On its face, the unemployment rate of 3.7 percent in June of this year would seem like great news for American workers. But the official rate includes only those who say they have actively looked for a job in the last four weeks. By contrast, the labor-force-participation rate — which measures all those working or looking for work — has been declining for at least three decades, especially among the less educated. This long-term decline in work has contributed to a host of social problems, from the opioid epidemic to crime to the breakdown of the family. By allowing in large numbers of less educated immigrants who compete with natives, our immigration policy partly accounts for this decline in work. More important, reversing the decline will be especially difficult as long as less skilled immigration is allowed to continue at its current rate.
Economists typically focus on men when they want to examine trends in employment that are unrelated to the changing role of women in society. Among men ages 25 to 64 without a bachelor’s degree, 81 percent were in the labor force as of the first quarter of this year. Despite the strong economy, this figure is down from 84 percent at the peak of the last expansion, in 2007. That rate was actually lower than it had been at the prior peak, in 2000, when 85 percent were in the labor force, which was lower than the peak in 1989, when 87 percent were in the labor force. Men in all educational groups have been on a downward employment trend, but the decline becomes more pronounced as the educational level goes down. Among women, labor-force participation increased steadily until 2000, but it has followed the pattern for men since then.
Excluding inmates, there were 37 million men and women ages 25 to 64 who were not in the labor force in the first part of this year. About three-fourths did not have a college degree. There were an additional 10 million people ages 18 to 24 who were not in the labor market. In fact, the decline in labor-force participation of youths is even steeper than that of those who are 25 to 64 and is affecting students and nonstudents alike. As economist Andrew Sum and others have pointed out, working while young instills the values and habits necessary to be gainfully employed later in life. Part of the decline in work for less educated adults 25 and older is likely related to their not having worked consistently when they were young.
The decline in labor-force participation is not the only troubling trend in the labor market. Wages have stagnated or declined for the less educated as well. Pew Research reports that since 2000, the bottom quarter of earners saw just a 4.3 percent real-wage increase — equivalent to an annual raise of just 0.2 percent. Analysis by the Economic Policy Institute of wages for men without a bachelor’s degree shows they earned no more in 2018 than they did in 1989. Compared with 1979, they actually earn less. And low wages cannot help but undermine work incentives.
Some factors contributing to labor-force dropout and wage stagnation have nothing to do with immigration. They include “skill-biased technological change,” which means that new technology has reduced demand for less educated workers. Automation is one of the most prominent examples of this phenomenon. Opening up trade with China and other low-wage countries has also tended to further reduce demand for less educated workers here in the U.S.
Of course, if demand for less educated work in the U.S. is down because of technology and globalization, then it makes little sense to continue to let in so many less educated immigrants. Census Bureau data from the first quarter of 2019 show that 5 million adult immigrants without a bachelor’s degree have been allowed to settle in the country just since 2010. Roughly half of them are illegal.
While it is by no means the only factor, there is both anecdotal and systematic evidence that immigration is contributing to the decline in work and wages among the less educated. Some of the best anecdotal evidence comes from a series of EEOC suits brought by Americans who have been shut out of jobs by employers who prefer to hire foreign-born Hispanics.
Amy Wax and Jason Richwine discuss a number of these cases in a long article in American Affairs. For example, Lawler Foods near Houston posted job advertisements only in Spanish. When black and white Americans showed up to apply, they were strongly discouraged and sometimes told outright that non-Hispanics were not welcome. Nearby Champion Fiberglass seems to have done much the same thing, as did Scrub Inc. in Chicago. Little River Golf in North Carolina paid a large settlement because it laid off black employees en masse so that they could be replaced by Hispanics. These cases are consistent with what many American job seekers already suspect, which is that employers of low-skill labor discriminate against natives, and particularly against blacks.
In addition to the anecdotal evidence, a systemic review of studies by the National Academies of Sciences, Engineering, and Medicine in 2017 reported over a dozen academic studies showing a negative effect of immigration on the wages of native-born Americans. Other studies have found negative effects on the employment of the least educated natives. Research also shows that teenagers and younger workers are often most adversely impacted by immigrant competition, as are U.S.-born blacks.
Wax and Richwine argue that immigrants often displace natives because employers believe that immigrants are harder workers than native-born Americans are. Unfortunately, this belief is sometimes accurate. Problems with drugs, crime, and welfare dependency have affected the willingness and capacity of some less educated natives to work. As Wax and Richwine point out, however, immigration allows us to ignore the problem of non-work and its underlying causes among the less educated. The continued arrival of so many immigrant workers means that policymakers, business owners, and society generally have less incentive to do anything about the plight of the less educated. In short, immigration not only exacerbates the problem of labor-force dropout, but also makes it less likely to be addressed.
Advocates of unskilled immigration argue that there are many jobs that Americans simply will not do. In reality, a majority of workers in just about every occupation identified by the Census Bureau are U.S.-born. For example, more than half of maids are native-born, as are 64 percent of meatpackers, 65 percent of construction laborers, and 66 percent of groundskeepers. Wages in all of these sectors show stagnation or long-term decline, so if there is a great need for such workers, why not let wages rise? Higher wages would increase work incentives and improve the lives of the poorest and least educated Americans.
Getting Americans to do farm work is probably the most challenging case, but agriculture employs only 2 percent of all immigrants (legal and illegal) and only 4 percent of all illegals. We should not let an economic sector that employs such a tiny share of immigrants drive the whole immigration debate.
Technological change and globalization could not be undone even if we wanted to undo them. Attitudes toward work or the opioid epidemic need to be addressed but will take years to turn around. To change immigration policy is more straightforward. It involves no more than changing the selection criteria for new immigrants and enforcing immigration laws. It seems almost certain that if we continue to let in large numbers of less educated immigrants, the low labor-force-participation rate and all the problems it contributes to will not improve.
This article appears as “Migrating Out of the Job Market ” in the August 12, 2019, print edition of National Review.