Apparently, the law of supply and demand has stopped working in Colorado.
Colorado’s unemployment rate has dropped to 3 percent — the lowest level since 2007. Normally, that would spur significant wage growth, as employers increase pay to attract scarce workers.
But real wages have been virtually stagnant since the Great Recession. Between 2009 and 2015, average hourly wages climbed 11 percent in Colorado. Inflation went up about 10 percent.
America’s immigration policy bears much of the blame for this conundrum. Our immigration system grants work permits to roughly 1 million new foreign laborers each year. This never-ending supply of workers distorts the labor market and gives businesses little reason to boost pay or benefits for Colorado’s employees.
Until policymakers take steps to lower immigration, local workers shouldn’t hold their breath for big raises.
The immigration system doesn’t reflect the nation’s economic needs. Even as the job market tanked during the recession, the number of immigrants coming to the United States rose to historic highs. In 2008 and 2009, the economy shed over 8.3 million jobs, yet the government admitted 2.2 million new immigrants.
In the nearly seven years since the economic recovery officially began in 2009, the job market has been so weak that millions of Americans have given up even looking for work. The labor force participation rate recently tumbled to levels last seen during the stagflation of the late 1970s.
Yet over those same years, the country let in another 7 million legal immigrants, to say nothing of the legions who crossed the border illegally.
High levels of immigration make it harder for people to find work. The average period of unemployment is longer today than at any point since recordkeeping began in 1948.
Current immigration policies also depress wages. Research from Harvard professor George Borjas shows that when immigration causes a 10 percent increase in the size of a particular skill group of workers, wages for that group drop 2.5 percent.
Indeed, real median household income is still below the levels of February 2008.
We are, of course, a nation of immigrants. And there is no question that the country has benefited immensely from many of those who have come to America yearning to breathe free and contribute to our society.
But looking forward, it makes little sense to import millions more workers when the economy isn’t even producing enough new jobs for those already here.
The immigrants arriving today are disproportionately unskilled. A Brookings Institution report found that 30 percent of working-age immigrants don’t have a high-school education, almost four times the rate for native-born Americans. While roughly 30 percent of native-born Americans have attended at least some college; only about 15 percent of foreign-born residents have done so.
Many of these less-skilled foreigners gravitate toward blue-collar jobs. That increases competition for such positions and disadvantages working-class Americans who are already struggling to make ends meet.
Policymakers have known they needed to lower immigration levels for decades, but have shamefully failed to act. Back in the early 1990s, President Clinton appointed a commission to study U.S. immigration policy. Its 1995 report concluded that “our current immigration system must undergo major reform to ensure that admissions continue to serve our national interests.”
Among other things, the commission recommended limiting immigration rates to 550,000 people a year, saying that the nation’s immigration system should “provide protection to American workers against unfair competition.”
The commission further argued for a focus “on the admission of highly skilled individuals.” Currently, the immigration system favors the relatives of current citizens and legal residents.
President Clinton called the commission’s proposals “a balanced immigration policy.” But nothing has been done since to make those recommendations a reality. Instead, immigration reform has bogged down over questions about how to handle those here illegally.
That’s an important issue to be addressed. But fixing the legal immigration system is even more pressing. American workers deserve better than today’s woefully misguided immigration policies.
Philip Prine is a licensed construction contractor in Louisville.
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