06/07/2015
U.S. employers pumped out another 280,000 jobs in May, suggesting that the recent slowdown was a temporary, weather-related phenomenon. The unemployment rate ticked up, to 5.5% from 5.4% the prior month, but even this was seen as a bullish sign — the result of more newly-confident people entering the labor force.
Good luck to the new arrivals. But some bad news:
“It’s a tale of two economies, the economy of the unskilled, and the economy of the semiskilled and the skilled,” said Robert A. Funk, chairman and chief executive of Express Employment Professionals, a staffing agency based in Oklahoma City that operates in 49 states.Two-tiered? We see it as a three-tiered economy: the skilled, who are always in demand (although skilled Americans face wage depression because of immigrant competition); the unskilled immigrants, who are finding jobs; and the unskilled native-born Americans, who for years have been displaced by their immigrant counterparts.There is pent-up demand for those with skills, like machinists, engineers and information and technology workers, he said, but those without that edge are continuing to have a tough time.”
[Hiring surges as U.S. gains 280,000 jobs in May, By Jeffry Bartash, MarketWatch, June 5, 2015]
Thus, some more bad news: The “other” employment survey, of households rather than businesses, reports the latest chapter in the American worker displacement story. In May:
Native-born American workers have lost ground to their foreign-born competitors throughout the Obama years, and despite the winter slowdown, the trend has accelerated over the past year. This is made clear in our New VDARE.com American Worker Displacement Index (NVDAWDI) graphic:
Native-born American employment growth is the black line, immigrant employment growth is in pink, and NVAWDI — the ratio of immigrant to native-born American job growth — is in yellow. The index starts at 100.0 for both immigrants and native-born Americans in January 2009, and tracks their employment growth since then.
From January 2009 to May 2015:
The foreign-born share of U.S. employment rose to 16.76% in May, up from 16.70% the prior month. In only seven of the 77 months of Obama’s tenure have immigrant workers accounted for a greater share of employment than they did last month.
May’s immigrant employment share was 1.79 percentage points (or about 12%) above the level recorded at the start of Obama’s administration.
With total employment now at a record 148.8 million, every one percentage point rise in the foreign-born employment share translates to as many as 1,488,000 displaced native-born workers.
Implication: Obama-era immigration may have pushed as many as 2.6 million (1.79 times 1,485,000) native-born Americans onto the unemployment rolls.
While the May hiring surge boosted wages, the increase over the past 12 months was just 2.3% versus the 3% to 4% typical at this stage in earlier recoveries. Chamber of Commerce types love this, of course, and love the immigrant surge (legal and illegal) that keeps wages low.
Typically, Washington releases no data on whether immigration-related wage stagnation hurts more native-born workers than immigration-related unemployment.
A detailed snapshot of American worker displacement over the past year is seen in the “Employment Status of the civilian population by nativity” table published in the monthly BLS report:
| Employment Status by Nativity, May 2014-May 2015(numbers in 1000s; not seasonally adjusted) | ||||
| May-14 | May-15 | Change | % Change | |
| Foreign born, 16 years and older | ||||
| Civilian population | 38,637 | 40,480 | 1,843 | 4.8% |
| Civilian labor force | 25,392 | 26,331 | 939 | 3.7% |
| Participation rate (%) | 65.7% | 65.2% | -0.5% | -0.8% |
| Employed | 23,977 | 25,098 | 1,121 | 4.7% |
| Employment/population % | 62.1% | 62.2% | 0.1% | 0.2% |
| Unemployed | 1,416 | 1,233 | -183 | -12.9% |
| Unemployment rate (%) | 5.6% | 4.7% | -0.9% | -16.1% |
| Not in labor force | 13,245 | 14,049 | 804 | 6.1% |
| Native born, 16 years and older | ||||
| Civilian population | 208,985 | 210,075 | 1,090 | 0.5% |
| Civilian labor force | 130,446 | 131,388 | 940 | 0.7% |
| Participation rate (%) | 62.4% | 62.5% | 0.1% | 0.2% |
| Employed | 122,421 | 124,251 | 1,830 | 1.5% |
| Employment/population % | 58.6% | 59.1% | 0.5% | 0.9% |
| Unemployed | 8,027 | 7,137 | -890 | -11.1% |
| Unemployment rate (%) | 6.2% | 5.4% | -0.8% | -12.9% |
| Not in labor force | 78,537 | 78,687 | 150 | 0.2% |
| Source: BLS, The Employment Situation — May 2015, Table A-7, June 5, 2015. PDF | ||||
It looks like a new illegal immigration surge is underway.
Footnote: At VDARE.com, we have been tracking American worker displacement for more than a decade. During that period, despite the Great Recession and although the monthly jobs numbers are avidly discussed, Main Stream Media attention to the immigration dimension has been close to zero. One heartening recent exception: The "Illegal Immigrant" Recovery? The Real Stunner In The Jobs Report, by Tyler Durden, Zerohedge.com, June 6, 2015.
Durden (this is a pseudonym used by many Zerohedge writers) makes a further interesting — if translated from economist-speak — point about the lack of wage growth in this recovery:
…the lack of wage growth and downstream inflation, is precisely what has permitted the Fed to maintain QE as long as it has.VDARE.com emphasis and links added.In other words, how many illegal workers cross the US border, may be the biggest variable shaping US monetary policy at the moment! And, in thought-experiment land, the more porous US immigration policy the longer the Fed will be allowed to maintain its ZIRP/QE experiment, and the higher the S&P will rise.
Could it be that illegal immigration is the best friend of that 0.1% of the US population which has benefited exclusively from the Fed’s relentless injection of liquidity into risk assets via either ZIRP of QE?
Edwin S. Rubenstein is President of ESR Research Economic Consultants.
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