How can wages stagnate, fall as jobs increase? Immigration

The latest jobs report, for December 2014, reports an increase of 252,000 jobs to the U.S. economy, and is hailed as ending “the best year for job growth since 1999.” Every monthly jobs report in 2014 was hailed by the Obama administration as adding jobs and proof of a recovering economy. The official unemployment rate fell in December to 5.6%, the lowest since before the Great Recession began in 2008.

Wages, however, as everyone knows, have stagnated throughout the so-called economic recovery. And the latest jobs report said average hourly earnings actually fell 0.2 percent in December.

How can wages stagnate and fall while the number of jobs increases? Shouldn’t the demand for more workers drive wages higher? The most likely explanation is that immigration, both legal and illegal, and the expectation of increased immigration in the future is restraining wage growth for U.S. workers.

Workers at fast-food restaurants in Philadelphia and at the airport have been demonstrating for a wage increase to $15/hour in 2015. Good luck with that now that employers know that 5 million formerly illegal immigrant workers will be legalized in 2015 thanks to President Obama’s unilateral executive deferred action. Those newly legalized workers will be competing with American workers for jobs and wages. That’s in addition to regular legal immigration of 1 million every year, and additional illegal immigration attracted by President Obama’s executive amnesties and his advocacy for a broad-based amnesty covering even more illegal immigrants.

While the number of officially unemployed Americans remains high at 8.7 million, another 6.8 million are involuntary part-time workers who can’t find full-time jobs but are counted as employed. And another 2.3 million Americans are classified as discouraged or marginally attached, who wanted, looked for, and were available for work in the past 12 months.

While the official unemployment rate is now 5.6%, for American men the unemployment rate is 5.8%. For American teenagers looking for work, the unemployment rate is 16.9%. For Black Americans the unemployment rate is 10.4%. For Black men it’s 11.0%. And for Black teenagers it’s 33.2%.

Is that okay? Can we all now relax and celebrate the end of the recession, which officially ended in 2009? Is now the time to bring more immigrant workers into the U.S. labor force to compete with American workers?

I wish President Obama and members of Congress of both political parties were more concerned about the plight of American workers than they are with the profits of American companies whose lobbyists contribute to their political campaigns. It’s no contradiction that the stock markets keep hitting record highs while American wages stagnate. Corporate profits are high and increasing because American wages stagnate.

 

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