Thank America’s immigrants for killing the recession and keeping unemployment at 50-year lows, Nobel laureate Paul Krugman says


One of the key economic puzzles in the post-pandemic United States is the conundrum of how employers continue to add jobs each month, despite the tightest labor market in decades and record-high inflation gradually subsiding. Nobel Prize-winning economist Paul Krugman attributes this phenomenon to immigration, pointing out that the increase in the labor force, driving job creation without igniting inflation, is primarily due to the availability of foreign-born workers. He highlighted that the U.S.'s ability to outperform other advanced countries is closely tied to its rapid growth, largely facilitated by immigrant workers. 

Following a slight dip in immigration at the beginning of the Trump administration and a significant drop in 2020 due to COVID-induced lockdowns, there has been a resurgence in immigration, reflected in the labor force data. As of the current month, there has been a substantial increase of 3.1 million immigrant workers in the labor force since the pre-pandemic period, compared to a native-born labor force that initially rose to 1.5 million above the pandemic level but has since contracted to below those levels.  

“The aftermath of the pandemic-era shutdowns of immigration was one of the tightest labor markets we’ve ever seen, and it started to cool as labor became more available,” Aaron Terrazas, chief economist at Glassdoor, told Fortune. “Correlation isn’t causation, of course, but it’s a natural way to think about it.”

That’s a big deal for the Federal Reserve because the Fed has been laser-focused on the job market as it decides where to take interest rates — even though workers’ raises are only partly responsible for the pandemic inflation surge. 

“The economy is not only continuing to grow but it seems to be accelerating; inflation has fallen from about 9% to nearly 2% again. A big part of that is the big rebound we’ve seen in the labor force and productivity growth,” said Andrew Hunter, deputy chief U.S. economist at Capital Economics, who also points to the increased labor-force participation of women, and mothers in particular, as a surprise factor. “That’s helped to keep growth strong and also keep inflation down. That’s something not many people were predicting.”

But doesn’t the addition of 3 million foreign-born workers mean that those jobs aren’t going to American-born workers? Well, no, Krugman says. 

“They're not stealing American jobs,” he said on the Daily Blast.

Foreign-born workers tend to have different skills and work in different industries, so “they're not perfect substitutes for American workers," Krugman added. "What they do is they open up space to run the economy hotter, and almost certainly actually lead to higher employment among people born here?" 

Here’s one example of how that might work. Immigrants are heavily represented in the care sector, as nannies, au pairs, home health aides, and nursing-home assistants. By caring for middle- and upper-class Americans’ children and homes (at a fairly low cost), immigrants allow middle-class women to do more paid work in the workforce.

In fact, immigration has helped narrow the gender pay gap in high-powered industries without requiring a drop in birth rates among middle-class native-born women, according to a National Bureau of Economic Research working paper by Patricia Cortés. Immigration also makes it easier for people to age in place by lowering the costs of home health care and landscaping, a different NBER paper found.

“That’s a market intervention that makes those services available for middle-class and upper-earning households, but [it creates] competition for people providing services as well,” said Terrazas. Other examples include the lower-paid ranks of health care, as well as agriculture, where low food prices are made possible by the backbreaking work and low pay of thousands of immigrants and temporary foreign workers. 

“We don’t have one immigration policy; we have different policies at different skill levels,” Terrazas added. Choosing the “right” amount of immigration necessarily means balancing different constituencies, and making deliberate choices about which industries should prioritize higher worker pay and which should focus on lower end-user prices, he said. 

Of course, immigrants aren’t only workers, but “people with lives and families,” Terrazas said. “Immigrants are also consumers; they have kids, and families, and they go to school and use roads and parks and recreational facilities.”

This consumer demand is another force driving the economy forward, by creating demand for goods and services. And immigrants tend to start businesses at higher rates than native-born Americans, including businesses that then employ other people. Krugman illustrated this with an example from his childhood home in Utica, where a Bosnian refugee started the now-thriving Chobani Yogurt company. (“It's actually Bosnian yogurt,” Krugman quipped.)

“It turns out that the dynamism, the vitality of the U.S. economy is very much aided by the inflow of immigrants,” he said. 

