Immigration changes the jobs maths

The March employment report delivered another blowout figure, with non-farm payrolls expanding by 303,000 jobs and unemployment ticking down to 3.8 per cent. Economists who previously warned that such vigorous hiring would inevitably ignite wage inflation are being forced to recalculate their models. The missing macroeconomic variable is a surge in international immigration.

The Expanding Labor Frontier

According to the Congressional Budget Office, net immigration added over three million people to the US population in 2023 alone. This demographic influx has expanded the potential labor supply, allowing employers to fill hundreds of thousands of open positions without bidding up hourly wages. High payroll numbers in an expanding labour force reflect potential economic growth rather than inflationary overheating.

The immigration surge has rewritten the mechanics of the US labor market, enabling massive monthly employment gains without triggering the wage-push inflation central banks feared.