National Data | July Jobs Disappoint — Will Immigrants Cause Fed Policy Error?

08/03/2013

The economy added 162,000 jobs in July according to the BLS survey of business establishments. While below expectations, it was enough to bring the unemployment down to 7.4% — the lowest jobless rate since December 2008.

But this July unemployment rate reduction is deceptive. It was made possible only because many job seekers were too discouraged to even look for work. When they stop looking they are no longer counted as part of the labor force, and therefore no longer counted as unemployed.

The U.S. labor force shrank by 35,000 in July; the labor force participation rate declined from 63.5% to 63.4%.

As to who among us is the most discouraged, consider that the labor force participation rate for foreign-born workers (66.9%) remained well above that of native-born workers (63.4%) in July.

Every month, VDARE.com’s analyzes the jobs data to track immigrant displacement of American workers, which the MSM never reports. July may have been one of those rare months in which foreign-born job seekers exited the labor force at a greater rate than the native-born. Our analysis of the Household Employment Survey shows a 227,000 overall job gain, with native-born individuals gaining jobs at greater rates than immigrants.

In July:

Total employment rose by 227,000, or by 0.16%
Native-born employment rose by 215,000, or by 0.18%
Foreign-born employment rose by 12,000, or by 0.05%

Why this little blip in the long-established displacement trend? Of course, there are no straight lines in economics, or nature. It could be statistical noise. The Labor Department reported robust hiring in industries such as retail, trade and professional services, but key sectors in which immigrants comprise an over-average share of employment, such manufacturing and construction, were essentially unchanged. Perhaps illegal immigrants are returning to Mexico in a weak U.S. job market. Alternatively, legal immigrants could be cycling from gainful employment to welfare.

But the July results do not change the powerful Obama-Era trend. This is made clear in our New VDARE.com American Worker Displacement Index (NVDAWDI).

NVDAWDI tracks the month-to-month trend in native-born and foreign-born employment since the start of the Obama Administration:

National Data | July Jobs: Will Immigrants Cause Fed Policy Error?

Native-born employment growth is the blue line, immigrant employment growth is in pink, and NVAWDI — the ratio of immigrant to native-born job growth — is yellow. To chart American worker displacement, we set both the native-born and immigrant employment indexes in January 2009 at 100.0.

Since January 2009:

Foreign-born employment increased by 1.907 million, or by 8.81%. The immigrant employment index rose from 100.0 to 108.7
Native-born employment rose by 157,000 or by 0.13%. The native-born employment index in July was 100.1, virtually unchanged from the level of January 2009.
NVDAWDI (the ratio of immigrant to native-born employment growth indexes) rose from 100.0 to 108.7 (100X(108.7/ 100.1)

While foreign-born workers held 16.3% of all jobs in July, they accounted for 92.3% of total job growth since Mr. Obama took office.

A detailed picture of American worker displacement over the past year is seen in figures published in the latest BLS report:

Employment Status by Nativity, July 2012-July 2013 (numbers in 1000s; not seasonally adjusted)
	Jul-12	Jul-13	Change	% Change
	Foreign born, 16 years and older
Civilian population	37,627	37,941	314	0.8%
Civilian labor force	25,180	25,382	202	0.8%
Participation rate (%)	66.9%	66.9%	0.0%	0.0%
Employed	23,211	23,689	478	2.1%
Employment/population %	61.7%	62.4%	0.7%	1.1%
Unemployed	1,970	1,693	-277	-14.1%
Unemployment rate (%)	7.8%	6.7%	-1.1%	-14.1%
Not in labor force	12,446	12,559	113	0.9%
	Native born, 16 years and older
Civilian population	205,727	207,815	2,088	1.0%
Civilian labor force	131,346	131,814	468	0.4%
Participation rate (%)	63.8%	63.4%	-0.4%	-0.6%
Employed	119,916	121,424	1,508	1.3%
Employment/population %	58.3%	58.4%	0.1%	0.2%
Unemployed	11,430	10,390	-1,040	-9.1%
Unemployment rate (%)	8.7%	7.9%	-0.8%	-9.2%
Not in labor force	74,381	76,001	1,620	2.2%
Source: BLS, The Employment Situation — July 2013, August 2, 2013. Table A-7.PDF

Over the past 12 months:

Immigrants gained 478,000 jobs, a 2.1% increase; native-born workers gained 1,508,000 positions, a 1.3% increase. ADVANTAGE IMMIGRANTS
The immigrant unemployment rate fell by 1.1 percentage points — or by 14.1%; native-born unemployment fell by 0.8 percentage points — a 9.2% decline. ADVANTAGE IMMIGRANTS, IN ADDITION:
The labor force participation rate — a measure of worker confidence — declined for the native-born while staying constant for immigrants. At 66.9%, the immigrant participation rate was 3.5% points above the native rate.

Note that the gap between immigrant and native-born unemployment rates has profound macroeconomic implications.

The Fed says it will end its monetary stimulus program when the unemployment rate falls below 7.0%. Immigrant unemployment is already below that level — it was 6.7% in July — and with native-born workers leaving the job hunt, perhaps because they are discouraged by immigrant competion, their jobless rate could also drop below the threshold set by the central bank.

This raises a troubling prospect: the Fed declaring victory while native-born workers are still struggling.

All thus, plus the Gang of Eight’s Amnesty/ Immigration Surge too.

Edwin S. Rubenstein is President of ESR Research Economic Consultants

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