Labor Market Shifts: Native vs. Foreign-Born Workers

The most recent employment report from the Labor Bureau indicates that native-born workers are securing jobs at a rapid pace, while foreign-born workers have experienced significant job losses. This decline has been noticeable over the last three months in a rather stagnant job market.

Some may refer to this as a cause for concern. It’s understandable if it prompts Jay Powell to hasten the Fed’s decision on lowering federal funding rates—though, perhaps, a better term to describe the current situation is “transition,” or even “health.”

A closer look at the numbers reveals that employment among foreign-born workers has fallen by 765,000 over the past three months, averaging a decline of 255,000 each month. Despite this, there’s no need for alarm; employment for foreign-born individuals has still risen by nearly 5.5 million since Joe Biden took office in 2021.

On the flip side, native-born employment surged by an average of 217,000 jobs per month over the last quarter, which is quite impressive. This shift in the job market reflects some significant changes in the economy.

Before we pass final judgment on native-born workers’ employment figures, a bit of context is helpful. Prior to the pandemic, their employment figures stood at around 131 million, and by August 2023, they had regained that level. When Biden left office, there had been a loss of about half a million native jobs in the post-pandemic recovery.

In simpler terms, toward the end of his term, Biden’s economic policies seemed to favor foreign workers, leaving many American workers behind.

When Trump took office, he pledged to crack down on illegal immigration and enforce border policies. It seems those efforts are reflected in the current job statistics, marking a shift from a more open labor market under Biden to a more American-focused workforce.

Of course, transitions like these are rarely smooth. A lot of the positions once held by foreign workers are presumably now filled by Americans. However, businesses are likely adjusting, perhaps seeking new methods to enhance service, management, or the adoption of emerging technologies. It’s interesting to consider how common devices, like tablets in restaurants, have become.

Some industries, though, are finding it particularly tough to adapt, especially hospitality, grooming, and construction.

For instance, hotel staff accustomed to a slower pace may need to transform into more equipped cleaning technicians, which, by the way, could come with better pay.

And who knows? Are we ready to have robots as hairstylists in the near future? Maybe we’ll be asking them to trim a bit higher! (For anyone unfamiliar with these references, I’d recommend checking out the classics like “Forbidden Planet” or “Lost Universe.”)

In construction, there might be a need to increase the use of prefabricated materials to keep up. Even in agriculture, there’s a pressing need to replace lower-skilled, lower-paid labor with more efficient alternatives. This could potentially create new demands for immigration reform, especially for implementing a structured seasonal worker program.

Another possible outcome of this transition, along with an increase in business investments, is the potential rise in wages for skilled, native-born workers as their skills and productivity improve.

This, in my view, is a more sustainable method of uplifting working-class individuals, as opposed to short-term fixes like tax credits or raising minimum wages. Fostering real prosperity for the working poor starts and ends with equipping them with the necessary tools and training to enhance productivity and, ultimately, their earning capacity.

In summary, the employment reports indicate a healthy transition within the economy, reflecting just one aspect of many occurring in the United States.