLTS data. For the figures also measure the numbers of employees voluntarily leaving their jobs – a clear sign of confidence that lots of new opportunities are available. Here are are the April-through-September results:

private sector:     +8.53 percent

manufacturing:    -2.94 percent

durable goods:     -9.48 percent

Clearly, durable goods workers have been displaying less confidence about reemployment opportunities than their counterparts in the rest of manufacturing, and much less than private sector workers overall. And these results are mirrored in the August-to-September numbers:

private sector:     -1.26 percent

manufacturing:    -6.60 percent

durable goods:   -11.76 percent

Nonetheless, in absolute terms, all these quits levels – even for durable goods – remain pretty high by recent standards. And for durables, they’re somewhat volatile, possibly because the absolute numbers have always been on the small side. Indeed, durable goods quits increased by 6.19 percent month-to-month as recently as July. And the August-to-September drop-off was the biggest sequential decline in percentage terms since the 15.70 percent monthly nosedive in August, 2017 – after which the numbers of quits steadily recovered.

As always, these trends could change (or, with the quits rate) intensify. It’s also possible that the President’s more sweeping tariffs on imports from China will be game-changers. (The first round dates only from early July, and the second, much larger round, went into effect in mid-September.) For now, however, the only real news about the economic effect of these levies is that they’ve showed no signs of slowing the recovery’s current momentum. Accept no substitutes.

(What’s Left of) Our Economy: Industries Claiming Labor Shortages are Productivity as Well as Wage Laggards

Tags

compensation, Labor Department, labor productivity, labor shortages, productivity, restaurants, trucking, wages, {What's Left of) Our Economy

The labor shortage claims from American businesses keep filling the media (even though wages, which are supposed to rise sharply in such circumstances, are improving only sluggishly). So it was more than a little interesting to look over the latest statistics on labor productivity released by the Department of Labor.

After all, companies and industries really facing dire labor shortages, and unwilling or unable to raise wages, are supposed to boost their productivity (generally by introducing labor-saving devices and practices). But the new Labor Department numbers show that they’re doing surprisingly little on this front, either.

Let’s examine two sectors of the economy that say with special vigor that they’re running out of workers: trucking and restaurants.

According to a typical account (from yesterday’s Washington Post), American trucking companies are facing “an extraordinary labor shortage” and their CEOs (including industry veterans) are saying things like “I’ve never seen it like this, ever….It doesn’t matter what the load even pays. There are just not drivers.”

The sector does appear to be raising pay. But not until the last two years have its overall employment costs been rising faster than those for the private sector overall – and the latter’s increases have hardly impressed. These data cover the entire transportation and warehousing sector, but after shooting up from a 2.1 percent annual pre-inflation pace to four percent (between the fourth quarters of 2011 and 2012), total compensation advances slowed to 2.3 percent annually during the next two years, and then to 2.2 percent in 2015 before accelerating.

Moreover, trucking industry productivity growth hasn’t been world-beating, either. The Labor Department reported last week that its overall gain in labor productivity (the narrower of two productivity growth measures tracked by Labor, but the one whose data is more up to date) in 2017 was 0.8 percent. A comparable figure for services industries in general isn’t available, but the Department does track labor productivity for non-farm businesses and for manufacturing.

Since labor productivity productivity for the former increased by 1.3 percent in 2017 and only 0.4 percent in manufacturing, it seems safe to conclude that services sector labor productivity grew by more than 1.3 percent – and therefore much more than trucking’s 0.8 percent. Nor does this picture change much going back to 2013.

Further, a remarkably similar pattern emerges upon examining the restaurant business. Labor shortages are widely claimed and reported, along with examples of the industry starting to improve compensation practices. New technologies are also apparently being tried to improve efficiency in the sector. But according to the data, these responses to the purported shortage of workers have been belated at best.

For example, as with trucking, annual total compensation gains in the accommodation and food services sectors (no restaurant-specific numbers are available) trailed those for the overall private sector for several years until 2016. And their owners and lobbyists have been making labor shortage claims for at least that long.

Data for restaurants (and bars) specifically are available for their labor productivity, and their performance here is only roughly comparable to the dreary results for non-manufacturing non-farm businesses.

