Today is the first anniversary of the Senate’s passage of the Gang of Eight immigration bill (S.744). So it is fitting to remember just how out of touch that bill was with what is actually going on in the U.S. labor market. The labor-force participation of working-age native-born Americans (ages 16 to 65) is at a record low, and the number not in the labor force is at a record high. Yet the Gang of Eight bill would double the number of new legal immigrants allowed into the country over the next decade to 20 million, adding to the 40 million immigrants (legal and illegal) already here. It would also legalize some 12 million illegal immigrants. Democrats are extremely vulnerable on this issue. But instead of labeling the Democrats as captive to special interests and indifferent to struggling American workers, much of the Republican party’s leadership wants to go along with this scheme.
A new report from the Center for Immigration Studies finds that the labor market looks dismal. We examine the employment rate — the share actually holding a job — and the labor-force participation rate — the share either holding a job or looking for one. (We also looked at the unemployment rate, but the government’s definition of “unemployed” is somewhat artificial and not especially illuminating.) In the first quarter of 2014, 58 million working-age native-born Americans were not working — 17 million more than in 2000. These figures do not include the 11 million working-age immigrants who are not working. Fully 34 percent of working-age natives do not have a job. As recently as the first quarter of 2000, the figure was 26 percent. (The report does not include those in prisons.)
Despite this situation, Paul Ryan has argued that without the substantial increase in immigration expected under S.744, the country faces “labor shortages.” He is certainly not alone; Rand Paul, John Boehner, Jeb Bush, and many other Republicans have forcefully argued not just for amnesty of one kind or another, but for substantial increases in the number of foreign workers allowed into the country. Such Republican leaders seem to be listening only to the U.S. Chamber of Commerce and the other businesses and industry associations that want more access to workers — both skilled and unskilled.
But there is zero evidence that labor is in short supply. Real wages for men, women, the well-educated, and the less-educated show no long-term growth. Even in science and technology, wage growth has been relatively flat for years. Perhaps more important, Figure 1 shows that over the last 14 years employment growth has not come close to matching the combination of natural population increase and immigration. The working-age population (native and immigrant) grew by about 14 percent, while employment grew only about 4 percent.
What the figure does not show is that much of the gap between population and employment growth has fallen on natives. The total number of working-age immigrants holding a job increased by 5.7 million from the first quarter of 2000 to the first quarter of 2014, while the same figure declined by 127,000 for natives over the same period. This is truly striking because the working-age native-born population increased by 17 million over this time period and accounted for two-thirds of overall population growth among those 16 to 65. Yet what employment growth there has been all went to immigrants.
Paul Ryan, Rand Paul, and other like-minded Republicans seem to think that the arrival of immigrants so stimulates the economy as to generate jobs not only for immigrants but for natives as well. While this study, this study, and this study indicate that immigration reduces the employment of natives, there is debate among economists on this question. However, there is no question that since 2000 at least 17 million new legal and illegal immigrants have settled in the country, while at the same time there has been a long-term decline in employment among the native-born. Thus mass immigration in the last 14 years has certainly not so stimulated the economy as to prevent a dramatic decline in work among native-born Americans.
Figure 2 shows that there has been a nearly uninterrupted 14-year decline in the labor-force participation of working-age natives. This decline has affected natives of virtually every age, race, gender, and education level. Unless we are on the threshold of one of the greatest periods of job growth in our history — which would be a fundamental reversal of recent trends — the current very low rates of labor-force participation will persist.
Consider just the native-born: If the same share of working-age natives had a job today as in 2000, 12.5 million more of them would be working. Further, while growth is slowing, the working-age population will still increase by a few million in the next decade, even without immigration. Adding to this number the 10 million new legal permanent immigrants who will arrive under current law means we will need something like 20 million new jobs in the next ten years if we want to come close to the employment and labor-force participation rates of 2007, let alone 2000. Doubling future immigration, as so many Democrats and Republicans want, would not just be grossly irresponsible, it would be profoundly negligent.
Many conservative advocates of high immigration respond that the reason so many natives are not working is that welfare is more attractive than work. There is clearly much truth in this argument. But, partly as a result of welfare reform, the number of people who work and receive non-cash welfare (e.g. food stamps, WIC, Medicaid) has greatly increased. Moreover, one of the reasons that welfare is attractive is that so many jobs pay less than they used to. Continually flooding the labor market with even more legal immigrant workers can only make this problem worse. Moreover, as I have pointed out before, immigrant households use non-cash welfare at higher rates than native households do.
There has also been a huge increase in Social Security disability, some of which surely reflects people gaming the system. But the numerical increase is nowhere near enough to explain the massive rise in non-work. Besides, people can work part-time and still collect disability payments. What’s more, the biggest increase in non-work is among the young, who are least likely to be disabled. Reforming welfare (again) and disability would certainly help in getting more people back into the labor market. But there has also been a big increase in people who are not working and not getting government assistance. If we hope to draw these folks back into jobs, then increasing wages and creating a tighter job market by reducing immigration would be extremely helpful. The Obama-Schumer-Ryan-Rubio-Paul-Boehner approach of dramatically increasing immigration makes absolutely no sense.
The other argument conservative immigration boosters make is that immigrants are harder workers than natives, especially young Americans; and this explains why they have fared somewhat better. But there is no clear evidence of this. In the first quarter of 2014, about 25 percent of native-born teenagers had a job, compared to about 20 percent of immigrant teens. About 68 percent of natives in their 20s were working in first quarter of this year, compared to about 62 percent of immigrants in their 20s. If there is a work-ethic problem among our young, it is at least as pronounced among immigrants as it is among natives.
Putting aside the economics, we know that people who do not work when they are young are less likely to work later in life, especially if they do not go to college. It seems that we have to learn the values necessary to get and keep a job at an early age. Thus, even if it is true that the average 27-year-old immigrant is a better worker than the average 17-year-old native, allowing in the immigrants has profound long-term consequences for our society, whether or not McDonald’s may get a somewhat better worker. I would also add that it strikes me as somewhat hypocritical for those of us over age 50 who faced much less job competition from immigrants when were young, because immigration was much lower, to now advocate policies that place today’s youth in direct competition with immigrants.
As for the politics, the issue of immigration is just sitting there for Republicans to use against Democrats. Republicans must do a better job of attracting working-class voters, a very large share of whom sat home in the last two presidential elections. Making the case for allowing in fewer foreign workers would appeal to these workers. Senator Jeff Sessions and David Brat, who defeated Eric Cantor on this very issue, are two Republicans who get it and have used the issue to great effect. Advocating for American workers by reducing immigration would be good politics and good policy.
— Steven Camarota is director of research at the Center for Immigration Studies.