Immigration

Strong Job Growth Isn't Enough

Despite a promising April jobs report, the U.S. is still 3 million workers short.

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The April jobs report from the Bureau of Labor Statistics (BLS) showcases an array of data that, prior to the pandemic, would have had economists dancing in the street. Payroll employment increased by 428,000; the average annual wage growth was 5.5 percent; and the primary unemployment rate stood at 3.6 percent—the lowest rate since 1969, excluding the months immediately preceding the pandemic. 

Things are even better for rank-and-file workers. More than half of the employment growth came from just four industries: retail, manufacturing, transportation and warehousing, and leisure and hospitality. Average annual hourly wages of all production and nonsupervisory employees rose by 6.4 percent, while those of transportation and warehousing and leisure and hospitality workers rose by 11.2 and 12.6 percent

Meanwhile, the March Job Openings and Labor Turnover Survey (JOLTS) report showed the largest-ever number of job openings—11.5 million. Compared to 5.9 million unemployed workers, that suggests almost two open jobs for every person seeking employment. In other words, 7.1 percent of jobs in the economy are currently unfilled.

The average growth of 550,000 payroll jobs per month for the last 16 months is certainly noteworthy. But compared to pre-pandemic labor participation rates, the U.S. economy is still 3 million workers short, and a quarter of those missing are prime-age workers. 

And that's the catch. In an era of strong wage growth, surging inflation, and record demand for workers, we're still seeing an unexpectedly slow rate of workers returning to the labor market.  The best and fastest solution to the problem would be to rapidly expand immigration opportunities, which have been severely curtailed by pandemic-era policies.

During the pandemic, pundits put forth three main arguments on why people weren't returning to work: aversion to being exposed to COVID-19, insufficient child care, and overly generous relief programs. These considerations should be in the rearview mirror by now. With readily available vaccines and boosters, the risk of COVID-19 infection for the typical worker has been minimized. Most schools resumed in-person classes by last fall, primary school children have had access to vaccines since November 2021, and schooling interruptions from COVID-19 variants have faded away. Meanwhile, nearly all pandemic relief programs that would reduce a worker's need for a paycheck have expired.

But there's still a marginal case for each of these explanations. Around 2.7 percent of the U.S. population (up to 7 million potential workers) is immunocompromised. Because they face a higher risk of severe illness from contracting COVID-19, that threat may still inhibit them (or their household members) from reentering the workforce. Similarly, children under the age of 4 still can't receive COVID-19 vaccines—causing some parents to keep their children away from group child care services. It's quite possible that there is a bit of a chicken-and-egg problem, where the reduced supply of workers limits the amount of child care a nursery school can provide, thus making it harder for parents to take on a job.

And some pandemic relief programs remain in effect, which may, at the very least, be indirectly  reducing the labor supply. The federal Emergency Rental Assistance (ERA) program still has almost $20 billion out of an initial $46.5 billion to spend. Applicants can receive up to 18 months of rental assistance, including payments for previous and future housing costs. Recipients can also reapply for additional assistance. March data from the Treasury Department show that the program distributed $2.2 billion to anywhere from 305,000 to 514,000 households. Assuming that no household was double dipping in the two rounds of the ERA program, this averages out to a $4,200 payment per household.

Similarly, the number of borrowers seeking loan repayment relief has significantly increased since the onset of the pandemic: The proportion of federal student loan borrowers opting for loan forbearance grew from under 10 percent to over 50 percent in 2020 and has remained there since. 

Both rental assistance and loan forbearance would diminish the pressure a worker would feel to return to work, but there hasn't yet been an estimate of these programs' effect on labor supply. Perhaps in response to such concerns, the governors of Nebraska and Arkansas have declined most future ERA funding.

However, the larger contributors to the dramatically reduced labor supply are likely the increase in people retiring and the decrease in immigration. The retiree population has risen substantially, with research from the St. Louis Federal Reserve suggesting that there were 2.4 million more retirees in August 2021 than was expected. While research by the Kansas City Federal Reserve suggests that the increase came from a reduction in the number of retirees returning to work, other data show it was an increase in employment-to-retirement transitions that fueled the rise in retirees.

Regardless of the exact reason for the increase in the retirement population, rising inflation tends to reduce the purchasing power of retirees on fixed incomes more than others. That means we may see an increase in retirees returning to the labor market (or older workers delaying their retirement), which may gradually reduce the labor shortage. 

A quicker solution—and one that would stimulate long-term economic growth—would be to expand immigration to allow arriving migrants to fill the labor supply shortfall. Pandemic-era immigration restrictions—such as curtailing international visas for skilled workers, students, and temporary workers and closing borders with Canada and Mexico via Title 42—have led to 2 million fewer working-age migrants in the U.S. compared to pre-pandemic trends. 