Industries like trucking and restaurants may indeed not be able to choose their employees from as many applicants as they would like, or from numbers to which they’ve become accustomed. But if they haven’t been doing anything special, at least until recently either to hike pay, improve productivity, or both, then several explanations are possible. Maybe they’re waiting for another wave of wage-depressing legal and illegal immigrants to save their days without the need to fatten paychecks of invest in new plant and equipment. Maybe they’re don’t know how to improve productivity in particular, in which case, their businesses simply may not be viable, or they’re simply lousy managers.

But unless the Labor Department figures are completely off-base, one explanation we can rule out completely is that, as groups, they’re utterly desperate for workers.

(What’s Left of) Our Economy: Historic Labor Shortages and Few Wage Hikes?

Tags

Jobs, labor shortages, wages, {What's Left of) Our Economy

Share of American companies with job openings amid “worst” skilled labor shortages in a decade: c. 90%

Share of these companies responding by “increasing pay”: c. one-third

(Source: “Open jobs, few takers: Good help hardest to find in a decade, hiring survey shows,” by Jeffry Bartash, Marketwatch.com, April 23, 2018, https://www.marketwatch.com/story/open-jobs-few-takers-good-help-hardest-to-find-in-a-decade-hiring-survey-shows-2018-04-23)

(What’s Left of) Our Economy: The Dubious Labor Shortage Claims Keep Coming

Tags

BLS, Bureau of Labor Statistics, healthcare, Immigration, labor shortages, nurses, nursing, Reuters, wages, West Virginia, {What's Left of) Our Economy

Perhaps some day we’ll find out when it apparently became mandatory for journalists to write articles about supposed labor shortages in the American economy without once mentioning the word “wages.” For now, RealityChek will have to settle for citing yet another example of this phenomenon that contains an interesting twist: The reporter in question did look at some data from the Bureau of Labor Statistics (BLS), the U.S. Labor Department division that gathers and publishes employee compensation figures. But she still left out BLS numbers on wages and salaries.

According to Jilian Mincer of Reuters:

“Hospitals nationwide face tough choices when it comes to filling nursing jobs. They are paying billions of dollars collectively to recruit and retain nurses rather than risk patient safety or closing down departments, according to Reuters interviews with more than 20 hospitals, including some of the largest U.S. chains.

“In addition to higher salaries, retention and signing bonuses, they now offer perks such as student loan repayment, free housing and career mentoring, and rely more on foreign or temporary nurses to fill the gaps.”

And as indicated above, she is clearly familiar with the BLS as a reliable source of information on the American employment picture. Later in the article, she writes that “Nursing shortages have occurred in the past, but the current crisis is far worse. The Bureau of Labor Statistics estimates there will be more than a million registered nurse openings by 2024, twice the rate seen in previous shortages.”

But for some reason, she didn’t mention the BLS wage data – a crucial omission because everything we (think we) know about economics tells us that when anything, including labor, is scarce, its price (pay in this case) will rise until the greater rewards attract an adequate supply. Common sense supports this analysis, too. If employers are scrambling to fill jobs, it stands to reason they’ll offer better pay to make sure they and not their competition attract the needed workers.

And what the BLS data tell us is that no such scramble is taking place – or at least not enough of one to bid up wages. The last year for which detailed data for occupations (as opposed to sectors of the economy) is available is 2016. The numbers say that last year, the mean (average) national annual wage for registered nurses was $72,180 before inflation, and the mean hourly wage was $34.70.

Now let’s go back five years. The 2011 numbers? An annual mean wage of $69,110 and an hourly median wage of $33.23 per hour. So pay by these key measures wages rose by 4.44 percent over those five years and 4.42 percent, respectively. And again, that’s before adjusting for inflation. Does that sound like the hospitals and other healthcare providers that employ nurses are desperate for more?

Even stranger: Nursing pay has been rising more slowly than pay overall during this period. Between 2011 and 2016, mean annual wages for all occupations were up 9.73 percent, and mean hourly wages were up by 9.75 percent. That’s more than twice as fast! (See the same links that contain the national nursing figures.)

