This morning’s new government data on U.S. inflation-adjusted wages (for September) has turned the story about the relationship between this …Continue reading →
This morning’s new government data on U.S. inflation-adjusted wages (for September) has turned the story about the relationship between this measure of pay and American immigration policy into something of a head scratcher. That goes double for immigration restrictionists like me. At the very least, matters are getting ever more complicated.
The restrictionists have argued that the Open Borders-friendly immigration policies pursued by the Biden administration had choked off economic opportunity and in particular depressed wages for blue collar American workers. That’s because, all else equal, an increase in the supply of labor should force down its price – just like all else equal, an increase in the supply of anything should force down its price.
Supporters of more immigration insist that this view is too simplistic, and that even the kind of low-skill immigrants who would seem to be competing with native-born blue collar workers for jobs actually improve the latter’s employment opportunities. The reason, as explained, for example, here:
“[M]any immigrants complement the work of U.S. employees and increase their productivity. For example, low-skilled immigrant laborers allow U.S.-born farmers, contractors, and craftsmen to expand agricultural production or to build more homes—thereby expanding employment possibilities and incomes for U.S. workers.”
It’s important, therefore, to note, that so far this year – a period when the Trump administration has launched a major immigration crackdown, immigration backers seem to have the upper hand.
Between February (the first full month of Trump 2.0) and September, America’s foreign-born workforce is down 2.98 percent, whereas during the comparable period last year, under the Biden administration, it rose by 1.33 percent.
Yet during the above Trump stretch, inflation-adjusted weekly wages for blue collar workers (what the U.S. government calls “production and nonsupervisory workers”) are up more slowly (by 0.93 percent) than they were during those Biden months (1.26 percent).
In addition, blue collar workers fared better wage-wise during that Biden period even though the foreign-born workforce grew by 1.33 percent then and shrank by 2.98 percent during that comparable Trump 2.0 months.
A more detailed look at the data, however, reveals why the immigration backers shouldn’t be raising their victory glasses just yet.
In the first place, the vast majority of “foreign-born workers” are legal residents of the United States. It’s surely true, according to the restrictionist Center for Immigration Studies, that during the Biden years, the record increase in the nation’s foreign-born population was “driven primarily by illegal immigration.”
But the organization also estimates that at the beginning of this year, illegal alien workers still amounted to only 6.7 percent of the total U.S. workforce of just over 162 million. So it’s possible that, when it comes to wages, the number of illegal alien workers simply hasn’t become big enough to move the needle either to native-born workers’ disadvantage.
Their share of the blue-collar workforce isn’t tracked by Washington, but the pro-immigration Center for Migration studies contends that it’s heavily concentrated in low-paying sectors of the economy. (As the Center for Immigration studies notes, however, they could be responsible for other setbacks for native-born workers – e.g., in terms of “the share of U.S.-born (ages 16 to 64) men without a bachelor’s degree not in the labor force — neither working nor looking for work….”)
Another development seemingly in the restrictionists’ favor: Because it’s still a relatively small share of the total workforce, that total workforce has kept increasing this year – by 0.83 percent – despite the drop in the numbers of foreign-born workers. In fact, its growth hasn’t been that much slower than the 1.08 percent increase during the same pre-crackdown February-September, 2004 period. In other words, labor supply keeps on expanding.
The number of blue collar workers has kept rising, too – by 0.37 percent between February and September of this year, versus its 0.65 percent growth between February and September last year.
And given the major hiring slowdown evident in the last few government monthly jobs report, labor demand clearly hasn’t been keeping up fast enough.
It’s also noteworthy that the relationship between immigration and wages has changed significantly between the first and second parts of this year so far. Between February and May, the story backed the restrictionists’ claims pretty strongly. During those Trump months, real blue collar weekly wages improved by 0.84 percent – more than double their 0.34 percent increase during those Biden months.
Since then, however, the story has flipped. Between May and September under the Biden administration in 2024, those blue-collar wages rose by 0.94 percent – more than ten times the rate as during the same Trump 2.0 period (0.09 percent).
Worse for the restrictionists – the great majority of the decrease in the foreign-born workforce so far this year came in that May-September stretch alone, when it sank by 2.64 percent.
At the same time, September could have marked a turning point. During this latest data month, inflation-adjusted blue collar weekly wages advanced by 0.21 percent – much faster than their 0.14 percent improvement between last August and September. Moreover, between this August and September, the foreign-born workforce decreased by 0.23 percent – much more than its 0.07 percent dip between August and September, 2024.
Further, as if this issue wasn’t already complicated enough, two considerations can’t be ignored. First, nine months simply may not be long enough to see immigration-related labor dynamics play out completely. Second, there’s the counterfactual: Absent the Trump crackdown, If the foreign-born labor force had kept growing this year, and especially had it continued growing strongly, as under the Biden administration, the increase in blue-collar wages this year might have been much weaker – if it had increased at all.
So RealityChek will keep on reporting these numbers as they come in, and keep trying to figure out when (and if) more clarity finally comes.
