No Paper, No Problem
No one’s talking about the impact of immigration on official employment figures.
There’s a disconnect between the nonfarm payrolls (NFP) reported by Department of Labor and Bureau of Labor Statistics (BLS) vs. the unemployment rate which is calculated from the household survey. NFP have shown strong monthly job gains of 230k on average over the last 12 months, yet the unemployment rate has ticked higher (currently 3.9%). No one seems to have a plausible reason why. Here’s a theory, and no it’s not a conspiracy theory, it’s simply the facts on the ground. With ~4 million illegal aliens pouring over the border each year (on average) for the past three years (estimated total of ~12 million during the Biden Administration), many of these folks have found jobs. Employers report total workers hired (without disclosing the names of the employees) to the BLS, so the number of reported number of workers increases inclusive of illegal aliens. Yet the illegal alien worker is most likely afraid to state that they are working when they are contacted by the household survey which is party that reports the unemployment percentage, because the illegal alien does have the legal permit to work. In other words, immigrant workers are captured in the employers’ payroll data while at the same time the non-status worker is reluctant to report their employment status in a government survey, if they are not legally authorized to work (see bar chart below).
I am told by an inside source that the Kansas City Fed is currently studying this exact dynamic, and they put real credence in this development that has helped drive recent employment growth. A leading economist I spoke with yesterday said this may be adding +100,000 workers per month; he jokingly stated to me: “200,000 is your new 100,000â€. Bottom line, expect strength in the work force to continue for some time as there are millions more enter the work force.
To legally work in the USA, foreigners can use a visa for temporary workers, such as H-1B for specialty occupations, L-1 for intracompany transferees, O-1 for individuals with extraordinary ability, and others. For permanent work, employment-based immigrant visas are needed (EB-1, EB-2, EB-3, EB-4, EB-5), which cater to different categories of workers, from those with extraordinary ability to investors. To prove eligibility to work, employees must present specific documents to their employers, such as a U.S. Passport, Permanent Resident Card (Green Card), Employment Authorization Document (Form I-766), or a foreign passport with a Form I-94 or Form I-94A indicating a nonimmigrant status that permits work. Hiring employees without proper paperwork is a violation of labor laws, so a profitable gray market has developed to provide fake documentation for those seeking work. |
