Carney: U.S. Does Not Have a Labor Shortage; It Has a Wage Shortage. America does not need to import workers.

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America does not need to import workers. We have plenty of potential workers who were sidelined by the Great Recession and globalization.

In the first two years of the Trump presidency, America created two million jobs. The unemployment level fell to an astonishing 3.7 percent in September, the lowest level in decades, and it has averaged 4 percent over the past year.

The official unemployment rate, however, only includes Americans looking for work. It overlooks more than 90 million Americans who are officially out of the labor force. The civilian labor force participation rate is now just 63.2 percent—down from more than 66 percent prior to the Great Recession.

Even when adjusted for America’s aging workforce and more working-age Americans attending college, participation is low. Just 82.6 percent of Americans between the ages of 25 and 54 were counted in the labor force, according to the most recent figures from the Department of Labor. That’s a full percentage point lower than it was in the late 1990s, the last time unemployment was this low

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The low level of wage growth indicates that despite the howls from corporate America about worker shortages, employers are not vigorously chasing workers with higher pay. Absent rapidly rising prices for labor, cries of a shortage ring hollow. All available data show a tight relationship between workforce participation and wage growth.

Importing skilled labor disrupts the climb. Instead of raising wages and employing more Americans, companies may import workers and stick them in the empty slot on the ladder. Those at the bottom do not move up. Those off the ladder never climb on.

One reason many employers prefer foreign workers is that U.S. residency is a subsidy—a form of compensation for the worker that the employer does not pay for. Visas are a form of corporate welfare that enables businesses to pay foreign workers less than they would need to pay a homebrewed worker to do the same job.

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