Immigrants are the surprise ally of the Federal Reserve against wage increases

The American political magazine Politico wrote an article about the impact of immigrants on the labor market.

The article also included the opinions of economists. Economists claimed that most of the increase in labor supply in the US in the last two years came from foreign nationals, but this situation alleviated the action of the Federal Reserve by reducing the rigidity of the labor market and suppressing wages of national workers.

The article claimed that there has been a large increase in the number of immigrant workers in the US in recent years, and that immigrant workers contribute to the fight against inflation without a large increase in unemployment.

‘IMMIGRANTS ARE THE FED’S GREATEST ALLIES’

The highlights of the article were as follows:

* The increase in the number of immigrants in the last two years helped meet the growing demand for workers after the epidemic. This raised the Federal Reserve’s hopes that inflation could fall without a large increase in unemployment.

* Fed Chair Jerome Powell expressed concern about an unbalanced market where the number of open positions far exceeded the number of available employees, fearing this would drive up wages and fuel further price increases.

*But now another trend has emerged. Millions of people, mostly foreigners, have entered the workforce to help fill many of these jobs.

CONFESSION OF THE ECONOMISTS

* Alec Phillips, US political economist at Goldman Sachs, who reduced the chance of a recession next year to just 15 percent, said: “The labor market has begun to relax without having to reduce demand for workers. “Immigrants clearly have a disproportionate contribution to this,” he said.

* Issuances of green cards and work visas rose by about 115,000 and 230,000 respectively in the past 12 months, reaching the highest level in recent years, Goldman Sachs economists said in a research note. Economists said this would mean 40,000 more workers per month than expected.

* According to Courtney Shupert, an economist at the research firm MacroPolicy Perspectives, almost three-quarters of the increase in labor supply in the last two years has been foreign-born.

* Professor Brian Kovak of Carnegie Mellon University stated that migration has negative effects on workers’ wages.

REPUBLICANS WANT EDUCATE IMMIGRANTS

* On the other hand, there are some differences of opinion regarding immigrants in American politics. Some Republican lawmakers argue that more attention should be paid to attracting immigrants who meet specific needs in the economy, especially those with higher educational levels.

* Senator Tom Cotton said in a speech: “President Biden’s immigration policies have forced the poorest Americans to compete against an avalanche of unskilled foreign labor; It has capped the wages of American workers still struggling to afford basic goods in an inflationary economy. “Immigration policies should support American workers, not replace them with foreigners,” he said.