Lat week, President Trump sat down with Fox News anchor Laura Ingraham in the White House. It was a wide-ranging interview that touched on immigration policy near the end. Ingraham mentioned wage growth and noted that wages are ticking up, but also that there is a lot of room for more growth, and she asked the President about his immigration plan.
(The link to the immigration discussion is here. It begins around the 3:10 mark)
Laura Ingraham:
We don’t have a tight labor market. If we had a tight labor market, we would be seeing real increases in wages. I hear that your team is planning on advocating more foreign workers coming in for some of these high-tech companies. I’m very concerned about that.
President Trump acknowledged Ingraham’s concerns but he didn’t deny that he wants to allow tech companies to bring in more workers. He instead argued that there are not enough workers in the United States to fill open jobs, or to take new jobs that companies from other countries (he specifically mentions Japan) will create by opening new plants here.
Ingraham does a good job pushing back by pointing out that wage levels indicate there is no labor shortage and says wages in the tech industry are relatively flat. That is at the heart of the disagreement between the two. The President says we don’t have enough skilled college graduates to fill existing jobs, but if that were true, wages would have spiked and there would have been a pronounced contraction in the tech sector. Neither of those things have occurred. Ingraham is right, and the President is wrong in that he mistakes the demand by tech employers for more lower-wage foreign workers with a "need"
If companies were having trouble finding workers, they wouldn't be bringing in H-1B workers, paying them less than American workers, and having those American workers training their replacements before being laid off.
Just after Christmas it was reported:
AT&T is poised to send thousands into the new year hunting for new jobs after assigning them to train their own foreign replacements, according to conversations with current and former workers and documents obtained by Axios. Many have worked for the company for over a decade. They aren't being offered severance or early retirement, and may not easily find a comparable job elsewhere with similar pay.
If President Trump is going to argue that companies can’t find workers, he needs to explain why AT&T is laying off thousands of qualified Americans while at the same time bringing in H-1Bs. And AT&T is just the most recent prominent example. This has been happening for years.
There have been modest wage gains so far during President Trump’s first term. However, much of that growth has been in at the lower end of the labor market. That’s good news for those working what have traditionally been referred to as “blue-collar” jobs and who have been waiting far too long for a pay hike. However, wages in higher-skilled occupations, and that includes STEM jobs, remains sluggish, and wage growth for workers with a four-year college degree is slower than it was during the tech boom of the 1990s.
No one should doubt the President when he says he hears all the time from corporate executives that they can’t find enough workers. They have been making this false claim for decades – that’s why the H-1B program exists – but there has never been an independent, peer-reviewed study that has found a shortage of qualified STEM workers in the U.S.
The evidence that there are more then enough workers to fill open jobs is convincing, if one wants to look for it instead of relying on the the word of Mark Zuckerberg, who funds an organization dedicated to driving down the cost of labor in the United States. Michelle Malkin and John Miano have written a whole book about it, so, too, has Hilarie Gamm. Professors Ron Hira and Norm Matloff have done extensive work on this issue, and there is broad support across the political spectrum for reforms that will disallow tech employers to use the H-1B program (and OPT and the L-1 visa, etc.) to displace American workers.
If President Trump were correct about a lack of tech workers, American college students would be flocking to STEM majors. This isn’t happening, not because the coursework is too difficult but because it is very difficult for many to find work in the field upon graduation. In 2014, the Census Bureau found that 74% of those with a bachelor's degree in a STEM major are not working in that field.
The fact that wages in STEM industries are higher than in lesser-skilled fields isn’t the point. What matters are wage levels in STEM over time AND within a specific geographic area. What tech workers make in Silicon Valley has to be compared to other workers earn in Silicon Valley, not what they make in Lincoln, Nebraska. When that is done, it becomes clear that tech workers are NOT in short supply.
The situation has improved for American workers since the Great Recession, and wages are increasing under President Trump, no doubt of that, but wage growth is still sluggish, and the effects of the jobs and wage losses suffered by Americans during from 2007 to 2010 are still being felt. It has taken more than a decade for the labor market to recover enough so that employers are compelled to raise pay to entice workers back into the labor market. That is a good thing, which is why it is disconcerting to hear the President talk about a “need” to bring in more foreign workers.
The proponents of mass immigration are nothing if not nimble in their messaging and are now promoting an increase in the number of foreign workers coming in to compete with American tech workers as “merit-based” reform. President Trump signaled in his interview with Ingraham that he is open to that suggestion.
To reiterate, the President’s bolsters his contention that more foreign tech workers are needed because wages are up, which is true for workers overall, while Ingraham points out that the rate of wages growth in the tech sector indicates there are plenty of available workers, which is also true.
It is true, too, that there is a lot of slack in the labor market across sectors and there is a lot more room for wage growth. Real wages today are just back up to the level of the 1970s, and there are signs of a slowdown. The best way to continue the positive trend is to reduce immigration, which the President in the past has promised to do, most notably by endorsing Sens. Tom Cotton (R-Ark.) and David Perdue’s (R-Ga.) RAISE Act.
The good recent economic news is that the labor market finally tightening to the point that the long-term unemployed are starting to come off the sidelines and reenter the workforce. Cutting back on immigration would require employers to invest in recruitment, training, and retention practices that would all be good for the American worker.
What the tightening labor market has done, though, is draw in people who were not previously job hunting. Nearly three-quarters of new hires have come off the sidelines. --The New York Times
Where are employers finding workers, with unemployment so low? From outside the labor force. Close to 3/4 of the newly employed are coming off the sidelines.
-- Ben Casselman, Economic reporter for The New York Times
Ingraham reminded the President at the close of the interview that “you ran on America first, I’m going to keep pressuring you on this.” You can send a message to President Trump and urge him to reduce the number of foreign workers coming to the United States by clicking here.
ERIC RUARK is the Director of Research for NumbersUSA
