White House Economic Staffers Suggest No Need for More Immigrant Workers

The White House’s economic staffers strongly suggested Tuesday there is no need for extra immigrant workers to fill new jobs in President Donald Trump’s go-go economy.

There are “plenty of [American] workers on the sidelines able to come off” and fill jobs in the growing economy, Rich Burkhauser, a member of Trump’s Council of Economic Advisors, told reporters Tuesday afternoon. The statement contradicts rising complaints from business groups who are worried that wages and salaries are climbing upwards.

More adults are being pulled out of unemployment by the promise of better jobs and higher wages, said the introduction to the report, titled, “Economic Report of the President”:

Consistent with the robust pace of economic growth in the United States, the labor market is the strongest that it has been in decades, with an unemployment rate that remained under 4 percent for much of 2018.  Employment is expanding and wages are rising at their fastest pace since 2009. Whenever both quantity and price go up in a market, this must be partly driven by a rise in demand. This suggests that an important change in the labor market has been an increase in the demand for labor, induced potentially by a supply-side expansion enabled by tax reform and deregulation.

The report says worries about a lack of workers are “pessimistic” because millions of people remain on the sidelines:

Although the low unemployment rate is a signal of a strong labor market, there is a question as to whether the rapid pace of hiring can continue and whether there are a sufficient number of remaining potential workers to support continued economic growth. This pessimistic view of the economy’s potential, however, overlooks the extent to which the share of prime-age adults who are in the labor market remains below its historical norm.

…

… [data suggests that] 1.7 million prime-age males who are not working [and not looking for work]. Some of these nonworkers are unemployed, while others remain out of the labor force. Because the number of prime-age males who are out of the labor force exceeds that seen in earlier business cycles, this represents an opportunity to further increase employment even while the unemployment rate remains near historical lows.

Federal data shows these sidelined people are rejoining the workforce, so meeting business’s demand for additional workers, the report says:

In the fourth quarter of 2018, 73.1 percent of all adults who started working had been out of the labor force in the previous month—compared with just 26.9 percent who had been unemployed (figure 3-6). This is the largest share coming from out of the labor force since tracking of labor flows began in 1990.

The report shows that Americans’ productivity is rising faster in Trump’s Hire American economy, ensuring that the existing supply of American workers is able to produce more wealth in less time. “Growth in labor productivity, which averaged just 1.0 percent between [mid-2009] and [late 2016] doubled to 2.0 percent in 2018,” the report said.

The report’s confident prediction comes as business groups are demanding greater supplies of immigrant workers and consumers, partly because investors and CEOs want to block rising wages in Trump’s tight labor market.

The pressure is pushing Trump to declare support for importing more workers. On March 7, for example, Trump told a group of business leaders that:

So we’re going to let a lot of people come in because we need workers.  We have to have workers.  Unemployment at 3.7, 3.6, probably.  These are low numbers.  And, in one way, I love it.  But, in another way, I don’t want to make it hard for you to get those companies rolling with really great people.  Because without the great people, it doesn’t work.  All of these wonderful things we talk about are nice, but you need the great — as you discussed, Juanita, you need the people and you need really good people.  And we have great people.  And we have the best in the world, in my opinion.  And we are having other people come into our country that you’re going to be very proud of and the job they do.

Amid the industry pressure, Trump’s economic report largely ignores the issue of immigration, even though the federal government already inflates the labor supply by importing one million people per year to artificially stimulate company sales and production, the stock market, and government tax revenues.

Instead, the report touts the extra wages earned amid rising productivity and Trump’s Hire American policy, saying  “Blue-collar workers, on average, are on track to see almost $2,500 more in annual wages … Employment is expanding and wages are rising at their fastest pace since 2009.”

