Wage stagnation and the immigration connection (made by CAPS but not the New York Times)

In his January 12 story, veteran New York Times reporter Steven Greenhouse tackled a critically important subject that affects every American—stagnant pay. [Our Economic Pickle, by Steven Greenhouse, New York Times, January 12, 2013] 

Greenhouse identified stagnant wages as the major contributing factor to income inequality. Wages, notes Greenhouse, have fallen to a record low as a share of America’s gross domestic product and, for some workers, have flatlined. At the same time, corporate profits hit an all time high. [Corporate Profits Hit Record as Wages Get Squeezed, by Chris Isadore, CNN Money, December 3, 2012]

Bemoaning what Harvard University economics professor Lawrence Katz calls America’s loss of shared prosperity, Greenhouse pointed to industrial giant Caterpillar. Although Caterpillar recorded record profits last year, the company forced its employees to accept a six-year wage freeze. [Striking Caterpillar Workers Ratify Deal They Dislike, by Steven Greenhouse, New York Times, August 17, 2012]

Unions, which once had leverage, are powerless. Detroit automakers have secured two-tier contracts that enable them to pay new hires $16 an hour, far less than the $28 an hour earned by longtime workers. This also pushes down labor’s share in any economic recovery.

Caterpillar and the automakers offer cases in point of craven corporate policies that have slashed American incomes. According to the Center on Budget and Policy Priorities, median income for working-age households headed by an individual under age 65 fell 12.4 percent from 2000 to 2011 to $55,640 even though America’s economy grew during the same period by more than 18 percent. 

Greenhouse made a passing reference to outsourcing’s hurtful consequences, correctly noting that it has “fattened corporate earnings while holding down wages at home.” But if the reader is looking for a mention of one of the biggest contributors to stagnant wages, immigration, he will search in vain.

Despite beginning his Times career in 1983 as a business reporter and today being one of the country's few journalists that cover labor as his full-time beat, Greenhouse either hasn’t learned or is unwilling to admit the cardinal rule governing wages: tight labor markets are better for workers than loose labor markets. Immigration adds to the labor pool and therefore hurts American workers.

Since the United States admits nearly one million legal immigrants annually, the collective net immigration totals over the last several decades has devastated working and unemployed Americans. Those that still have jobs haven’t experienced a real increase in wages; the unemployed compete, often unsuccessfully, with more job seekers each year.

In truth of course, Greenhouse understands the supply and demand laws as well as anyone. Even his Times colleague, Nobel Prize winner and self described liberal Paul Krugman, knows the score: “Immigration reduces the wages of domestic workers who compete with immigrants.” [Notes on Immigration, by Paul Krugman, New York Times, March 27, 2006].  Krugman described his finding as “one of the negative conclusions” he drew about immigration. 

To write honestly about immigration at the Times, maybe journalists need a Nobel Prize.