National Data| July Jobs—American Worker Displacement Soars; New Immigration Surge Underway?
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From a distance it all looks good: 255,000 jobs added to payrolls in July, a bigger-than-expected gain that suggests the country’s growth rate may be more robust than thought just two months ago; unemployment remains at 4.9%; and the labor force participation rate, while still near all- time lows, bumps up to 62.8% from 62.7% in June.

Establishment economists couldn’t contain themselves:

 “This was everything you could have asked for, maybe more,” said Michelle Meyer, head of United States economics at Bank of America Merrill Lynch. “We’re seeing new entrants into the labor market, which implies a longer runway for the business cycle.”

“This is a validator,” said Michael Gapen, chief United States economist at Barclays. “This is a report that indicates that the slowdown in hiring earlier in the year has been reversed.”

Strong Job Gains, for Second Month, Reframe Economic Outlook,

By Nelson D. Schwartz, NYT, August 5, 2016

Well, yes Ms. Meyer, new entrants are surging into the U.S. labor market. But as you can see in the table at the bottom of this article, most the this “surge” is from overseas. (The foreign-born immigrant labor force grew 5-times faster than the native-born American labor force over the past 12 months).

And yes, Mr. Gapen [Email him] the slowdown in hiring evident earlier this year does seem to have reversed—but immigrants, not native-born Americans, are the overwhelming benefactors. (Over the past two months immigrants have gained 647,000 jobs—a 2.6% gain—while American workers have lost have lost 160,000, a 0.1% loss.

While July saw a robust 420,000 gain in Household Survey employment, the foreign-born component surged more than twice as fast as the native-born.

In July

  • Total Household Survey employment rose by 420,000, up by 0.3%
  • Native-born employment rose by 292,000, up by 0.2%
  • Foreign-born employment rose by 128,000, up by 0.5%
While Native-born American workers have lost ground to their foreign-born immigrant competitors throughout the Obama years, the trend has accelerated significantly over the past few months. This is brought out in our New American Worker Displacement Index (NVDAWDI) graphic:

Native-born American employment growth is represented by the black line, immigrant employment growth is in pink, and NVAWDI—the ratio of immigrant to native-born job growth—is in yellow. The index starts at 100.0 in January 2009 for both immigrants and native-born Americans, and tracks their employment growth since then.

From January 2009 through July 2016:

  • Immigrant employment rose by 4.180 million, or by 19.3%. The immigrant employment index rose from 100.0 to 119.3.
  • Native-born American employment rose by 5.116 million, up by 4.2%. The native-born American employment index rose from 100.0 to 104.2.
  • NVDAWDI (the ratio of immigrant to native-born employment growth indexes) rose from 100.0 to 114.5. (100X (119.3/104.2))
During the Obama years immigrant employment has risen 4.6 times faster than American employment – 19.3% versus 4.2%. In many unskilled occupations the job growth gap is far larger, owing to the disproportionate number of foreign-born workers.

The foreign-born share of total U.S. employment has risen steadily, although erratically, throughout the Obama years:

In February 2009, President Obama’s first full month in office, 14.972% of all persons working in the U.S. were foreign-born. The foreign-born share reported in July was 17.046%, ranking second among the 91 months of Mr. Obama’s administration. The record, 17.077%, was reached in March of this year. Six of the 10 worst months of American worker displacement during the Obama years—i.e., months with the highest foreign-born employment shares— have occurred during the first seven months of 2016.

So July’s immigrant employment share was 2.07 percentage points above the level recorded in February 2009, Barack Obama’s first full month in office.  With total employment now at 151.5 million, this implies that Obama-era immigration may have pushed as many as 3.14 million native-born Americans onto the unemployment rolls since then.

A detailed snapshot of American worker displacement over the past year is seen in the Employment Status of the Civilian Population by nativity table published in the monthly BLS Report. PDF

Employment Status by Nativity, July 2015-July 2016
(numbers in 1000s; not seasonally adjusted)
  Jul-15 Jul-16 Change % Change
  Foreign born, 16 years and older
Civilian population 40,135 41,311 1,176 2.9%
Civilian labor force 26,079 27,132 1,053 4.0%
     Participation rate (%) 65.0 65.7 0.7 %pts. 1.1%
Employment 24,710 25,984 1,274 5.2%
Employment/population % 61.6 62.9 1.3 %pts. 2.1%
Unemployed 1,369 1,149 -220 -16.1%
Unemployment rate (%) 5.2 4.2 1.0 %pts. -19.2%
Not in labor force 14,056 14,178 122 0.9%
Native born, 16 years and older
Civilian population 210,742 212,310 1,568 0.7%
Civilian labor force 132,448 133,572 1,124 0.8%
     Participation rate (%) 62.8 62.9 0.1 %pts. 0.2%
Employment 125,012 126,453 1,441 1.2%
Employment/population % 59.3 59.6 0.3 %pts. 0.5%
Unemployed 7,436 7,119 -317 -4.3%
Unemployment rate (%) 5.6 5.3 0.3 %pts. -5.4%
Not in labor force 78,293 78,737 444 0.6%
Source: BLS, The Employment Situation—July 2016, Table A-7, August 5, 2016.

From July 2015 to July 2016:

  • Foreign-born employment rose by 1.274 million, up 5.2%, while native-born American employment rose 1.441 million, up by 1.2%. Immigrant employment grew more than 4-times faster than American employment.
  • The number of unemployed immigrants fell by 16.1%, while the number native-born unemployed fell by 4.3%. Advantage immigrants.
  • Unemployment rates dropped by 19% for immigrants and 5.0% for native-bornAdvantage immigrants
  • The Labor Force Participation rate (LFP), a sign of worker confidence, rose by 1.1% for immigrants and by 0.2% for native-born Americans. Advantage immigrants.
(And remember: this government data understates the true displacement impact of immigration, because it doesn’t count the post-1965 wave’s U.S.-born children, now a significant factor).

Once again the civilian population numbers give us pause. BLS estimates that the population of working age immigrants grew by 1.2 million over the 12 months from July 2015 to July 2016. That is larger than the commonly cited figure of 1 million per year for net legal immigration of all ages.

Are illegals filling the gap? Or refugees that we do not know about?

As Donald Trump might say: What’s going on here?

Edwin S. Rubenstein (email him) is President of ESR Research Economic Consultants.


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