03/13/2012
Professor Stiglitz: Won’t count Immigration as Unemployment factor?
At the Financial Times Nobel Prize-winning economist Joseph Stiglitz has published a powerful essay The US labour market is still a shamblesMarch 12 2012:
…the labour market today … is a shambles. In Friday’s US employment report, the proportion of working-age American adults in a job moved up only 0.1 percentage points, to a miserable 58.6 per cent — numbers not seen since the downturn of the early 1980s. There are still 23m Americans who would like a full-time job but who cannot get one. The jobs deficit, the number of extra jobs that would have been required to keep up with new entrants to the labour market, is 15m. Employment has yet to return to its level of December 2008. Male employment is still below what it was in February 2007 — meanwhile, the working-age population has grown considerably.He observes:
Let’s assume that job creation continues at the rate of 225,000 jobs a month. That is only about 100,000 beyond the number required to provide jobs for the average monthly number of new entrants into the labour force. At that pace, it would take 150 months to reach full employment — 13 years, some time around 2025Stiglitz, a man of the Left with a long history of liking State action, deduces from these facts a need for further stimulus spending by the Government.
Totally missing from this discussion is any acknowledgement of the impact of immigration (legal as well as illegal). As Ed Rubenstein has repeatedly pointed out for us, a very large proportion of what jobs are created goes to new immigrants:
In 2008 and 2009 2.4 million new immigrants (legal and illegal) settled in the United States even though 8.2 million jobs vanished over the same period. Figures for 2010 show the foreign-born working age population is growing five times faster than the comparable native-born population. Nearly three-quarters of the 1.2 million jobs created in 2010 went to foreign-born workers.
(The Economic Case for an Immigration Moratorium By Ed Rubenstein)
This was not an issue in the Great Depression in the 1930s, because the supremely wise 1924 Immigration Act had virtually stopped immigration.
Ironically, according to the Wikipedia article on Professor Stiglitz, his Noble Prize was won
..for laying the foundations for the theory of markets with asymmetric information
What kind of intellectual or emotional filter is at work here to cause this esteemed scholar to forget to consider the key dimension of worker supply, focus only on demand, and write such an aymmetrical article?
Ask Professor Stiglitz.
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