Donald Trump Cuts Consumer Spending by Illegal Immigrants, Laments Federal Reserve Member
by Neil Munro5 Jun 2017154

President Donald Trump should expand the economy by welcoming illegal immigrant consumers, rather than by boosting Americans’ wages and productivity, says a growing chorus of establishment voices on Wall Street, the federal government, and industry.

“There are millions of [illegal] immigrants living in this country … [who] are not going out and shopping,” because of Trump’s enforcement policies, said Robert Kaplan, the head of the Federal Reserve of Dallas, and a voting member of the Federal Reserve which regulates the economy by adjusting interest rates.

That demand for imported consumers is also echoed by Wall Street advisors, such as Mark Zandi, at Moody’s Analytics, who predicted that reduced immigration would lower housing prices. In 2015, Google chairman Eric Schmidt bluntly called on the federal government to import more consumers. “Most stock markets assume modest growth, so how are you over a couple of decades to deal with the fact that one-third of your [aging] customers are going to go away? … Well, one [way] is to produce more customers through immigration,” he said, adding that companies could also grow if they export more products and services.

But business will get more consumers in American once a better economy draws more absent Americans from the sidelines and into the economy, said an official at Trump’s Office of Management and Budget. “We do expect consumption growth to be faster going forward than it has been in recent years, but this is more a by-product of faster economic growth overall spurred by productivity growth,” said an official. “As firms invest more because of the Administration’s policies, labor productivity growth will rise and overall output will be higher. This is the main source of the increased growth in consumption that we expect,” he added.

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The head of Trump’s main budget office, former Rep. Mike Mulvaney, recently dismissed business complaints about a tight labor market. Millions of Americans have fallen out of the labor market since the 2000s, he pointed out, saying “if you created economic opportunity and jobs that they want, they would come back.”

“So I’m not worried about the tightness of the labor supply,” Mulvaney told The Wall Street Journal.

The OMB official told Breitbart:

The participation rate among 25-54 year-olds averaged 84.0 percent in 2000, but by 2016 had dropped to 81.3 percent. If the same labor force participation rate had obtained in this age demographic in 2016 as it had in 2000, that would imply an extra 3.4 million people working [and consuming] in 2016. This is only a rough, but illustrative, indicator of the number of people who could hypothetically be in the labor force if we had maintained the peak participation rate that we had achieved in 2000.

In fact, that huge number of missing workers are caused by the pre-Trump government policies, admitted a top economic advisor to President Barack Obama. “This [dropout] is caused by policies and institutions, not by technology,” said Jason Furman, an economist who chaired Obama’s Council of Economic Advisors. “We shouldn’t accept it as inevitable,” he told a Brookings Institute expert, Dave Wessel in August 2016. Furman continued:

The fraction of prime age men who are working or looking for work has fallen continuously since the 1950s. In the early 1950s, 98 percent of men in that age bracket had a job … [or] were actively looking for one. Today, that fraction has fallen down to 88 percent. … Understand it is quite large. The difference between a recession and a normal economic period is maybe two percentage points on the employment population ratio … so this is something that is more like 10 percentage points … The fraction of prime age men who are working or looking for work has fallen continuously since the 1950s. In the early 1950s, 98 percent of men in that age bracket had a job … [or] were actively looking for one. Today, that fraction has fallen down to 88 percent.

In another measurement, dubbed the “employment to population ratio,” the percentage of working-age men is stuck at 85.3 percent, well below the 89.7 percent rate in 1999, leaving at least 2 million men sidelined and out of sight.

In April, Kaplan called for the work participation be raised via additional government-backed training of workers — not via higher wages that would encourage workers to get their own training. He said:

Although the labor force participation rate for prime-age workers is about 88 percent for college graduates and 81 percent for those who have attended some college, it is only 76 percent for those with a high school diploma and only 66 percent for those who have less than a high school diploma. In short, where there is substantial labor slack in the economy, it is highly correlated with segments of the population with lower levels of educational attainment. While there are a variety of reasons for this correlation, individuals in these segments would benefit from additional skills training in order to be more productive members of the workforce.

The U.S. employment rate for prime-age men lags far behind the rate in high-wage Germany.

During the 2016 campaign, Trump promised to change immigration rules to favor Americans, saying:

When politicians talk about “immigration reform” they mean: amnesty, cheap labor and open borders. The Schumer-Rubio [2013] immigration bill was nothing more than a giveaway to the corporate patrons who run both parties. Real immigration reform puts the needs of working people first – not wealthy globetrotting donors. We are the only country in the world whose immigration system puts the needs of other nations ahead of our own.

Since his election, Trump has sharply reduced the inflow of illegal immigrants — but has not yet penalized companies that employ illegals. He has begun small-scale reforms to the contract-worker programs, such as the H-1B program, but has not tried to slow or pause legal immigration.

Each year, the federal government provides companies with 1 million new legal immigrants, plus 1 million temporary contract-workers, such as H-1B and H-2B workers. This inflow loosens the labor market, to the huge disadvantage of working Americans, and especially the four million Americans who enter the workforce each year. For example, the inflow of cheap labor cuts Americans’ wages and salaries by roughly $500 billion per year, nearly all of which is transferred to company owners and investors, according to data provided by the National Academies of Sciences in 2016. Also, the NAS report shows that federal, state and local government provide legal and illegal immigrants with at least $56 billion of taxpayer cash and aid each year, nearly all of which flow back into companies selling food, shelter, autos, retail products, and other consumables.

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http://www.breitbart.com/big-government/...-says-business/