BLS Report Reflects Lower Average Wages: An Explanation

As the classic Johnny Mercer/ Harold Arlen tune goes, let’s “Ac-Cent-Tchu-Ate the Positive.” The White House adopted the advice of the popular 1944 song, along with “eliminate the negative,” and applied it to the October Bureau of Labor Statistics report. But, as is routinely the case, a sub rosa review of the BLS data is, official White House happy talk aside, more disconcerting given that in September the economy created a mere 136,000 jobs, well below the Wall Street prediction of 145,000.

Nevertheless, proceeding in full 2020 campaign mode, the White House boasted about, among its other successes, September’s 50-year low 3.5 percent household unemployment rate that included significant declines in the numbers of discouraged and underemployed workers, as well as record low unemployment for Hispanics and African-Americans.

Conspicuously missing from the press release was the discouraging news that on a year-over-year comparison, earnings grew only 2.9 percent, significantly below August’s 3.2 percent – the weakest wage growth since July 2018. Making workers’ bottom line income worse is that their average weekly hours logged stayed the same at 34.4 – same hours, lower pay.

Still, in most demographic segments employment status has improved, and presumably individuals’ lives are better. BLS data showed that the unemployment rate for people without a high school diploma fell to 4.8 percent, the lowest rate since 1992 when such statistics were first compiled and dramatically lower than the 7.8 percent posted in November 2016. The U-6 unemployment rate that measures those marginally attached to the labor force also plunged, and currently stands at 6.9 percent, its lowest since 2000.

More employment, especially for minorities and for the under-educated and less skilled, is unarguably a positive. Even though wages could be higher, having a job also translates into financial independence, increased self-worth and, hopefully, eventual professional growth.

Since most Americans are doing better, a reasonable question is why President Trump continues the practice of annually admitting more than 1 million, lifetime work-authorized legal immigrants. The new lawful permanent residents will compete for employment one-on-one with citizens, and with the approximately 4 million Americans who turn 18 each year. The most adversely affected could be those recently on the rebound from long unemployment, but who now have jobs in retail, hospitality or health care.

President Trump’s critics call him anti-immigrant. But since his 2016 inauguration, the Trump administration has admitted more than 3 million permanently work-authorized immigrants, and nearly as many guest workers who also vie for employment with citizens. More than two years have passed since President Trump’s February 2017 address to Congress wherein he called for reforming, i.e., reducing, legal immigration to protect American workers.

Returning to last month’s dip in wage growth, immigration is a key ingredient that partially explains why incomes declined after several monthly increases. Tight labor markets are an essential component of rising wages. Month-to-month variations like September’s can be expected. But over the long haul, markets must be tight, and therefore immigration low, to sustain consistently higher wages, and to protect American workers from job displacement. This is ironclad Economics 101 that too many establishment media reporters ignore even though it has been established fact for a century.

As American Federation of Labor president Samuel Gompers wrote in his 1921 letter, “Those who favor unrestricted immigration care nothing for the people. They are simply desirous of flooding the country with unskilled as well as skilled labor of other lands for the purpose of breaking down American standards.”

No intellectual argument can be made in defense of allowing more years of an annual influx of more than 1 million immigrants. President Trump should return to his American worker advocacy by again taking up the case for lower immigration levels.

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