Immigration curbs might not boost U.S. wages

WASHINGTON — President Donald Trump’s plan to get Americans higher wages by limiting immigration may not be the right tool for the goal.

Average hourly earnings rose 2.5 percent in July from a year earlier for a fourth straight month, matching the rate of the past two years, according to Labor Department data issued Friday. While hiring continued at a solid pace and the unemployment rate matched a 16-year low, growth in worker pay has stalled at levels below recent expansions that typically produced gains of 3 percent or faster, even as companies frequently cite labor shortages.

Trump last week endorsed a proposal to restrict legal immigration and give priority to those with higher skills, arguing that in the process, wages would rise across the board. While attracting the world’s best and brightest may be a worthy goal, many economists doubt shrinking the pool of foreign workers will make employers boost compensation, or help the economy, attributing the weak pay gains to other factors.

“Weak wage growth has to do with the real change we’re seeing in corporate behavior and longer-term trends” such as automation and the rise of mega-firms that have more leeway to limit labor costs, said Scott Brown, chief economist at Raymond James Financial in St. Petersburg, Fla. “Companies are not going to boost your salary until you have one foot out the door. That’s the way corporate America works these days.”

Besides, he said, “I don’t think immigration has that big of an impact on wages,” so the new plan to restrict it “doesn’t make much sense at all.”

Sens. Tom Cotton, R-Ark., and David Perdue, R-Ga., have proposed legislation to evaluate visa applications based on merit, with a preference for people with higher education or job skills. The bill would significantly reduce the number of green cards issued, and eliminate some benefits for prospective immigrants with families already in the U.S. It would also cap annual refugee admissions, and end a visa lottery meant to diversify the immigrant population.

The plan “will reduce poverty, increase wages and save taxpayers billions and billions of dollars,” Trump said Wednesday. The U.S. should “favor applicants who can speak English, demonstrate they can financially support themselves and their families, and demonstrate skills.”

While the bill is unlikely to pass the Senate, Trump’s support reflects pledges he made on the campaign trail to limit immigration and help working Americans.