By A recent report from the Congressional Budget Office (CBO) has sparked a reevaluation of how immigration, both legal and illegal, is affecting the economy. The CBO’s projection of higher population growth compared to the Census Bureau has caught the attention of economists.
Steve Englander, head of North America macro strategy at Standard Chartered, has delved into the issue of jobs growth disparity between two key reports – the nonfarm payrolls data and the household report. The nonfarm payrolls data, which surveys employers, and the household report, which surveys workers, should theoretically have minimal differences over an extended period. However, currently, they do not align. In the past year, nonfarm payrolls have expanded by 2.9 million, whereas the household survey, adjusted to match the job count methodology of the payrolls report, has only shown an increase of 1.1 million.
Englander hypothesizes that a surge in immigration could be responsible for the unexpected rise in payrolls. According to the CBO, approximately 3.3 million immigrants entered the country in 2023. Of these, 2.5 million were either undocumented or had overstayed their visas.
The discrepancies between the two reports and the potential role of immigration in driving job growth highlight the intricacies of measuring the true impact of immigration on the economy. As economists continue to study this issue, it will be interesting to see how these findings shape future debates and policies concerning immigration and its economic implications.
The Impact of Undocumented Workers on the U.S. Economy
Undocumented workers in the United States have a significant impact on the country’s economy, even though their presence may not be fully captured in official employment figures. According to experts, there is a high possibility that these workers contribute meaningfully to monthly job changes.
However, it is important to note that undocumented immigrants often feel hesitant to participate in government surveys, even if they are confidential. This reluctance to respond further reinforces the difficulty in accurately determining their numbers.
When analyzing job growth by industry, a strong connection to immigration becomes apparent. Sectors such as construction, healthcare and social assistance, food manufacturing, accommodation and food services, and personal services experienced a remarkable year-over-year growth rate of 3.3%. In comparison, other sectors only grew by 0.9%. This data supports the argument that the majority of employment gains are concentrated in sectors with a significant immigrant workforce.
Another factor worth considering is the puzzlingly low level of initial jobless claims. While some believe this might be an indication of an increasing number of workers becoming ineligible for unemployment benefits, others argue that it suggests job losers are facing greater challenges in finding new employment opportunities.
Furthermore, this phenomenon could help explain the rise in productivity levels. Since some undocumented immigrants work outside the formal job counting framework used by the Bureau of Labor Statistics, their economic output may be included in the data, while their labor input goes unnoticed.
Economist Englander refers to this situation as a “labor supply shock” which is expected to gradually weaken the U.S. dollar. However, this depreciation is likely to occur over an extended period rather than taking place suddenly.
In conclusion, the impact of undocumented workers on the U.S. economy shouldn’t be underestimated. Their contributions to employment and productivity, although not accurately recorded, play a significant role in shaping the nation’s economic landscape.
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