The skills gap in unemployment is huge. Workers with at least a four-year college degree have an unemployment rate of 3.8 percent and a labor force participation rate of 75.5 percent. Workers with less than a high school diploma have an unemployment rate of 11 percent and a labor force participation rate of 45.4 percent. Over the last thirty years, wages for workers with a four year college degree have risen while wages for male workers with less than a high school diploma have declined sharply. And yet some economists argue that, despite the high unemployment rate and declining wages, the US faces a shortage of low-skill workers.
According to these economists, low-skill natives too often are drug addicted, too often have criminal records, and are too reluctant to move to areas where the economy is expanding. But this entire framework is wrong. We ought to think of America's low-skill population, both the foreign and native born, as having common interests. We ought to work to redesign our welfare, tax, health care and immigration policies so that they work better for America’s struggling low-skill workers of all backgrounds.
A study by Brian Cadena and Brian Kovak found that Mexican-born workers were more likely than native-born workers to relocate to areas of greater job growth. The study also notes that those Mexican-born workers were “much less likely to receive unemployment insurance benefits compared to similarly skilled natives, which likely increases the urgency of finding new employment.” Reihan Salam observed that native-born low-skill workers are more likely to have existing social support networks and greater access to the welfare state and that this likely plays a major role in mobility.
As individual foreign-born low-skill workers attain US citizenship, gain access to the American welfare state, and build social networks, we should expect the labor markets of those particular foreign-born workers and native-born workers to converge. That would be a good thing. We should not want a separate caste of workers who do not have access to the same protections as the rest of the population. We should want foreign-born workers to be fully integrated into American society.
Not everyone wants that. Cadena and Kovak support a temporary low-skill guest worker program like the one in the current Senate immigration bill. This envisions two different low-skill labor markets. There would be one labor market for low-skill native-born workers with access to the welfare state in which wage declines correlate with declining labor force participation and disintegrating families, and a second “mobile” foreign-born labor market in which workers do not have access to the welfare state and would face deportation if they underwent a spell of unemployment. This would leave us with two different populations of low-skill workers who are, each in their own way, segregated from the mainstream of American life.
We can do better. We can change a number of policies to make it easier for low-skill workers (both foreign and native-born) to find work and take care of their families. Michael Strain has suggested relocation vouchers for the long-term unemployed to help them move to areas of greater job availability and offering lump-sum unemployment insurance bonuses to laid off workers who find new jobs quickly.
We should make our immigration system friendlier for all of our current populations of low-skill workers. Illegal immigrants with longstanding ties to the US should receive amnesty and a shorter path to citizenship than the one contemplated by the Senate immigration bill, but this amnesty should not come until after the implementation of mandatory, universal employment verification. Wages for low-skill (especially male) workers have been declining for decades. George Borjas found that inflows of low-skill immigrants tend to somewhat reduce wages for current low-skill workers. For the sake of our current population of low-skill workers, both the native and foreign-born, the US should follow Canada and Australia in adopting an immigration policy that favors higher-skilled and English-proficient immigrants. This is the policy that the American public already wants.
Our health care and tax systems can be made more pro-work. President Obama’s health care plan mandates that employers offer health insurance to employees or else pay a fine—if the employees are working more than thirty hours a week. This incentivizes employers to keep workers part-time for as long as possible.
Simply repealing the Obama employer-mandate would be an improvement, but we can do better yet. James Capretta has proposed a plan that would extend a flat tax credit to workers who don’t already have employer-provided health insurance. That means that a worker who lost a job that provided health insurance would still be covered if they had to piece together forty hour a week from several different employers until they could get a full-time job. Capretta’s plan would extend health insurance to many workers outside the employer-provided insurance system and it would be more pro-jobs than current law. Robert Stein’s tax plan would quadruple the child tax credit and increase the take home pay and work incentives of many parents below the median income. Stein’s plan would also cut taxes on capital, making it more profitable for businesses to invest and create jobs.
We can improve the mobility of low-skill native-born workers and extend the protections of the welfare state to more of our foreign-born workers, while making that welfare state more pro-work for all. We can adopt pro-jobs policies that will extend greater health care security to low-skill workers and their families. We can adopt tax policies that will increase the take home pay of working parents below the median, and immigration policies that will not expand the labor force in areas where wages are in long-term decline. We can do more to integrate all the elements of America’s low-skill labor force into the mainstream of American life. We can, and we should, make American society work better for low-skill workers and their families.
Pete Spiliakos is a columnist for First Things. His previous “On the Square” columns can be found here.