Into the Weeds on Wages

October 30, 2018 | Joe Guzzardi

The Economic Policy Institute, a respected nonpartisan, nonprofit Washington, D.C., organization, recently published a report detailing 40 years of stagnant wages in the United States.

Titled “America’s Slow-Motion Wage Crisis,” the three-part report covers earnings trends of the last 70 years. The first part addresses the immediate post-war period, from 1947 through 1979, when wage growth was rapid for all workers, including those at the bottom and the middle. Then, EPI analyzes the period from 1979 through the present, when wage growth slowed, especially for low- and middle-wage workers. The report’s final section looks exclusively at the period since 2009, when the post-Great Recession recovery began.

Among EPI’s findings are that, for three decades after World War II, wages grew rapidly across the board. But since the end of the 1970s, wages have grown slowly for most of the workforce, and the gap between the best-paid workers and the rest of the workforce widened significantly, the income inequality chasm. Wage stagnation has been particularly stubborn since 2009; between 2009 and 2014, inflation-adjusted wages were flat or falling.

While EPI never addresses immigration or its effect on earnings, even though adding tens of millions of work-authorized, lawful permanent residents to the legal labor pool over the period reviewed exerts downward pressure on wages, EPI did, however, cite Current Population Survey data which indicated that the Hispanic and Asian workforces increased from 9.4% percent to 16.9% and from 4.8% to 6.8%, respectively, between 1979 and 2017.

Immigration is disproportionately harmful to black Americans who have been jobless at roughly twice the rate of whites since 1972, although this year black unemployment numbers finally started dropping, a change which has been a long time in coming. From 1970-2010, immigration averaged 770,976 after averaging only 181,725 from 1930-1970. With less immigration, companies must create or depend on recruitment channels where unemployed or underemployed Americans live.

That outreach approach would be especially helpful to Black Americans in high unemployment areas who don’t have the resources to leave family and community to pursue jobs nationwide, a strategy similar to when employers came looking for unemployed or underemployed workers during the Great Migration of Black Americans to the industrial cities after WWI interrupted the immigrant flow. Industrialists hired recruiters to find underemployed, freed slave descendants to offer them jobs and transportation.

Numerous case studies underline immigration’s deleterious paycheck consequences for the American labor force. “Low-Skill Immigration: A Case for Restriction” concluded that the “left and the right, for different reasons, have embraced a system that encourages the replacement of native workers, including subsequent generations of immigrants, rather than improving their prospects.”

The H-1B visa also has come under scrutiny for its relentless displacement of American tech workers. According to aMercury Newsstory, U.S. colleges graduate 50 percent more engineering and computer science degree holders than IT industries hire each year. A third of U.S. computer science graduates who don’t enter the IT field say they couldn’t find jobs.

The most compelling research came from “Networks of Exploitation: Immigrant Labor and the Restructuring of the Los Angeles Janitorial Industry,” which found that immigrants replaced virtually the entire Black American-born workforce in the janitorial and maintenance industries. Author Cynthia Cranford concluded that in post-World War II Los Angeles, African-American male and female janitors upgraded their pay and working conditions through unionization. However, lower paying, non-union jobs returned in the 1980s, when building owners decided to contract with non-union companies. These companies hired placement agencies who tapped into their social networks to recruit illegal immigrant Hispanics.

The positive news is that the latest Employment Cost Index is the strongest since 2007, encouraging but not an established pattern if immigration continues on its annual autopilot course of bringing in more than 1 million people. The calculation is simple, and inarguable. A loose labor market with high immigration is bad for American workers; tight labor markets with lower immigration are good for American workers.

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Central bankers run everything and bankers have to keep workers poor in order to keep them in debt. There are no loan profits in prosperity.

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Only to a point, Nutella.
Exporting middle class wealth/equity (to elite, to foreign workers) means any loans the diminishing workers take out will be smaller and run for decades longer (mortgages, for instance). With a destabilized job market, it means those loans won’t be paid back. 2008, for example.

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