Joanie Billie of EmployBridge will explain how the US economy is doing in the March employment statistics on “How to make money.”
The U.S. unemployment rate would be even higher if the government properly accounted for the recent surge in illegal immigration, according to a new analyst note from Goldman Sachs.
Goldman strategists led by chief economist Jan Hatzius predicted that the immigration surge actually added about 1.1 million people to the U.S. labor force and added 1 million household jobs.
Taking these numbers into account, the unemployment rate in March was found to rise to 3.9% from the previously reported figure of 3.8%.
The discrepancy in data stems from the way immigrants are treated.
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A construction worker hammers into a beam while renovating a road in the Union Market District in Washington, DC, on September 8, 2023. (Photographer: Al Drago/Bloomberg via Getty Images / Getty Images)
The Department of Labor’s monthly employment report is based on two surveys. The Establishment Survey, which collects data from about 122,000 businesses and government agencies, is used to calculate the number of jobs the U.S. adds each month. The other is based on monthly interviews with approximately 60,000 households and is used to determine the unemployment rate.
However, the latter household survey relies on the Census Bureau’s population estimates as a benchmark and uses lagged migration estimates based on the 2022 American Community Survey, making it “unable to capture the recent immigration surge.” “We have not been able to do so,” the economists said.
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The U.S. Census estimates that the U.S. population will grow by 0.5% in 2023 compared to the previous year, while the Congressional Budget Office projects it to grow by 0.9%. This discrepancy is a result of CBO’s efforts to capture a wave of illegal immigration at the Southwest border.
Goldman estimates that about 64% of immigrants in 2023 will be “inadmissible,” while about a third will apply for asylum, meaning they can apply for a work permit after 150 days. There is.
A Venezuelan immigrant family illegally crosses the Rio Grande River in Eagle Pass, Texas, on the border with Mexico on June 30, 2022. (Chandan Khanna/AFP via Getty Images/Getty Images)
“As a result, household surveys that use census population estimates as benchmarks are also likely to underestimate the size of the labor force and employment,” they said.
Establishment surveys are less affected because companies do not have to report their immigration status when submitting employment data, but this adds to the discrepancy between the two reports.
“This means that the surge in illegal immigration in 2023 likely contributed to the widening employment gap between the establishment and household surveys,” the economists added.
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Mr. Goldman said the household survey likely underestimated the actual number of workers by 100,000 to 400,000.
Still, the issue will likely be resolved in January 2025, when the Labor Department begins incorporating information from the latest 2023 American Community Survey.
