The Jobs Crunch: A Progressive Indictment Of Immigration—And Both Parties

September 23, 2004

[Peter Brimelow writes: At VDARE.COM, we often get mail from disgusted Democrats, and even lonely liberals, wanting to know why their party refuses to address immigration reform too. Randall Burns, one of our ablest correspondents, writes here as a self-described "progressive."]

The chart below was a centerpiece in the Kerry campaign`s Our Plan for America. It`s stark message: America is facing stagnant job growth.

Traditionally, progressives have been very concerned about jobs and the distribution of wealth. But do Kerry and Edwards really understand the employment problem—or the needs of the constituency they purport to represent?

Their chart understates the problem by ignoring two major factors:

  • The “natural increase” of the American workforce was at least 3.75 million.
  • During this period, at least 2.25 million jobs were filled by new immigrants.

Thus simple math suggests that, on Bush`s watch, at least 5 million Americans became involuntarily unable to participate in the workforce.

This point is supported by the steadily falling Labor Force Participation Rate. Even during the 2004 election year recovery,” the August Labor Force Participation rate was a stagnant 66%.

This job crunch is not fully reflected in the unemployment rate that politicians always talk about—because unemployment statistics basically cover folks who are drawing unemployment insurance. 

The many omitted groups include: at least 3 million jobless who never worked enough to qualify for unemployment insurance; Disability retirees, who increased by over 0.5 million from 2000 to 2002— many of them really displaced skilled workers; anyone in the underground economy, which doubled to over 10% of the economy from1992-1998 alone; and, tragically, given the cost of prisons and prison conditions, America`s incarcerated population, which has grown annually by over 100,000 from 1998 to 2003.

Moreover, the quality of jobs is decreasing dramatically. Four categories of non-tradable domestic service employment accounted for 78% of all new jobs created in August 2004. During the Bush Administration, 2.7 million US manufacturing jobs and 200,000 technical jobs were lost.  

US disposable income has declined for 30 years, but in the last four years it has plummeted.  A two-paycheck family has less disposable income today than a single paycheck family had 30 years ago.  

Not surprisingly, the US poverty rate has steadily increased under Bush.

Bottom line: America`s working and middle classes are being squeezed—with no end in sight. 

But the Kerry-Edwards team appears either not to understand the desperate plight of their main constituency, working and middle-class Americans, or not to care about them. 

Perhaps this is due to sheer embarrassment over Democratic complicity in much of the legislation that has caused the problem—GOP policies that are, in effect, vicious acts of class warfare designed to minimize the cost of labor and increase the wealth of the owners of capital:  

  • Massive legal immigration:  Immigration is associated with important measures of economic decline–states with high levels of immigration tend to have poor long-term bond ratings.

 

 

  • Professional “Guest Workers.”  In the late 1990s, major corporations successfully lobbied for H-1b, L-1 and L-4 visa expansions allowing them to fill professional positions in the US with foreign guest workers, with minimal controls.  These visas allow on-the-job training in the US and placement of those members of the offshore teams that need direct customer contact facilitating offshore outsourcing. H-1b holders have better than even odds of eventually obtaining a valuable US green card. Since the employer pays a token fee for a guest worker visa, the employer is essentially using the public resource of immigration rights as a partial compensation—a practice even pro-business economists like Milton Friedman admit is a de facto corporate subsidy“.

 

  • Outsourcing/Bad Trade Deals.  American trade policy has been pro-“free trade” without requiring that the trading partner have equivalent environmental or employee protections.  These blind spots have, for example, caused the export of almost all American non-ferrous metals processing jobs to Mexico and Canada.  They also have enabled Chinese prisoners to displace American textile and garment workers.  By 2003, NAFTA alone was responsible for the loss of nearly 2 million American jobs–mostly manufacturing jobs that moved to Mexico. 

An extreme example: The computer industry.  The combination of offshore outsourcing and corporate-sponsored immigration practices forced hundreds of thousands of American tech workers to make career changes in the context of rapidly shrinking opportunities reminiscent of the Great Depression.

