It has puzzled economists why U.S. employment numbers have not matched unemployment rates, but a surge in immigration has emerged as a key factor. Besides explaining inconsistencies in job data regarding unemployment rates, it suggests that the economy can keep adding jobs without overheating.
To calculate employment figures, the Bureau of Labor Statistics uses two surveys, the establishment survey and the household survey. Recently, the disparity between them has increased significantly. The household survey, which contributes to the calculation of unemployment rates, may be affected by errors in population estimates supplied by the Census Bureau. A higher estimate of population growth by the Congressional Budget Office, which accounts for immigration increases, suggests that the labor market can support more jobs growth without overheating. According to economists, the economy could have added more jobs without tightening the labor market previously, resulting in a need for revised estimates for job and GDP growth. They also notice that it is also possible that the discrepancy can be attributed to reporting errors and nuances in survey methodology.
The chief economist at Goldman Sachs, David Mericle, points out that the increase in unemployment rates is mainly attributed to an increase in foreign workers' unemployment rates. As more immigrants enter the country, the pool of workers competing for typical immigrant jobs increases. Other indicators of the job market remain strong, with minimal layoffs and low unemployment claims attributed to the expanded workforce. Household surveys have previously underestimated job growth by significant margins due to historical discrepancies, such as those observed during the late 1990s due to unauthorized immigration.
According to UBS economist Jonathan Pingle, census estimates of immigration may be too conservative. He also questions the establishment survey's potential overestimation of job growth. Data conflicting with the immigration narrative, such as remittances from border states, further contribute to this uncertainty. In addition, Pingle expressed concern over the recent decline in household employment figures, suggesting a more serious problem than a slowdown in growth.
4 comments:
Do you know why Pringle believes the census estimates of immigration may be too conservative?
This was a major topic of discussion in Labor Economics last semester. Based upon the belief of many economists, the estimations for immigrants within the US are typically far from reality. So, I agree with Cooper that I would like to know what influences Pringle's opinion.
Do you think the higher estimate of population growth, particularly accounting for immigration increases, suggests that the U.S. labor market can accommodate more job growth without facing overheating concerns?
I think the point about household employment being down is interesting. I wonder why this is. It seems that if he is concerned than it may be a trend rather than just a one off statistic.
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