America faces a growth-limiting, inflation-increasing labor shortage, but the solution is easy: Allow the immigrants clamoring at the border to take the jobs that employers desperately need to fill. Migrant border arrivals surpassed 222,000 in March, a 22-year peak, meaning some help may be on the way—if we welcome it.  

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  1. Uh....not quite buying the 'we need workers' argument. Maybe try paying more? And wrt immigration, our POTUS seems to be asleep at the switch when it comes to our southern border - plenty of illegals getting in.

    Close the fucking border. Then we can talk more immigration. Until then, pound sand.

    1. Fuck that. Pay them less tax dollars. Not always a wage issue. Sometimes a benefits issue.

      1. Read the article. Your phony concerns were addressed.

        1. I responded to a post not the article. Do you know how commenting systems work?

    2. How about lessening access to the government teat? Less free money, less forgiveness of debt, less protection from non-payment.

      1. There's been all of that yet there's still supposedly a worker shortage. Try again, this time with real not fantasy problems.

        1. There isn't a worker shortage. Benefits have not ended. See the 18 months for housing in the article.

          On top of that there is still unemployment, food stamps, etc. While they've decreased there is still an abnormally low labor participation rate.

          Odd how you ignore reality.

          1. Also Ed misses that much of it has been shifted to other areas and has not been reduced and more likely increased. Check out a cable bill the FTC will pay for certain dollar amounts if you qualify.

        2. The very article above says otherwise. Rent payments still funded, Debt delay up to 50% (half!!), etc, etc...

          We made fake money to the tune of $50,000 per working person and handed out freebies; now can't figure out why no one goes to work....

          Dumb; Seriously Dumb the political world is.

    3. I'm working 50-60 hour weeks as clients are scrambling to get their projects underway in the construction industry to lock prices in while inflation skyrockets, and lead times (supply chain problems) increase apace. We're an architecture and interior design firm.

      I've got one client that wants to work on a 24-week construction schedule for their project, even though key pieces of computer and mechanical equipment have lead times over a year long. I have another that gets pissed every time they are told that the prices we got a few months ago aren't good anymore. It's crazy.

      We would love to hire people to relieve the pressure, but you can't find any. I don't think it's the compensation, either. Some people want flex hours or to work from home or to partly-work-from-home or work for themselves as a contract employee and that might be OK in some offices, but it doesn't work for ours. Some people just aren't too keen at putting in that level of workload, either.

      We're a highly competitive, HIGHLY collaborative field and you can't just do your own thing or waste a bunch of time waiting for feedback from decision-makers. It's much more efficient to be in the office together where you can stand up at your desk and ask someone a question and get an answer or a discussion going right away.

      Another problem is that our industry, like many others, was absolutely devastated by the government response to the pandemic. Young people in the field got dropped like a hot potato when we were forced to shut down, and found other things to do to make money. Why would they come back after getting burned so badly?

    4. We're supposed to import uneducated, unskilled foreigners to do the jobs we're paying uneducated, unskilled Americans not to do? Yeah, that sounds like a great plan.

    5. I like how the whining author confuses job growth - a change in employment, with unemployment.

      It's like confusing velocity with distance.

      I see stupid people do it all the time.

  2. Hearing Biden brag about this today, I wondered how many Americans were stupid enough to fall for it.

    1. How many viewers does CNN have?

      1. About 3 weeks worth?

        1. It's closer to 3.

  3. > The best and fastest solution to the problem would be to rapidly expand immigration opportunities,

    Of course.

    Then, there's the possibility that you could, you know, let the market balance itself out organically. You know, a Libertarian solution whereby the value of work is determined by supply and demand.

    But this is a Left Libertarian magazine, and it's more important to massively devalue the cost of labor (and say "who give a shit?" about any consequences beyond filling those jobs as cheaply as possible) rather than allowing an equilibrium to form organically.

    1. Michael D. Farren is a research fellow at the Mercatus Center at George Mason University. His research focuses on the effects of government favoritism toward particular businesses, industries, and occupations, specializing in labor, economic development, and transportation issues.

      El Oh El

    2. Will increased immigration result in you getting a pay cut?

      If yes then you're worthless, and if not then you've got nothing to bitch about.

      1. Illegal immigrants and Americans working low skilled labor jobs are worthless?

        Are you aware that the 200k a month illegal immigrants a month is one of the facotmmtors of the inflation costs on rentals?

        It is weird how you call yourself a capitalist but don't understand how an influx of menial labor effects wages for a large portion of Americans working menial jobs. With laws like ACA allowing businesses to exclude various tax costs from employment of non citizens. But fuck them right? Just worthless people.

        Said from a guy who admits he was homeless too. Lol.