None of that means we should be advocating for fully open borders, Krugman made pains to note. But it suggests that the U.S. economy has a long way yet to go before the supply of workers becomes too much to handle.

As Apollo Chief Economist Torsten Slok wrote recently, the native-born workforce in the U.S. still has about 5 million “missing workers”—including people who died during the pandemic—as well as the missing growth after it. 

“These 5 million missing workers are the reason why the labor market is tight and why wage inflation is likely to remain elevated,” Slok wrote. “Put differently, there is still plenty of room for job growth.”

University of Kansas professor Misty Heggeness has developed a Taylor Swift curriculum called Swiftynomics 101 to teach economics using the pop star's impact on the NFL's business. This curriculum analyzes the economic effects of Taylor Swift's relationship with Kansas City Chiefs tight end Travis Kelce. The idea was suggested by Lynn MacDonald, an economics professor at St. Cloud State University Center for Economic Education.

The curriculum uses the Swift-NFL case study to explain the Theory of the Firm and delve into the economics of discrimination. It discusses how Swift’s presence at Chiefs games has boosted viewership and increased interest among young women and Gen Z, resulting in valuable brand marketing for the NFL. Attracting younger fans is vital for the NFL's future as Gen Z is less interested in traditional sports.

The curriculum's first lesson revolves around the Theory of the Firm, emphasizing how businesses aim to maximize profits, sometimes through decisions that may have long-term effects such as cultivating a new generation of customers or fans. These lessons are valuable for economics students, showcasing real-life applications of economic concepts.

While Swift's involvement has been beneficial for the NFL, there have been criticisms from some core football fans and anti-Swift groups. This criticism can also be used to teach students about the economics of discrimination and its intersection with gender, economics, and the workplace.

The Taylor Swift curriculum serves to show students that economics can be interesting and relevant by incorporating subjects that they care about, thus altering their perception of the subject.  

Lyft (LYFT.O), opens new tab said on Tuesday the company will guarantee weekly earnings for drivers, a first in the U.S. ride-hailing industry dominated by larger rival Uber Technologies (UBER.N), opens new tab, in a move to lure more drivers to its platform.
The ride-hailing market has largely been a duopoly between Lyft and Uber in the United States, with the former that owns a roughly 30% market share locked in fierce competition with the rival for riders as well as drivers.
Last year about 15% of Lyft drivers across the United States earned less than 70% of what riders paid, after external fees, but Lyft assured to pay the difference if drivers made below 70% at the end of a week.
"We think hopefully it will get more drivers driving for Lyft, but also just make the whole sector stronger," CEO David Risher told Reuters in an interview.
Late last year, Uber and Lyft agreed to pay $328 million to settle allegations that the companies withheld wages from drivers and did not provide paid sick leave in New York state.
Investors believe that the ride-hailing sector is set to see robust demand, however, the supply of drivers may vary due to a variety of factors such as the economy and wages, among others.
"We have more drivers now than we've had, I think, since the middle of 2019. It's strong and I tell you what, it's getting even stronger," Risher said.
While the move could pile up costs, the action was well within Lyft's plan for the year, Risher said. The cost savings from restructuring last year were in part to ensure the company could afford to guarantee "drivers got their fair share," he added.
Lyft also announced other actions to improve transparency such as allowing drivers to see the split between them, the company, and external fees on the app.
It also said drivers could earn more on scheduled rides, making extra bucks for the time they may spend waiting, and those offering 50 rides in an electric vehicle a week, will earn an extra $100 between Feb. 12 and July 1.
When stars returned to the red carpet in early January after two bruising strikes to celebrate the success of “Oppenheimer” and “Succession,” one existential threat above all was on everyone’s mind: Hollywood is shrinking.
The era of “peak TV,” is over, said 17 entertainment business executives, agents, and bankers who spoke with Reuters. From fewer original series and movies to greater scrutiny of budgets and a further squeeze on movie theater profits, people who call the shots said the television and film industries are adjusting to sober economic realities.
“The great contraction is upon us,” said one veteran television executive, speaking on condition of anonymity. “I think there will be a significant retrenchment in the quantity of content, and the amount spent on content.”
The contraction story will figure prominently as Walt Disney (DIS.N), opens new tab, Warner Bros Discovery (WBD.O), opens new tab and Fox (FOXA.O), opens new tab to report quarterly results this month. It is also the backdrop for media merger chatter, most recently sale talks between the owner of Paramount Global (PARA.O), opens new tab, and Skydance Media CEO David Ellison, the media mogul whose studio co-produced “Top Gun: Maverick.”
Analyst TD Cowen estimated broadcast and cable television advertising will end 2023 down 7% from the prior year, with total advertising declines of 11.7% at Disney, according to LSEG. Warner Bros Discovery reported a 13% decline in advertising for the first nine months of 2023. Along with print and radio, traditional TV has been “hollowed out” by digital advertising.
The outlook for 2024 is not much better. TD Cowen forecast that broadcast and cable TV ad revenue would fall another 7%. Even though media companies are expanding their digital ad businesses, the sinking traditional TV business still accounts for 80% of their total advertising revenue, according to TD Cowen.
Streaming services, which were supposed to carry the industry into the future, are also struggling to reach profitability after years of profligate spending. As the industry enters what MoffettNathanson describes as the “third act of the streaming wars,” production spending will fall below 2022 levels, when competition stoked "never sustainable" investment.
Most streaming services are charging more while delivering less new content, feeding skepticism over their long-term strategy, according to TD Cowen.
The overall number of scripted series is expected to shrink dramatically from the pinnacle of 633 shows released in 2022. The combination of the Hollywood strikes and constrained spending dented production last year, with just 481 U.S. series released in 2023, according to data from market research firm Ampere Analysis.
Even market-leading Netflix (NFLX.O), opens new tab that slashed the number of scripted series it released by more than one-third from 2022 to 2023, Ampere said. The profitable streaming service, which reported record subscriber gains in its fourth quarter, declined to comment.
Executives who spoke to Reuters said the industry could shed more scripted series and hit the 300-shows range in coming years.
In 2024, the domestic box office will continue to feel the impact of the actors and writers' strikes, with just 90 films offered for wide release this year, down from around 100 in 2023, according to MoffettNathanson. With a film slate heavy in untested stories and characters, U.S. box office sales are expected to be $8 billion in 2024, down 10% from 2023 and down 30% from 2019.


