By Ira Mehlman
FAIR
You don’t have to be an economist to figure out that when the number of people entering the labor force exceeds the number of jobs created, unemployment will increase. But it doesn’t hurt when, arguably, the most influential economist in the world comes right out and says it publicly.
At a news conference last week, after the Federal Reserve announced it was lowering the prime interest rate by a half percentage point, in part due to concerns over the health of the job market and rising unemployment. Chairman Jerome Powell also cited mass illegal immigration as a factor driving up the unemployment rate. “If you’re having millions of people come into the labor force, then—and you’re creating 100,000 jobs [per month], you’re going to see unemployment go up…We understand there’s been quite an influx across the borders, and that is actually been one of the things that has allowed unemployment rate to rise,” he observed. Equally notable is that Powell raised the issue without being prompted, which is significant because the Federal Reserve generally goes out of its way to avoid discussing hot button political issues.
The official U.S. unemployment rate has been steadily ticking upward since last year. After post-pandemic unemployment bottomed out in 2023, it increased to 4.2 percent in August 2024, representing a little more than 7 million workers who are actively seeking a job. Perhaps a more important figure is the U-6 unemployment rate, which includes workers who have become discouraged and given up looking for a job and those who are involuntarily working part-time. The U-6 rate represented about 7.9 percent of American workers in August – about 13.3 million people — who, if given the chance and a reasonable salary, would be working.
While the Fed is voicing concerns about unemployment, the number of new foreign workers entering our labor force continues unabated. It is not clear if Chairman Powell’s reference to the “influx across the borders” was specifically about illegal aliens (including parolees and asylum seekers) entering the country, or all new arrivals, including green card holders and those with guestworker visas. Either way, the impact on American workers is significant.
In August, the U.S. economy created about 142,000 jobs. During that same month, 159,000 illegal aliens were encountered illegally entering the U.S. Of this number, 103,000 were classified as single adults who likely came in search of jobs. Despite the fact that they are merely economic migrants, under the Biden-Harris administration, the vast majority of these aliens have still been released into the U.S. through parole, or as asylum-seekers. Parolees are immediately eligible to apply for work authorization, while asylum-seekers may receive work authorization 180 days after filing an asylum application. And, even though they remain illegal aliens until they find some way of legalizing, they are allowed to compete with American workers for jobs.
In addition to continued large numbers of illegal aliens being allowed to enter the labor force, the United States admits about a million legal immigrants each year with green cards. A significant number of these new immigrants are working-age adults who are likely to enter the job market as well.
The United States also issues an assortment of “temporary” worker visas. In FY 2023, 712,078 new H-visas were issued to workers with a variety of skill sets to fill U.S. jobs (not including 186,748 spouses and dependent children who accompanied them). Another 445,418 F-1 student visas were issued. Besides studying in the United States, these visas allow holders to “accept on-campus employment subject to certain conditions and restrictions,” and a broader range of jobs thereafter.
There is not a one-to-one displacement or lost job opportunity for an American worker with the arrival of each new foreign worker. But clearly, in the estimation of Chairman Powell, the “influx across the borders” is having a deleterious effect on Americans who are seeking employment and the U.S. economy as a whole.
Chairman Powell’s unsolicited remarks should be a signal to those who make our immigration policies that it is time to secure our borders and moderate the number of new foreign workers we admit to our country.