      2. Angry dry drunk spouting unsupported factless nonsense. Or for Sarc, any day ending in ‘y’.

  4. I've been sending out resumes for science writing, technical writing, and medical writing jobs every couple of days but I get no responses. I've got a bachelors in biology and a masters in ecology and evolution. I've written about biology for a few websites, but the internet work has dried up. The jobs available are for people without college degrees. No one will hire me for them, because I'm over qualified. We don't have a labor shortage as much as inflexibility in the job market.

    1. Over-qualified? Are you transgendered from a protected racial group? Can you twist any topic to focus on equity and inclusion? Are you able to write with diversity-induced grammar?

    2. Aim lower. Maybe you're not getting hired because you need to work into the position you want, as opposed to starting there.

    3. Despite what the XtremeMAGAs on here say, your job search experience isn't unusual. Many of the supposed 11 million open jobs don't exist. Others have unreasonable expectations. It's all a big scam in order to drive down wages by jacking up the number of immigrants allowed in.

      1. Something (or someone) is only worth what someone else is willing to pay.

        So if you think you're worth $100K/yr and nobody will hire you for more than $25K'yr, then that's you. You need to do something different.

        1. Normally I would agree with you on this, but we’ve spent decades as a society fucking that equation all up. I can’t tell you how many people walk into my office thinking I should design their 4000sf McMansion for pennies on the dollar but think their time is worth hundreds of dollars an hour.

          (Basically what I’m saying is people’s self worth has skyrocketed while their view of other peoples worth has plummeted.)

          1. You've just perfectly described EVERY Fortune 500 CEO's mentality.

        2. With inflation, I agree that your point is part of the problem, and with both sides (employer/candidate) being somewhat justified.
          I'm not taking less than 10% more to make a parallel move. And I'd still probably come out behind. Sadly, this will only worsen inflation.

      2. "Despite what the XtremeMAGAs..."

        Oh, oh look! One more TDS-addled pile of shit!
        Fuck off and die, asshole.

        1. MAGA Xtreme sounds like a new sports beverage.

  5. The last thing we need in a nation of 335 million is more immigrants. We should be reducing immigration, not increasing it.

    1. More people = more opportunities and more wealth.

      1. Not every person's goal is to create opportunities or wealth.

        Some people just have a greedy self-entitled goal of STEALING other's wealth; and that is not entirely possibly thanks to the Nazi-Regime.

        Are 'immigrants' desire to come to the USA to be free from being stolen from (not anymore) or do they come here to eat the grass on their neighbors lawn?

        1. correction; "and that is *now* entirely possibly"

      2. Importing unskilled, uneducated workers to do the jobs we're paying unskilled, uneducated Americans not to do isn't a great plan.

      3. Not in a welfare state with the perverse incentives provided by democrat traitors.

  6. “ the lowest rate since 1969, excluding the months immediately preceding the pandemic.”

    If my reading comprehension doesn’t totally suck, that sentence is really saying that unemployment was the lowest in 2019.

    And I’d really like to know what the real unemployment numbers are because I’m old enough to remember how the Obama administration and their media lackeys played tidliwinks with the numbers to make his economy look better than it really was.

  7. Its so much fun hearing how the Nazi-Regime is producing a better economy after completely and entirely F'ing it up in the first place.

    "Hey man... I plowed your car into a telephone pole but after my good hard work I got the rear bumper back on. I think I'm going need to credit/payment for that."

  8. its never been as good a time to be a worker as now in at least four decades. Thanks mostly to the pandemic, and partly to Trump ( cutting immigration) and Biden (stimulus), the economy is FINALLY starting to REWARD HARD WORK.

    Workers will soon be missing these days as the pandemic stimulus wanes, the supply chain recovers cheap imports and corps insist on increased lower-cost immigration.

    1. Not to mention the giant recession brought on by runaway inflation, Fed policy, and a housing market crash.

  9. Local newspaper had a column by a so-called economist detailing why teenagers don't want to work summer jobs this year.
    One was "gas prices went up." We are supposed to believe that kids will refuse $15/hr. jobs at the local fast food joint because they have to pay $1 more for a gallon of gas than they paid last year.
    Even more ludicrous was the assertion that they didn't want to work "because of the on-going war in Ukraine."

    1. Working is optional in Gang-Land USA. Those lawless 3rd Party Gov-Guns can just be cheered/voted to go steal for me!.... Which frankly is so much easier than actually having to produce any good to society.

  10. 3 million workers short?
    Maybe some other Reason writer can suggest a solution?
    Fiona?

  11. The headline told you that this was going to be an open borders article. The image used at the top shows want ads for different jobs available. Are peasants from Guatamala going to fill that 'graphic designer' job?

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  13. I like how the whining author confuses job growth - a change in employment, with unemployment.

    It's like confusing velocity with distance.

    I see stupid people do it all the time.

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