Sen. J.D. Vance (R-OH) grilled Fed Chair Jerome Powell on the effect of increased immigration on driving up property prices while simultaneously lowering salaries for working and middle-class Americans.
During a Banking Committee meeting, Vance asked Powell about the impact of mass immigration, in which the United States accepts around a million legals annually in addition to adding perhaps millions of illegals every few years, on house prices.
“What do you see in the relationship, particularly since housing has been such a huge driver of inflation over the past few years? What role do you think illegal immigration has in pushing up housing costs, which of course is a main pusher of inflation for American citizens?” Vance questioned Powell.
Powell stated, “I’m sure there are cities in the nation where new individuals are coming in; you can find places where they exist, where it will have added to an already tight housing market.” He generally minimized the effect on “aggregate inflation.”
Vance specifically discussed the housing market in Springfield, Ohio, where a large migration from Haiti has sharply raised rents and pushed house prices beyond the reach of most people.
“Springfield has had a boom in population from immigration that has greatly impacted our ability to generate enough housing,” a message from Springfield officials states, according to Vance.
“Springfield’s Haitian population has gone to 15,000 from 20,000 over the past four years, significantly straining our resources and capacity to provide enough homes for all residents.” Even with the scheduled addition of 2,000 more homes over the next three to five years, this remains insufficient.
Vance’s remarks follow former President Donald Trump’s remarks to an Arizona audience last month that mass immigration significantly influences American house values.
With our 15 million new immigrants, housing prices are simply rising. Trump commented that we couldn’t accommodate them anywhere. “We have absolutely no place for them; that number is rising, and we have nowhere at all.”
Vance is a strong vice presidential candidate for Trump.
Similarly, Vance observed at the hearing with Powell the effect mass immigration had on wages, especially for middle-class and working Americans.
“I wonder when you see other economists discuss the growth of immigration and how it has surely put a downward push on wages.” Obviously, that has put some downward pressure on inflation, but it also puts downward pressure on the wages that people earn to pay for their families,” Vance said. “Why do we regard that as a positive thing?”
Powell replied by acknowledging that U.S. salaries reflect immigration in some measure:
“All of this is taking place within the context of a very tight labor market, which has now become somewhat less tight—significantly less tight….” Immigration is addressing the extremely tight labor market in your area. Although wages are still somewhat high, they are declining to a more ecologically friendly level.”
Vance said legislators should concentrate on removing millions of prime working-age Americans from the job market sidelines instead of bringing thousands more foreign workers for hiring.
“If we say we have a highly tight labor market and we say there is more than one opening per worker, there are two possible ways you could reasonably solve that, certainly more than that, but two clear ways you could reasonably handle that,” Vance said.
“One is from a new wave of immigrants who are bringing workers through the system.” In this regard, increasing pay and bringing some of the sidelined workers back can also help. I particularly consider the seven million males of prime age who have left the workforce. Why not try to raise wages in a way that draws some of those people off the sidelines? Policymakers should not be more focused on the labor shortage than on bringing in a lot of new immigrants.”
Powell said he agreed with Vance’s assessment, noting, “That’s a very helpful emphasis. I agree; I also do not believe it has to be one or the other.”
According to a labor market data analysis last month, over 75% of all American job growth—both legal and illegal immigrants—has gone to newly arrived immigrants in January 2019, before the Chinese coronavirus epidemic shuttered the American economy.
Less than one million native-born Americans have entered the workforce in the meantime.
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