Vital Signs

Jobs, Politics, and Immigration

Unemployment and underemployment are trends becoming more noticeable as the 20th century draws to a close. Eighteen million new jobs were created in the United States during the expansionary 1980's, but, ominously, structural unemployment—the seeming base level in our economy—was still redefined upward from 4.5 percent to 5.5 percent of the work force. Worse, new job creation fell far from this pace in the early 90's and remained sluggish even as the production of goods and services grew. All the while, the category of "discouraged worker," describing those who have ceased looking for work, rises uncounted. The root cause of these developments is, arguably, a rapidly growing population. More people means more workers. Some few contend that this bodes well for America in the long run. But there is room for doubt.

First, review some characteristics of labor. It is a factor of production; labor productivity puts an upper limit on the wage that can be paid without igniting inflation. In other respects labor is a commodity; wages, or the price paid for labor, respond to the law of supply and demand. Wages usually rise in a strong economy. The trigger is unemployment falling to near its structural level, which allows labor to command, as well as demand, higher wages.

Consider the decade and a half after World War II. The economy boomed, the labor supply did not expand, wages went up very, very fast,...

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