The U.S. labor force is in a state of flux, with a labor shortage occurring despite the current economic slowdown. The Wall Street Journal recently reported that migrant construction laborers in the Washington area made on average $120 a day before the pandemic, but now make about $200 a day. This is more than a 60 percent increase and is indicative of higher pay and better working conditions for migrants in the U.S. Furthermore, hourly pay for all U.S. construction workers has risen about 15 percent since late 2019, according to the Labor Department.
However, while workers are being paid more, hours worked are down. Our research indicates that the reduction in aggregate hours worked in the U.S. between 2019-2022 is due to a reduction in hours worked per person rather than a 1 percentage point decline in the labor force participation rate. This means that, despite the higher pay, people still in the workforce are working a couple of dozen hours a year less than before.
At the same time, those calling for immigration to lower wages and stem inflation are completely out of touch with the reality of the US labor force. Lack of work authorization is not a serious impediment to working, as the law barring the employment of illegal immigrants has been unenforced for decades.
Overall, the U.S. labor market is in a state of flux, with higher pay and better working conditions but fewer hours worked. This paradox is a result of a number of factors, including the pandemic, government policies, and the lack of enforcement on work authorization laws. It is clear that the U.S. labor force is experiencing a major shift, and it remains to be seen how this will affect the overall economy.
0. “U.S. Business Owners Pay Premium to Hire Migrant Workers in Extremely Tight Labor Market” The Wall Street Journal, 7 Feb. 2023, https://www.wsj.com/articles/migrants-are-doing-better-than-ever-thanks-to-tight-labor-market-11675784935
1. “Migrants replenish tight US labor market – Chinadaily.com.cn” China Daily, 8 Feb. 2023, https://global.chinadaily.com.cn/a/202302/08/WS63e32e6ba31057c47ebada24.html
2. “Would More Immigration of Workers Reduce Inflation?” Econlib, 4 Feb. 2023, https://www.econlib.org/would-more-immigration-of-workers-reduce-inflation/
3. “Why Have So Many People Dropped Out of the Labor Market?” SchiffGold, 31 Jan. 2023, https://schiffgold.com/key-gold-news/why-have-so-many-people-dropped-out-of-the-labor-market/