In fairness, Reuters’ Mincer looks at an additional nursing issue – the labor situation in rural areas, which she describes as especially dire. And it does seem to make some intuitive sense that small towns and farm communities would have special difficulties staffing medical facilities. But the numbers don’t seem to back up that story, either.

The author spent considerable space reporting on West Virginia. But the BLS numbers show that, between 2011 and 2016, both hourly and average nursing pay advanced by 4.50 percent. That’s only slightly more than the national rates of increase.

Yes, Mincer’s piece did talk a lot about healthcare providers offering “higher salaries, retention and signing bonuses [and] perks such as student loan repayment, free housing and career mentoring….” It’s entirely possible that she’s right. (The government doesn’t keep detailed occupational figures on these scores.) It’s also entirely possible that the data that is tracked by BLS is way off base. But when you’re claiming “labor shortage,” shouldn’t you at least mention that the most comprehensive facts available about base pay say nothing of the kind?

Moreover, buried in the article – indeed at the end of the quote immediately above – is a clue to the apparent paradox: Mincer’s observation that the healthcare industry is relying “more on foreign…nurses to fill the [employment] gaps.”

If true, that would make clear that lax immigration policies are still enabling nurses’ employers to suppress pay by easing any shortages in the domestic labor force by hiring immigrant nurses who will work for significantly lower pay than native-born workers. And it would suggest that the Cheap Labor lobby encompassing so many American businesses is still able to keep these wage-suppressing global labor pipelines open by peddling a steady stream of warnings about bogus labor shortages to gullible journalists.

(What’s Left of) Our Economy: And the Labor Shortage/Immigration Beat Goes On

Tags

CNN.com, fake news, illegal immigrants, illegal immigration, Immigration, labor shortages, productivity, wages, {What's Left of) Our Economy

Here’s yet another Open Borders- and amnesty-friendly article from the Mainstream Media that simply doesn’t add up – this time from CNN.com. In this story about a small San Francisco-area manufacturer who claims that he lost a tenth of his employees due to a 2011 government raid in search of illegal immigrant workers, one whopping inconsistency in particular stands out. It concerns the wages paid by the employer Emerald Packaging of Union City, California.

Emerald’s owner, claims that the company is still suffering from the personnel losses because he can’t find adequate replacements. And the CNN reporters’ sympathy for his supposed plight – and the obvious difficulties encountered by his illegal workers – was made clear by the article’s melodramatic headline: “RAIDED: Immigration agents showed up at Kevin Kelly’s factory and he lost his star workers.”

RealityChek regulars know by now that such claims of labor shortages due to restrictive immigration policies are usually open and shut tip-offs that the business in question is paying inadequate wages, or has refused to automate and become more productive. As I’ve noted repeatedly, mainstream economic theory teaches that when the demand for anything – including labor – exceeds the supply, the price of that commodity (in this case the wage and/or non-wage benefits) tends to rise until a new equilibrium is restored. Alternatively, businesses tend to substitute capital (typically in the form of technology) for what they view as overly expensive labor.

Kelly emphatically denied to the CNN reporter that he’s been skimping on wages by using illegal workers: “When people say these companies are hiring illegal labor because they want to keep their costs down… in our case that argument is complete bulls–t.”

In fact, according to Kelly, the jobs that illegals were filling – and that in some cases have remained unfilled – “aren’t cheap positions.” He added that “They range from $15 an hour entry-level jobs to $35 an hour for experienced mechanics. ‘With overtime of $27 to $35 an hour, you can make pretty good money of $75,000 to over $100,000 a year.’”

But his claims started to fall apart – not that CNN picked up on this – the instant he started discussing in detail the employee whose departure he felt most keenly – an assistant foreman named Miguel Gonzalez.

As the CNN article tells it, “Gonzalez had worked for Emerald Packaging for over 20 years. He started as a box handler, moving and storing product pallets and factory supplies, and worked his way up to assistant foreman. He was a gifted mechanic and Kelly relied on him to help keep the factory running.” Further, he could:

>”walk into my office and tell me what’s going on in the facility.”

>Gonzales was “Keen to learn and move up the ranks [and] routinely took on extra work and hours. He also rarely missed work, even returning to the factory floor just two days after his first child, Casandra, was born.”

