National Data | December Employment: Half Total Job Growth Needed To Absorb Last Month’s Immigration

01/11/2014

So much for consensus.

Months of accelerating employment growth, lower unemployment claims and, more recently, indications that GDP is growing at a rate not seen since before the Great Recession, had convinced most economists that the worm had decisively turned. Many expected December’s job creation figure to be the largest since the Fall of 2008.

But in fact a mere 74,000 jobs were created in December — the smallest gain in three years. Snow and an unusually short Christmas retail season undoubtedly distorted the results. But long-term trends were not exactly encouraging.

For example: the labor force participation rate (LPR). It fell to 62.6% in December 2013, the lowest level in 35 years. This means that only 62.6 of every 100 working-age adults was actually working or looking for work in December.

A year ago, in December 2012, 63.4 of every 100 adults was in the labor force.

The U.S. labor force shrank by a whopping 496,000 in the past 12 months. Retirement of aging Baby Boomers is often cited as a reason for the decline, but LPRs for people under 55 also dropped sharply over the last year. For them it’s a matter of discouragement caused by a still weak labor market.

For whatever reasons, native-born Americans bore the entire brunt of last year’s labor force decline.

From December 2012 to December 2013:

The total labor force declined by 496,000, or by 0.32%
The native-born American labor force fell by 677,000, or by 0.52%
Foreign-born labor force rose by 181,000, or by 0.72%

Note that labor force participation rates fell for both immigrants and native-born Americans in 2013. But the immigrant labor force grew because immigrant population growth more than offset the decline in immigrant LPRs. Native-born American population growth did not reach that threshold.

Politicians may not care much about plummeting participation rates. In fact, they may like the idea that lower LPRs can push unemployment rates down even when job growth is weak. That is exactly what happened in December: the unemployment rate fell three ticks, to 6.7%, the first time it’s been below 7.0% in 60 months.

December was the third consecutive month in which the immigrant share of total U.S. employment declined:

In December:

Total employment rose by 143,000, or by 0.10%
Native-born American employment rose by 235,000, or by 0.20%
Foreign-born employment fell by 92,000, or by 0.39%

But this blip does not alter what looks to be the chief legacy of Barack Obama: the displacement of native-born American workers by immigrants.

We chart this trend in our New VDARE.com American Worker Displacement Index (NVDAWDI). It tracks month to month changes in native-born American and foreign-born employment since the start of the Obama Administration:

National Data | December Employment: Half Total Job Growth Needed To Absorb Last Month’s Immigration

Native-born American employment growth is the blue line, immigrant employment growth is in pink, and NVAWDI — the ratio of immigrant to native-born job growth — is in yellow. The graphic starts at 100.0 for both native-born American and immigrant employment in January 2009, and tracks their growth since then.

From January 2009 to December 2013:

Foreign-born employment rose by 2.167 million, or by 10.0%. The immigrant employment index rose from 100.0 to 110.0
Native-born American employment rose by 198,000 or by 0.2%. The native-born American employment index in December 2013 was 100.2, or just barely above the level of January 2009.
NVDAWDI (the ratio of immigrant to native-born employment growth indexes) rose from 100.0 to 109.8 (100X(110.0/100.2)

Native-born v Immigrant Employment Status, Dec. 2012-Dec. 2013 (numbers in 1000s; not seasonally adjusted)
	Dec-12	Dec-13	Change	% Change
	Foreign born, 16 years and older
Civilian population	37,999	38,481	482	1.3%
Civilian labor force	25,248	25,429	181	0.7%
Participation rate (%)	66.4%	66.1%	-0.3%	-0.5%
Employed	23,216	23,787	571	2.5%
Employment/population %	61.1%	61.8%	0.7%	1.1%
Unemployed	2,032	1,642	-390	-19.2%
Unemployment rate (%)	8.0%	6.5%	-1.5%	-18.8%
Not in labor force	12,751	13,052	301	2.4%
	Native born, 16 years and older
Civilian population	206,351	208,264	1,913	0.9%
Civilian labor force	129,656	128,979	-677	-0.5%
Participation rate (%)	62.8%	61.9%	-0.9%	-1.4%
Employed	119,844	120,636	792	0.7%
Employment/population %	58.1%	57.9%	-0.2%	-0.3%
Unemployed	9,812	8,342	-1,470	-15.0%
Unemployment rate (%)	7.6%	6.5%	-1.1%	-14.5%
Not in labor force	76,695	79,286	2,591	3.4%
Source: BLS, The Employment Situation — December 2013, Table A-7, January 10, 2014. PDF

Over the past 12 months:

Immigrants gained 571,000 jobs, a 2.5% increase; native-born American workers gained 792,000 positions, a 0.7% increase. ADVANTAGE IMMIGRANTS
The unemployment rate for immigrants fell by 1.5 percentage point — or by 18.8%; the native-born American unemployment rate fell by 1.1 percentage points — a 14.4% decline. ADVANTAGE IMMIGRANTS
The labor force participation rate — a measure of worker confidence — declined for both native-born Americans and immigrants. In percentage terms, however, the native-born American participation rate fell nearly three-times more than the immigrant rate. ADVANTAGE IMMIGRANTS
The number of immigrants “not in the labor force” — i.e., neither working nor looking for work, rose by 301,000, or by 2.4%; the number native-born not in the labor force rose by 2.591 million, or by 3.4%. ADVANTAGE IMMIGRANTS

Overarching everything is the seemingly inexorable rise in the foreign-born population. The foreign-born population of working age rose by 482,000 over the past 12 months. That represents an average monthly increase of about 40,200.

Bottom line: More than half of December’s total job gain was needed just to absorb new immigrants.

Edwin S. Rubenstein is President of ESR Research Economic Consultants.

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