There is no disputing the data: Wages for working-class Americans are not keeping up with inflation. Moreover, a near-record number of Americans are now out of the labor force entirely. And yet many liberals — avowed friends of the American worker — are calling for more immigration so that employers don’t have to raise wages and get Americans back to work.
It is not surprising when Big Business calls for more immigration to keep wages down, but what has happened to the American left?
Last year, nine Democratic senators joined nine pro-business Republicans calling for an increase in the number of workers admitted under the H-2B program, which brings in lower-skilled non-agriculture workers. The Washington Post editorial board in September argued for “higher inflows of legal workers.” Nicole Narea at the liberal news site Vox states, “The federal government can’t force people to work but it can make it easier for immigrants” to come in and fill jobs.
One might think progressive voices would at least express some concern about the enormous decline in labor-force participation among the non-college-educated or the fact working-class wages have not kept pace with inflation. But not today’s left.
There is general agreement that immigration does lower wages. In an article for Foreign Affairs last month, prominent economists Gordon Hanson and Matthew Slaughter called for significantly increasing immigration to “limit wage and price growth.” UC-Davis economist Giovanni Peri makes much the same argument in an interview with NPR.
A comprehensive 2016 report by the National Academies of Science cites numerous studies showing a negative impact from immigration on wages, particularly those with low levels of education. Subsequent research shows the same thing.
But is it really a good idea to use immigration to increase the supply of workers and reduce wages? Wage growth — especially among the less-educated, who have relatively modest earnings to begin with — is almost certainly not a key driver of inflation. Congressional overspending is probably the most important cause, although international supply chain disruptions, pent-up demand during COVID, and the Fed keeping interest rates too low for too long also drove up consumer prices.
Progressives cheered all of the new spending, but now that inflation is roaring, many want to reduce the income of workers, including those who make modest wages. The Bureau of Labor Statistics reports that median weekly wages did not keep pace with inflation from the third quarter of 2020 to 2022. Even before COVID, the wages had shown little to no growth.
Perhaps worse than stagnant or declining wages is the decades-long decline in the labor-force participation rate of the US-born, meaning the share who are working or at least looking for work. Those out of the labor force do not show up as unemployed because they are not actively looking for work. The decline is especially pronounced among men without a bachelor’s degree. This falloff in labor-force participation causes a host of negative effects on individuals and society. It contributes to substance abuse, welfare dependency, mental health issues, crime, family breakup, and even early death. Getting more working-age people back into the labor force would be good for individuals, the economy and society in general.
Improvement is certainly possible but it will involve the difficult task of reforming our welfare and disability system and addressing the opioid and mental-health crises, and other issues, that have contributed to the decline in work. If the labor-force participation rate of working-age people ages 16 to 64 returned to what it was in 2000 — not exactly an eternity ago — it would add 6.5 million people to the labor force.
A tight labor market is a great opportunity to let wages rise for jobs generally performed by people without college degrees, encouraging more of them to come back into the labor force.
Instead, the Biden administration is encouraging mass immigration of people, many of whom can’t legally work and will pay little in taxes. Increasing the supply of labor lowers wages, particularly in the restaurant and construction industries, for everyone even if they are given work permits.
How can Democrats call themselves the party of the working class and encourage this?
Steven Camarota is director of research at the Center for Immigration Studies.
