Wages Are Not to Blame for Inflation

BLS February Report – Wages Stagnant

The Bureau of Labor Statistics (BLS) reported last week that jobs rose by 678,000 and unemployment fell to 3.8% in February.

Many in the media pounced on these numbers, predicting that the labor market will return to pre-pandemic levels this summer.

A troubling aspect of the report, however, is how wages were stagnant in February from the previous month, as inflation reached a 40-year high that is expected to worsen in coming months.

Politicians Want More Immigration to Cut Wages

Meanwhile, some legislative leaders are now seeing soaring inflation as an opportunity to openly discuss increasing immigration to keep wages low.

In “The Democrats’ Plan to Fix Inflation: Squeeze Blue-Collar Americans,” Newsweek opinion columnist Mark Thies wrote:

Senator Dick Durbin (D-Ill.), Democratic whip and one of the loudest proponents of his party’s Build Back Better Act—which offers work permits and de facto legal status to 6.5 million illegal immigrants and would be the largest amnesty in U.S. history—gleefully noted that the bill would put downward pressure on incomes. “Oh, most certainly,” he told reporters. “If there are more workers filling those jobs, it’s deflationary.”

Congressman Jimmy Gomez (D-Calif.) concurs. “If you have more people that are allowed to work in this country, then there’s gonna be less of a tight labor market,” he explained in December.

Business Insider reporter Joseph Zeballos-Roigter wrote about how Senator Jon Tester (D, MT) also wants to address inflation by increasing immigration. According to Zeballos-Roigter:

Senator Tester stated that “a comprehensive immigration bill could help cut inflation…”

Corporate Profits, not Wages, are Steering Inflation

Arguments that wages are currently driving inflation are nonetheless misplaced.

As explained by reporter Irina Ivanova in the CBS News article “Rising fuel prices and corporate profits — not wages — are chiefly to blame for inflation,”: “economic data show wages are far from the main driver of inflation.”

Ivanova further wrote:

The prices growing fastest today — cars, fuel, housing and furniture — point away from wages and toward other explanations, such as goods shortages or companies padding their profit margins. More broadly, it has long been clear that the relationship between what workers earn and what consumers pay has been tenuous at best…

If wages aren’t the primary reason prices have soared, why are consumers paying more for everything from food to rent? One key factor that companies tend not to publicize: higher corporate profits.

Over the past year, despite the extreme economic upheaval of the pandemic, after-tax corporate profits have soared to record levels as a share of economic output, according to the U.S. Commerce Department.”

Workers Worry

February consumer sentiment reports show that Americans across all income spectrums have a bleak view on jobs and wages.

Aimie Picchi wrote about the economic anxiety among higher earners in the CBS News article “Americans are fed up with the economy — and $100,000 earners are driving the pessimism”:

Rising U.S. prices are hitting all Americans, and lower-income households have less leeway in their budgets to handle the surging cost of everyday items ranging from gasoline to food. But upper-income households may be more aware of the impact of inflation given that they haven’t enjoyed the same income gains of late as lower-income workers, which means their “real wages” — or wages after inflation is factored in — are declining.”

NBC News correspondent Isa Gutierrez reported in “Undocumented day laborers face harsh work prospects due to immigration spike” how the record immigration surges at the border have made the day laborer market more difficult.

Black women in particular have cause for concern, as this was the only group that faced rising unemployment in February.

Allowing more immigration to increase job competition will add to the economic insecurity for American workers.

LISA IRVING is the Volunteer Coordinator for NumbersUSA’s Media Standards Project