The overall number of jobs in IT and related disciplines shrank 17.2% from 2000-2003, largely due to outsourcing overseas.  Job openings, when they occurred, were often filled with H-1B and L-1 guest workers.   

Congress, driven largely by campaign donations, had raised the cap on newly issued H-1b guest worker visas (active for up to 6 years) to 195,000  per year–and expanded an even more loosely controlled  L-1  guest worker program.   Because these temporary visas are extensively used to facilitate long term residence, when a US permanent resident was hired to fill a position, it was often a former guest worker coming back into his old position.

From 1996-1998, 28% of new hiring for programmer jobs went to H-1b workers. That rose to 50% in 1999 and according to some expert estimates, 90% in 2001. 

As a result, by 2002, there were over 463,000 H-1b workers employed in US information technology programming jobs—a job category with fewer than 3 million workers in total. (And that figure doesn`t include people who recently used guest worker programs to obtain green cards and workers using other guest worker visas.) 

Between the 17.2 percent decline in information technology jobs and the expansion of guest worker visas, over 1,000,000 American computer professionals were permanently out of work.

And the use of foreign guest workers reduced the salary for Americans in these jobs by over $10,000 per year below what it would otherwise have been. 

What, then, is to be done?

The present situation is inherently unstable. Henry Ford was right:  industrial economies that do not pay workers enough to afford their products have limited potential. 

Conservatives have correctly observed that “open borders” threaten the very existence of social welfare programs.  

Progressives need to take this analysis further. They should look at how current immigration and trade policy threatens to eliminate the very existence of broad portions of the American “mass market” and its democratic institutions.

The Bush administration, with the active collusion of Alan Greenspan at the Federal Reserve, has been staving off the evil day with a half TRILLION dollar annual operating accounts deficit financed by foreign borrowing.  But the low interest rates that have made it affordable, and the cooperative foreign lenders, are likely to go away over the next few years.  

By using immigration, trade and fiscal policies to lower labor costs and concentrate wealth in their hands, America`s parasitic elites are committing economic and political suicide—just as the antebellum planters blindly expanded slavery even when it had become obvious that slavery was an extraordinarily bad idea. 

The Kerry-Edwards team have every political incentive to bring these issues up.  Their promises on employment and the economy are meaningless until immigration, trade and outsourcing are addressed. 

But Kerry and Edwards as Senators have acted to exacerbate every one of these attacks on their constituency. This is particularly perverse because even Hispanics largely support reduced immigration. 

American progressives have examined the role of money in politics—but they have failed to expose mass immigration as corporate welfare

Kerry-Edwards should be asking how to:

  • Manage the U.S. economy without a $500 billion annual trade deficit and mass immigration.
  • Reverse America`s decline in disposable income and expand the access to wealth available to the broad base of US citizens.

Countries like Japan have trade surpluses, no large levels of immigration—and lack America`s natural resources and rich history of technical innovation.

A pioneering nation like the United States can have sound economic policies that build a sustainable future for its people and open new frontiers for all humanity, rather than simply liquidate assets that took generations to build. 

It may well be that simple enforcement of immigration law and increased deportations can do little in the context of mass migrations driven by desperation. Ralph Nader has proposed major changes in US foreign and trade policy that would reduce the tendency of Hispanics to migrate to the United States.  We need to expand the range of policy options—and contain neoconservative class warfare.

My guess: even if Kerry is marginally better than Bush, there is no reason to expect him to reform the current mess until a crisis arises—as it will

Progressives and thoughtful conservatives must prepare for that crisis together.

 

Randall Burns [email him] holds a degree in Economics from the University of Chicago.  He works in the information technology sector and is a graduate student at Carnegie Mellon University.  Burns has been active in furthering the introduction of immigration, trade, and tax realities into the progressive agenda. In 2004, he helped create the Kucinich campaign`s position paper on H-1b/L-1 visas.