Border Crisis Likely Cause of Employment Data Anomaly

News Analysis

The massive influx of illegal immigrants over the past year appears to be the most plausible cause of a major employment statistic growing increasingly inaccurate. If that is so, the error should be remedied come February.

In fiscal 2022, Border Patrol was aware of some 2.8 million illegal border crossings—a historic number. Less then 40 percent of those have been sent back. The rest of them were largely released to the interior of the United States or weren’t apprehended in the first place. The majority of illegal border crossers work either illegally or on a work permit they are allowed to get while their immigration court case is pending.

The government, however, has trouble accounting for these workers in its data. Usually, that’s a minor issue, but the influx of illegal immigrants over the past year may have caused a sizable anomaly in the data.

Accuracy of the data in important as it’s used by the market and policymakers to make high-stakes decisions.

Based on government numbers, the American economy has been adding millions of jobs, but Americans, when asked, don’t report such large gains in employment. The paradox emerged earlier this year and has continued to grow. By November, more than 4 million jobs were missing from a key Census Bureau survey.

Mainstream economists, and particularly the Federal Reserve, have often talked this year about the job market overheating with too many openings for too few workers. The Fed has been rapidly raising interest rates in an effort to curb demand and reduce job openings and thus ease inflation pressures. The employment data it could relying on, however, has grown increasingly conflicted.

The Bureau of Labor Statistics (BLS) publishes two employment figures every month. One comes from a Census Bureau household survey and asks Americans whether they are employed. The result is then used to calculate unemployment rates and other indicators.

The second number comes from a survey of non-farm establishments and asks how many people they are employing. The BLS uses it to calculate monthly job growth.

The two numbers usually grow and fall in tandem and any discrepancies tend to smooth out over a few months.

Since March, however, the two figures have grown increasingly apart. The establishment number has been soaring, while the household number has barely kept up with population growth.

Employers have reported more than 5 million new jobs between April and November, while workers have reported an increase of less than 650,000, based on the surveys. The last time a gap opened so wide, adjusted for overall employment growth, was in 1988.

The establishment survey doesn’t count farm workers, household workers, unpaid family workers, and those who are self-employed but not incorporated. But employment changes in these categories don’t appear to justify a discrepancy this large.

Border crossings, however, could offer at least a partial explanation.

The Census Bureau adjusts its survey results based on the country’s estimated population and demographic mix. But those adjustments are only done in January, the agency explained to The Epoch Times.

“Given that the population controls for any given year are updated just once at the beginning of each year, the household survey’s total employment measure will not reflect the real-time impact of unanticipated changes in immigration that occur during the year,” said the BLS’s Division of Labor Force Statistics.

The establishment survey, on the other hand, would include “recent immigrants that appear on establishment payrolls,” the agency said via email.

“It’s very possible” that immigration has been the dominant factor causing the discrepancy between the surveys, said Steven Camarota, director of research at the Center for Immigration Studies (CIS), a think-tank advocating low immigration.

If that’s the case, the discrepancy should mostly disappear after the Census Bureau adjusts its population estimates in January, which will be reflected in its early February release.

This explanation would clarify how it’s possible that the economy has kept adding jobs even though Americans who’d retreated from the labor force during the COVID-19 pandemic—often retirees—largely haven’t come back.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.