The Reality of Employment Isn’t So Good

The U.S. job market rebounded in September as the economy added 248,000 jobs, according to government data released Friday morning, a reassuring sign of the nation’s recovery. The unemployment rate crossed a key threshold for the first time in six years, falling to 5.9 percent. – The Washington Post, October 3, 2014.

Fact Check: The situation is hardly reassuring for a very large number of Americans. One reason is that the official unemployment rate is crafted to put a better face on employment than actually exists. It does not count people who have given up looking for work. In fact, so many people have dropped out of the workforce that America’s workforce participation rate is only 62.7 percent, the lowest level in 36 years. Also, the official figure does not include people who want full-time employment, but can only find part-time jobs. If these two were added in, the unemployment rate would be 11.8 percent.

Most of the newly created jobs are low level and relatively low paying. This was reflected by the fact that the average hourly wage has not risen significantly during the past year. Traditionally, manufacturing jobs have provided good salaries and upward mobility, but manufacturing remains a weak sector in the alleged economic recovery. In the latest report, only 4,000 of the added jobs were in manufacturing.

Meanwhile, our government’s immigration policy keeps allowing foreigners to come in and compete with Americans for the not so abundant jobs. Foreigners took the newly created jobs at a higher rate than Americans. As studies by Harvard economist George Borjas have shown, immigration has a higher negative impact on poor and disadvantaged Americans, in terms of competition and wage suppression than on other groups. Although the official rate of unemployment is 5.9 percent, it is 11.4 percent for black Americans.

It is not completely inaccurate, however, to say that an economic recovery is taking place. But it mainly benefits the wealthier segments of our society. These often are people who gain directly or indirectly from the profits accrued from the wage suppression caused by immigration. Things indeed are looking better on Wall Street. Main Street is another matter.

 

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