Where do immigrants fit into a country with a declining labor force participation rate and a rising minimum wage?

“U.S. Will Accept More Refugees as Crisis Grows” (nytimes) says ” The Obama administration will increase the number of worldwide refugees the United States accepts each year to 100,000 by 2017.”

The Bureau of Labor Statistics shows a decline in the labor force participation rate from 66 percent in 2009 to 62.5 percent today (chart). In other words, every year a smaller percentage of adult Americans are working.

Minimum wages are rising all over the country.

There are a variety of legal attacks on hiring people as contractors (potentially working out to below minimum wage) rather than as W-2 employees.

What will immigrants who are not selected for English fluency, education, job skills, or youth do once they arrive? If they are legal immigrants, especially if they have children, they will presumably eventually be eligible for the full range of welfare benefits, e.g., a taxpayer-funded house, taxpayer-funded health care, taxpayer-funded food, etc. According to this page, immigrants both legal and illegal collected welfare at a 57-percent rate back in 2009 (compared to 39 percent for native-born households with children; soon the majority of us will be dependents of the Great Father in Washington!). The same page, however, says that 95 percent of immigrant households in 2009 had at least one worker.

The U.S. has been successful at absorbing immigrants, but our largest waves of immigration (as a percentage of the population) were before the 1938 introduction of a minimum wage and many decades before we built a comprehensive welfare state (e.g., Medicaid was created in 1965).

What do readers think? Where will these new Americans fit into the labor force? Who will want to pay them $15/hour plus benefits?

14 thoughts on “Where do immigrants fit into a country with a declining labor force participation rate and a rising minimum wage?

  1. {Low cost labor, Minimum wage} Choose one. Get rid of minimum wage law or at least let the state govts. decide. This is how India manages its huge population of billion plus people including illegal immigrants from Nepal and Bangladesh.

  2. Rampant wage fraud is what will happen. It already does, but it will just be even more so as minimum wage continues to rise. There will be trial periods at cash wages that never seem to turn into an actual hire. There will be accounting fraud. It will be pretty terrible, and people will accept the worse working conditions.

    For the businesses that can’t get out of paying the higher wages, they will insist on overeducation to filter for the most English-speaking, customer-friendly “American” types. So working up from entry level without expensive credentials will be even more difficult unless you do it for illegally low wages at one of the fraud huts.

    And a select handful of people who campaigned for higher minimum wages will get nice sinecures raising awareness somewhere for 75k/year or more.

  3. Overall the points in this post are good, but one thing missing is that the minimum wage itself is an anti-immigration (or immigrant deterrent) measure. Its absolutely right that most immigrants -essentially the ones who are third world peasants- don’t have the skillsets to justify the proposed minimum wages in what is supposed to be a first world economy. So they will stop coming. That is the whole idea.

    I will leave it to others to speculate why the unions and politicians, in this case, can’t just argue for better (or any) enforcement of current immigration laws, lowering quotas, etc. directly and are relying on the minimum wage indirect method.

    Also I agree with Mrs. Lastname that we can expect lots of cute measures to get around labor laws. The “trial period” that never works out into an actual hire is a good one (and the federal government itself is a bad offender). Another would be a contract where the employee is supposed to be “on call” on the time, so they can’t take another job, but are actually paid for the hours when they are called in. In the past employers handled potential emergencies and surge demand just by keeping more employees around than they really needed in normal situations.

  4. Immigrants are not all made from the same timber so that you can just count heads. Ashkenazi Jews are not the same as Puerto Ricans, Koreans are not the same as Cambodians. Past performance is not a guaranty of future results.

    Walker (the head of MIT) was spectacularly wrong about the Jews when he wrote in the Atlantic in 1896 that they were “beaten men from beaten races” , unsuited for democratic life unlike those who had sat under the council oaks of Germany.
    http://www.theatlantic.com/magazine/archive/1896/06/restriction-of-immigration/306011/

    He could not have been more wrong. But that doesn’t mean that those who are skeptical about immigration today are also wrong.

  5. That labor force participation rate statistic is not what you think it is. It represents people who are either employed or looking for a job. So if two million people currently looking for work were to find jobs next month, that would have no effect on the participation rate. It also consider all Americans over the age of 16. Thus my parents, who are in their mid-seventies, are part of the group deemed to be not participating in the labor force because they’re neither employed nor trying to find a job.

    The labor force participation rate is currently a favorite statistic of those who are trying to make the case that the American economy has not improved during the past 5 years. A better statistic to look at is the
    Employment-Population Ratio for people 25 to 54 years old. That ratio actually indicated the portion of Americans in that age range who are working. It has been rising since the beginning of 2012. It’s only made up of the ground lost during the recession, indicating a very weak and slow recovery, but it’s a recovery nonetheless.

    http://4.bp.blogspot.com/-YtzX-UDUXZc/Vg6hIDPXhfI/AAAAAAAAlLI/DVbVjzjBOOw/s1600/EmployPop2554Sept2015.PNG

  6. Given that 100,000 refugees per year represents about 1/3000 of the population per year, it is hardly significant that you even mention it in relation to any employment statistics.

    Also, your reference to benefits paid to illegal immigrants only applies to benefits for the US citizen children of illegal immigrants, as far as I can tell.

  7. To say “immigrants both legal and illegal collected welfare at a 57-percent rate back in 2009” does not define the cost of the welfare support. How much of that rate amounts to a 2 dollar a day subsidy for food stamps?

    I do think that we need to limit legal and illegal immigration as a replacement for native labor.

  8. Duke: “Hardly significant” because this particular batch of new citizens each year will be a small percentage of the total U.S. population? Or even of the total batch of new Americans? (4 million babies are born in the U.S. each year plus about 1 million immigrants total) Wouldn’t the kinds of jobs that they get be “significant” to the refugees themselves? After 10 years there will be 1 million of these folks but even if there were just one person the job that he or she had would, I think, be significant to that person.

    Vince: Thanks for that chart. As I read it the labor force participation rate of 25-54-year-olds peaked in the late 1990s, was more or less flat through the 2000s and has been declining since 2009. It does not look to me like a chart of a country whose economy is putting a high value on more workers, even if restricted to the 25-54-year-old age group. (If the value to American employers of additional workers were high, presumably they would pay some of those 25-54-year-olds enough to motivate them to leave the house).

  9. Wouldn’t it be great if you could select WAR REFUGEES that are fluent in English, educated, and have job skills!

  10. @aviv

    The German Labor Ministry has said only 10% of “Syrian refugees,” have sufficient skills to be able to get a job, or get training for a job.

    That means a large group of adult “refugees,” must undergo training, just to be ready to undergo later training. Merkel’s an idiot.

  11. It definitely benefits people who rent apartments/flats in urban areas. Have a look at how Denver, CO rents have risen and risen as 10K to 15K people per month, continue to swell the population of the Denver area.

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