Native-Born Americans Losing Jobs to Immigrants: The Hidden Impact on the US Labor Market

Native-Born Americans Lose Jobs to Immigrants

At the beginning of the year, it was highlighted that the most significant untold story of the US labor market was the "great replacement" of native-born workers with foreign-born workers. This trend was particularly noticeable among illegal immigrants. Since October 2019, native-born US workers have lost 1.4 million jobs, while foreign-born workers have gained 3 million jobs.

Replacement of Native-Born Workers Becomes a Major Talking Point

After nine months, the persistent replacement of native-born workers with immigrants and illegal aliens finally became the biggest political and media talking point. This was evidenced by articles such as "How Immigration Remade the U.S. Labor Force " and "Without Immigrants, US Working-Age Population Would Shrink". These articles are an extension of the latest narrative, first introduced by Fed chair Powell, and then picked up by Goldman, which essentially stated: you can have (record) illegal immigration, or you can have even more (breakneck) inflation.

Native vs Foreign-Born Debate Intensifies

The August payrolls report brought the native vs foreign-born debate into sharp focus. While the report was a mixed bag, with the payrolls print coming in softer than expected, but a big bounce from sharply downward revised June and July prints, the unemployment rate did drop from the Sahm Rule's recession trigger level of 4.3% to 4.2%. This effectively eliminated the clear cut case for a 50bps rate cut, especially since the Household survey was not only far stronger than the Establishment survey, but indicated the biggest increase in employment since March.

Quality of Job Gains in the Past Year

However, a closer look at the composition of the increase in employed workers paints a disastrous picture. The increase consisted of an increase of 527K part-time jobs, offset by a 438K plunge in full-time jobs. This means that since last June, the US has added just over 2 million part-time jobs, and lost over 1.5 million full-time jobs. Part-time jobs pay far less, don't offer benefits, and generally lead to suboptimal outcomes for the labor market. This has led to an increase in the number of multiple jobholders, which jumped above 8.5 million, back to all-time highs.

The Great Job Replacement Fact

The quality of job gains in the past year has been catastrophic, and the reason for that is the continued replacement of native-born workers with immigrants (some legal but mostly illegal). In the past month, the US added 635K foreign-born workers, while losing 1.325 million native-born workers. This was tied for the biggest one-month drop in native-born workers since the covid crash. The US has not created a single job for native-born workers since July 2018, and in that interval, it has created 4.7 million jobs for immigrants, both legal and illegal.

Most Immigrant Workers are Illegal

For those who would argue that these are mostly legal immigrants, Standard Chartered strategist Steven Englander refuted that claim and proved that most of these immigrant workers are virtually all illegal. He wrote that immigration, particularly illegal immigration, "is a political flashpoint that has also become an important factor in assessing economic performance. Detailed data from US Customs and Border Protection (CBP) and US Citizenship and Immigration Services (USCIS) suggest that half of non-farm payroll (NFP) growth to date for FY24 (started 1 October 2023) has been from undocumented immigrants who have received an Employment Authorization Document (EAD)".

Bottom Line

It is clear that the labor market in the US has been an absolute catastrophe and harbinger of economic disaster for the past year. The great worker replacement scandal has resulted in native-born Americans losing jobs to immigrants, most of whom are illegal. This raises serious questions about the future of the US labor market and the economic implications of these trends. What are your thoughts on this issue? Share this article with your friends and let us know your views. Don't forget to sign up for the Daily Briefing which is everyday at 6pm.