>Soon after Gonzalez’ hiring, “he showed initiative by tinkering with and fixing up the machines on the factory floor on his own time to help them operate better. Two years into the job, he was promoted into a role where he learned to set up, repair and maintain the factory equipment.”

>”Over time, [he] taught himself every aspect of the business, including payments and shipping.”

>In Kelly’s words, “He was the single best machine mechanic we had.”

>”Losing him had an immediate impact on production because there just wasn’t anybody of Miguel’s caliber to replace him. There just wasn’t,” said Kelly.

And what was this supremely talented “star worker” making in 2011, after twenty years of superlative performance? Twenty-two dollars per hour. (He also received healthcare and retirement benefits.) According to the Labor Department’s data, that wage is somewhat ($2.50 per hour) more than the average hourly wage (before inflation) for all workers in the plastics packaging manufacturing sector that year, and a little over six dollars an hour more than non-supervisory workers alone make. (It’s not clear whether an assistant foreman qualifies in the Labor Department’s eyes as a supervisory or a non-supervisory worker.) But that $22 per hour is also about $13 dollars an hour less than what Kelly said he pays “experienced mechanics” nowadays (five years later).

There’s no doubt that some businesses that hire illegal immigrants need every body they can get, and there’s no doubt that some illegal immigrants are earning good wages largely as a result. But when a news organization plainly convinced of the desperate need for illegal workers touts a single alleged example of this dire situation that’s so full of gaping holes, Americans are more than entitled to start wondering whether this narrative as a whole is fake news.

Im-Politic: A Surprising Source (Unwittingly) Explains Need to Keep Tight Immigration Curbs

Tags

Im-Politic, immigrants, Immigration, labor costs, labor shortages, productivity, Ryan Avent, technology, The Economist

I’ve long argued that one of the main reasons for Americans to oppose mass immigration policies (including sweeping forms of amnesty for the current illegal population) is the devastating impact such labor inflows are likely to have on productivity growth. (Just FYI, here’s my latest take.) One of my main reasons? The relative scarcity of labor throughout American history deserves considerable credit for the nation’s emergence as a global productivity and technology leader. And since robustly improving productivity is a major key to boosting national living standards on a sustainable basis, that’s always struck me as a pretty strong argument to keep labor in short supply by limiting immigration – which of course brings in more workers. 

As a result, imagine my surprise to see that this view has just been supported by a leading writer for the British magazine The Economist – which has long loudly advocated for wider Open Borders.

The case for immigration as a productivity growth killer is solidly grounded in conventional economics. In that 2006 Congressional testimony linked above, I noted “When businesses conclude that the price of scarce labor has become excessive, powerful incentives emerge for them to substitute capital and technology for labor. And that means innovation.”

I then pointed out that “Our country owes much of its longstanding world leadership in most technology areas to this genuinely chronic scarcity and thus relatively high price of labor. Preventing shortages with immigration policy could weaken this proven spur to technological progress and all the benefits it brings.”

If you’re skeptical, here’s a link to the leading scholarly work connecting outstanding U.S. productivity performance and a chronically inadequate American labor supply. In fairness, not everyone agrees. Here’s a link to the most prominent rebuttal.

But I was understandably heartened to see the importance of scarce labor to productivity growth supported in this post by Ryan Avent, a senior editor and economics columnist for The Economist. According to Avent:

“Economic historians often explain divergences in patterns of industrialisation by pointing to differences in labour costs. British workers were expensive relative to workers on the continent and relative to British energy. British firms therefore had an incentive to develop and deploy new technologies that economised on labour and used a lot of energy: industrialisation! There’s more to the story than that, but that’s a pretty big component. Later something similar happened in America, where workers were even more expensive and resources even more abundant, and where the phenomenally productive ‘American system’ of manufacturing therefore emerged.”

Avent doesn’t explicitly make the immigration policy connection. But it’s glaringly obvious to all except the ideologically blinkered (or the hired guns of the American cheap labor lobby). Needless to say, I’ll be awaiting his next offering on the immigration policy debate with more than the usual interest. You should, too.