But the staffers’ cheering for higher wages is muted because the report does not suggest the government should further boost wages by actually cutting legal and illegal immigration below the current level of roughly two million per year. In fact, the report does not mention Trump’s tight labor market, and it does try to give credit for the wage increase to the establishment-backed tax cut:

The CEA has already tallied 645 companies that have offered bonuses, and/or increased retirement contributions, since the TCJA was enacted. The total number of workers receiving a bonus or increased retirement contribution now stands at over 6 million, with an average bonus size of $1,154 (figure 1-iv). Additional workers are seeing higher take home pay, given that nearly 200 companies have announced increases in wages, with 102 of these firms announcing minimum wage increases.

But the report also rebukes business lobbyists by declaring the obvious — that business’s growing demand for a limited number of workers tends to drive up their wages, saying:

In a competitive labor market, firms pay workers a wage that is equal to the value of their marginal product. As worker productivity increases, the value of each hour of labor to firms will rise. Consequently, wages will subsequently rise as well, because firms that do not increase their pay will see their workers go to other, higher-paying, firms.

Immigration is mentioned in Trump’s brief forward on the report, but the passage does not say that the economy needs even more foreign workers. It says:

To improve the welfare of our Nation and its citizens, we are redoubling our efforts to fix an immigration system that has been broken for decades. The chaos at our Southern Border comes at an intolerable cost to American citizens, who deserve peaceful, prosperous communities. We cannot tolerate the crime, drug smuggling, illegal entry, and human trafficking enabled by a porous border. The current system that allows dangerous gang members into our society, strains public services, and rewards those who ignore our laws over those who respect our citizenship process is simply unsustainable for our Nation. We must have an orderly immigration system that honors United States citizenship as the unrivaled privilege we all know it to be.

The report says government policy can get more Americans into the workforce, without the need for additional immigration. These labor-boosting policies include better controls on drug epidemics, better child care for parents, and better training to help people work with high-tech machinery:

Krueger (2017) notes that 47 percent of prime-age males who are out of the labor force report using pain medication, with almost two-thirds of them using prescription pain medication on a given day. He finds a strong association between county-level opioid prescriptions in 2015 and declines in labor force participation between 2000 and 2015, with opioid prescriptions potentially accounting for a decline of 0.6 percentage point in prime-age male participation during this period.

…

Altogether, the empirical evidence on the responsiveness of labor supply decisions to wages in general and to child care costs more specifically suggests that a reduction in the cost of care could lead to increases in the number of people who participate in the workforce and also the number of hours worked among current workers.

…

The key observation is that, as automation progresses, workers will increasingly be drawn to the jobs and tasks that are more difficult to automate. Astute policymaking will nonetheless play a role in promoting workforce development, particularly for less educated workers—through, for example, the Pledge to America’s Workers, which we discuss later in the chapter.

Each year, roughly four million young Americans join the workforce after high school or university. The federal government then imports roughly 1.1 million legal immigrants, refreshes a resident population of roughly 1.5 million white-collar guest workers and roughly 500,000 blue-collar visa workers, and it also tolerates about eight million illegal workers.

In 2019, because of catch-and-release rules mandated by Congress and the courts, the federal government also will likely release at least 350,000 Central American laborers into the U.S. job market, even as at least 500,000 more migrants sneak past U.S. border defenses or overstay their visas.

Overall, in 2019, the U.S. government will allow at least two million new foreign workers into the United States to compete for the starter jobs sought by the latest wave of four million U.S. graduates. The new migrants also undermine the 24 million other Americans and the roughly three million legal immigrants who have joined the workforce since 2014.

This federal policy of using legal and illegal migration to boost economic growth for investors shifts enormous wealth from young employees towards older investors by flooding the market with cheap white-collar graduates and blue-collar foreign labor.

This cheap labor economic policy forces Americans to compete even for low wage jobs, it widens wealth gaps, reduces high tech investment, increases state and local tax burdens, hurts kids’ schools and college education, pushes Americans away from high-tech careers, and sidelines millions of marginalized Americans, including many who are now struggling with fentanyl addictions.