February 9, 2018

Reuters’ Coverage of 2017 Wage Increases Ignores Decline in Illegal Immigration

Filed under: Economy,Taxes & Government — Tom @ 4:30 pm

Reuters reported Monday that 29 states and DC saw average weekly wage increases of 3 percent or more in 2017, up from 11, 13 and 9 states, respectively, in 2014, 2015, and 2016. Additionally, no states saw wage declines, compared to 6, 10 and 10 in the previous three years. The dispatch’s reporters only mentioned declining jobless rates as factor in these improvements, ignoring several other relevant factors, the most important of which is probably last year’s increase immigration law-enforcement efforts.

The first paragraph of the analysis made its focus clear:

The kind of pay raises for which American workers have waited years are now here for a broadening swath of the country, according to a Reuters analysis of state-by-state data that suggests falling unemployment has finally begun boosting wages.

… Over the past four years, the U.S. economy added 10 million jobs and the overall unemployment rate fell to its lowest level since 2000. Yet wages have disappointed.

… The disconnect has puzzled economists at the Federal Reserve, frustrated politicians concerned about rising inequality, and held regular Americans back …

… Average weekly pay rose in 30 states, also up sharply from prior years, the analysis showed.

Reuters’ first graphic has several errors:


The featured states were reportedly “zeroing in on record lows” in their unemployment rates during 2017. While the explanation of the methodology at the end of the article refers to “states which had achieved possible record lows in 2017,” only nine of the states on the map (CA, CO, HI, ID, ME, MS, ND, OR, and TN) appear to have tied or beaten their old records.

Based on my analysis using the less stringent “zeroing in” standard, Reuters should have excluded Alabama, Kansas, New York, and Virginia, and should have added Washington State.

As to average wage growth, the graphic below for percentage changes in weekly earnings shows that there was significant improvement in 2017, compared to a lackluster previous three years (a graphic containing 20i4 is here):


While nearing full employment is a factor, it’s hard to ignore how all four states bordering Mexico (California, Arizona, New Mexico, and Texas) moved up into the 3 percent-plus tier in 2017. Texas and New Mexico went from wage losses to outsized gains, while Arizona and California jumped one tier (despite its 40-year low, California’s 4.8 percent unemployment rate is hardly impressive, and nowhere near genuine full employment). Maryland, another state with increasing numbers of illegal immigrants, also moved from wage losses to the top tier.

Economists and politicians are “puzzled” and “frustrated” because they rarely acknowledge that lax immigration enforcement in previous years created a growing class of low-wage, non-citizen workers who kept wages artificially low — until last year, when border apprehensions fell by 40 percent (as fewer people tried to enter the U.S. illegally) and deportations increased by 37 percent.

The reporters also ignored the positive effects of reined-in federal government regulation and last year’s turnaround and expansion in the oil industry.


1 Comment

  1. [...] I noted at my home blog last week, beyond falling unemployment, some credit should also go to tougher immigration [...]

    Pingback by BizzyBlog — February 12, 2018 @ 11:27 am

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