(What’s Left of) Our Economy: Wages Data Still Belie Amnesty Advocates’ Labor Shortage Claims

Tags

illegal immigrants, Immigration, Jobs, labor shortages, productivity, wages, {What's Left of) Our Economy

The Pew Research Center is out with its latest estimates of the role played by both immigrants and illegal immigrants in the American job market. So that has enabled me to crunch some reasonably reliable numbers to find out whether illegals-friendly immigration policies like some form of amnesty are, as often claimed, desperately needed if the nation is to avoid a crippling labor shortage.

When I performed this exercise roughly a decade ago, I found that similar claims being made in that period were wildly overblown at best. Why? Because the data showed that real wages in the industries employing the most illegal immigrants were generally stagnant or going down. That’s exactly the opposite of what should happen if economists (and common sense) are right in contending that when anything – including workers – is scarce relative to demand, the price of that thing should go up.

And the verdict for 2014 – the year for which Pew’s latest statistics come? Labor shortage claims are still mainly hokum.

According to Pew, the sectors where illegal aliens make up the greatest share of workers are (in order of the total immigrant share of their workforces: private households; textile and apparel manufacturing; agriculture; accommodation; food manufacturing; computer and electronics manufacturing; personal and laundry services; administrative and support services; construction, and miscellaneous manufacturing.

Are there many signs of the kinds of labor market tightness that should be sending pay soaring out of sight? I couldn’t find data for domestic workers, but here are the current-dollar wage figures for the other sectors during the current recovery so far. That means from June, 2009 through February, 2016, except where noted. They cover non-supervisory workers, on the assumption that few illegal aliens are finding managerial jobs in these parts of the economy:

Private sector overall: +17.78 percent

Construction: +15.93 percent

Computer and electronic manufacturing: +12.55 percent

Miscellaneous manufacturing: +16.55 percent

Food manufacturing: +17.31 percent

Textile mill manufacturing: +14.93 percent

Textile products mill manufacturing: +24.76 percent

Apparel manufacturing: +18.05 percent

Administrative and support services (through January): +14.33 percent

Accommodation (through January): +7.56 percent

Personal and laundry services: +21.61 percent

Farm workers: +24.53 percent

I sure don’t see any broad-based wage explosion in these statistics. In only four of the eleven illegal alien-heavy sectors have wages even been rising faster than those in the overall private sector – which hasn’t been terribly fast given that the current recovery is more than seven years old. Two of them, moreover, are in labor-intensive manufacturing industries that have been so decimated by foreign competition for so long that what’s left of them might indeed be facing labor shortages. The reason? Who in his or her right mind would assume they have much of a future in this country?

But what about more recent developments? Can signs of widespread labor shortages be seen in the current stage of the recovery? You be the judge, based on these February (or January, where noted above) year-on-year developments:

Private sector overall: +2.48 percent

Construction: +3.38 percent

Computer and electronic manufacturing: +2.73 percent

Miscellaneous manufacturing: +3.13 percent

Food manufacturing: +3.70 percent

Textile mill manufacturing: -1.07 percent

Textile products mill manufacturing: +8.04 percent

Apparel manufacturing: -3.02 percent

Administrative and support services (through January): +4.13 percent

Accommodation (through January): +1.50 percent

Personal and laundry services: +3.88 percent

Farm workers: +3.00 percent

Bottom line: The illegal immigrant-heavy sectors have seen some wage acceleration since last year. But two of the manufacturing sectors where wages had separated themselves from the pack are now experiencing wage decline. And it’s important to keep two other considerations in mind for many of the rest: First, their wages have been boosted artificially during this period by numerous sizable minimum wage increases in major states and localities. That’s not to say that such hikes per se are undesirable in any way. Indeed, I personally don’t see any reason why they shouldn’t be much more tightly linked to inflation nationwide than they’ve been till now.

When it comes to the labor shortage claims, however, they greatly distort the picture – because they represent wage developments based not on the labor supply and demand situation in these parts of the economy, but on political decisions.

Second, if the relatively strong wage increases that have taken place continue much longer, expect the sectors in question to start automating fast — or faster. That’s been a major feature of American economic history. And if economists are right, the resulting technological progress will wind up simply being delayed (perhaps partly accounting for the economy’s recent sluggish productivity growth?), rather than stopped, by the continuing easy availability of illegal immigrant labor.