On Tuesday night, in his final State of the Union address, President Obama said that “Anyone claiming that America’s economy is in decline is peddling fiction.” While that statement may not be what is technically referred to as a political whopper, a la John McCain’s pronouncement in 2008 that “The fundamentals of the economy are strong;” or even Obama’s own promise that the 2009 stimulus bill would fund hundreds of “shovel-ready” projects, it is misleading, nonetheless.
Compared to the performance of the U.S. economy from 2007 to 2009, things have gotten better. But the economy is far for healthy, and arguably the last seven years have accelerated the country’s long-term economic decline. Obama referred to the long-term trends that preceded the Great Recession – though he didn’t note anything outside of technological innovations. Here, Obama is on solid footing, even if he doesn’t fully grasp why. Forty years before Obama assumed office, manufacturing in the United States was on the decline and economic competitors had arisen in Japan and in Western Europe. Women began to enter the full-time workforce in increasing numbers, changing the contours of the labor market. In the 1970s, due to a variety of domestic and international factors, the U.S. economy hit headwinds it hadn’t experienced since the Great Depression.
At a time when job creation had slowed, with Baby Boomers expanding the labor pool and more women than ever before embarking on careers, one would have expected that American politicians would have chosen not to open the immigration floodgates once again. But they did. In 1970, 370,000 persons were admitted as immigrants and the illegal alien population was under three million. But the mid-1990s, average immigration had more than doubled, as had the illegal alien population, despite an amnesty in 1986. In 2009, Obama’s first year in office, the United States was admitting one million immigrants a year and the illegal alien population was over 11 million. When Obama refers to factors that worked against the average American worker, immigration is something that cannot be ignored. Mass immigration helped to bring about a slack labor market that has resulted in much more painful and prolonged downturns in the economic cycle.
To his credit, Obama did mention immigration as a factor that has driven down wages. This was a profound statement that has not gone unnoticed, especially since he deviated from his written remarks to argue “Immigrants aren’t the principal reason wages haven’t gone up enough (emphasis added).” There are arguments about how big a role immigration has played in suppressing wages, but only economists who serve as mouthpieces for multinational corporations pretend that mass immigration has improved the lot of the average worker. Coming from Obama, the acknowledgement that immigration does indeed help to make wages “sticky downward” may seem like am unforced error or a Kinsley gaffe, but in reality it a position he held in the Senate and wrote about in 2004 in The Audacity of Hope:
[T]here’s no denying that many blacks share the same anxieties as many whites about the wave of illegal immigration flooding our Southern border -- a sense that what’s happening now is fundamentally different from what has gone on before. Not all these fears are irrational. The number of immigrants added to the labor force every year is of a magnitude not seen in this country for over a century. If this huge influx of mostly low-skill workers provides some benefits to the economy as a whole… it also threatens to depress further the wages of blue-collar Americans and put strains on an already overburdened safety net.
While attempting to paint a rosy economic picture during his presidency, Obama still has to account for the fact that the labor participation rate is at its lowest level since the 1970s, and the jobless situation is worse than at any time since the 1930s (for which he blames corporations without pointing out their support for his expansionist immigration policies). Obama may brag about the 9.3 million jobs added under his Presidency (he falsely claimed 14 million in the SOTU), but he won’t tell us that this lags behind previous “recoveries, and that many of these jobs are low-paying and/or part-time;” nor will he mention that there are 56 million people between 16 and 64 who are not in the workforce, despite the official unemployment number now at 5 percent.
On Tuesday, President Obama may have revealed his true position on immigration, or he may have been trying to again position his party as pro-worker, at least in rhetoric. Whatever, the reason, he is correct. Immigration is one of the reasons that wages haven’t gone up enough for American workers.
