“Hopeful” Employment News Is Really Not So Hopeful

At first glance, last week’s report that the number of people applying for unemployment benefits fell to the lowest level since early April should be an indication of better things ahead. The Labor Department announced the fourth decline in five weeks to a seasonally adjusted 388,000. The four-week average, a better indicator, dropped to 396,750, the first time in seven months that the average dropped below 400,000. [Unemployment Aid Applications Drop to Seven Month Low, by Christopher S. Rugaber, Associated Press, November 17, 2011]

Steven Wood, an analyst at Insight Economics, put the best spin on the news that he could. Wood said that the job market is “still weak but there are hopeful signs of some modest improvement.”

That’s thin gruel. Note Wood’s key words: “weak,” hopeful,” “modest.”

Wood was more forthcoming about the number of people receiving benefits which fell by 57,000 to 3.6 million, the fewest since the economy tanked in September, 2008. According to Wood, while some among the approximately 20 million looking for full time work may have found jobs, the greater probability is that most have used up their benefits. The total number of Americans receiving aid is 6.8 million, a figure that includes about 3 million additional people currently receiving extended benefits from emergency programs put into place during the recession.

In October, the economy added only 80,000 jobs—a number that obviously doesn’t make a dent in a 16.5 percent U-6 unemployment rate. In fact, 80,000 is about the monthly number of legal immigrants who arrive in the United States and either immediately look for employment or may have to depend on social services. As long as the federal government maintains its current immigration policy, then, as financial journalist Felix Salmon predicts, “unemployment is here to stay.”

Here’s the question that Salmon poses: “Is there anything the government can do to bring employment down?”

Well, there’s a whole bunch the government could do—namely suspend for the foreseeable future the issuance of non-immigrant visas which total about 1 million per year. The visas include work permits, thus allowing the new immigrants to compete directly with Americans for scarce jobs. Furthermore Congress could pass the Legal Workforce Act that would mandate E-Verify, thereby removing aliens from payroll jobs and scaring others away from applying. In terms of expanding American employment opportunities, no program would be more effective that an immigration time-out and E-Verify.

Interestingly, Salmon understand the connection between over-immigration and unemployment. Salmon’s theory is that recent college graduates are the ones getting good jobs, not older, experienced, laid- off workers.

Salmon thinks others would have a chance if they’re:

"… working hard enough to burn through the fat reserves of highly qualified graduates and moms and immigrants, you might eventually start cutting into the hard muscle mass of the long term unemployed."

Note Salmon’s reference to “immigrants” as a roadblock to American employment. As long as immigration remains at its current level and job creation stays non-existent, American workers should expect that, as Salmon ominously anticipates, unemployment is here to stay.