A ‘Bigger Economy’ Isn’t Better

The Quote Below: More Misinformation from the Media

“The world’s largest economy isn’t growing fast enough, according to one market expert who believes the U.S. will soon face a major labor shortage. More immigrants, he says, can help make up the difference.

“ ’The baby boomers have been retiring in huge numbers since 2012,’ David Kelly of JP Morgan Asset Management told FOX Business’ Stuart Varney. ‘The result of that is that over the next decade the working age population aged 18 to 64 is only going to grow by two-tenths of percent per year. And that just isn’t fast enough to grow. We’re already at full employment, basically.’ . . .

“Kelly said 75 percent of immigrants who enter the U.S. each year are of working age as compared to about 64 percent of the native population.

“When you bring in more immigrants, you disproportionately bring in more workers, and actually workers is what the United States will need over the next decade, he said.” – US Needs More Immigrants for Economy to Grow: JP Morgan, Fox Business, 8/30/19 [Link]

Fact Check of Quote Above: Immigration is not the answer to lowering the average age of the U.S. population. We could increase our already massive level of legal immigration, and it would have only a modest impact on our ration of working-age people to retirees. “Among the reasons,” one analyst notes, “are only modestly younger than natives on average, and that immigrant fertility tends to decline by the second generation.”

Another mistake of this article is its assumption that making the overall economy bigger will benefit everyone. Overall growth through immigration most certainly will help the economic elites who benefit from cheap labor. But it does not help most people, particularly workers, both native and foreign-born, whose wages are suppressed. When someone proposes a larger economy, measured by gross domestic product, a most relevant question to ask is whether it will result in a high per capita income throughout society.

As for the claim that we will face a “labor shortage,” There are significant reasons to doubt it. One is the impending prospect of large-scale automation forecast by a number of studies. One predicts that by 2030, scarcely more than the ten years from now, almost 40 percent of jobs now done by humans will be automated. It’s hard to image we would have a labor shortage in that situation. More likely, we would have to worry about finding enough jobs for Americans to do. Forget about needing foreigners workers.

It is hard to escape the conclusion that many financial writers are wedded to the “labor shortage” myth to the exclusion of all other concerns—most specifically concern for the well-being of American workers.



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