The industry is slowing down, executives said. Development executives are taking longer to greenlight shows, even for projects from established showrunners like Ronald D. Moore, whose credits include “For All Mankind” and “Outlander.”
Production budgets are contracting -- including at the streaming service Apple TV+, whose cash-flush corporate parent, Apple, boasts a market capitalization of $3 trillion. Both examples are reported here for the first time.
Shows that fail to grab an audience are being canceled quicker, as with the Disney+ series “American Born Chinese,” an adaptation of a groundbreaking graphic novel featuring two Oscar winners, Michelle Yeoh and Ke Huy Quan.
One senior television agent called it “the new world order,” with shorter seasons and fewer episodes per season.
Fox is looking to slash spending on one prestige drama to $4.5 million per episode from $10 million. At Disney, where CEO Bob Iger is fending off activist shareholders, development executives are under deeper scrutiny.
“They’re all a bit scared about what to do next,” said one prominent talent manager.


The movie business is having its own existential crisis as once-reliable formats have fallen flat at the box office. One longtime studio chief said he has been hearing for years about “superhero fatigue.” That was in full display last year, when a procession of big-budget but poorly received films, including “The Marvels,” “Shazam: Fury of the Gods” and “The Flash,” fell short of expectations.
In response, industry insiders say studios will focus on fewer but more ambitious endeavors, with the potential to deliver “Oppenheimer” and “Barbie-sized cultural and box-office impact. Both films helped prop up a 2023 box office where well-established franchises fell flat.
“You've got to have a spectacle,” said one studio executive associated with one of the biggest blockbusters in recent years. “It’s got to be, ‘You have to see it while it’s in the theater.’ We can’t greenlight something large-scale if you could probably watch this at home and it’s just as good.”
Audiences are gravitating to streaming services to watch all but the biggest, loudest, films, noted TD Cowen. Just 19 action/adventure films accounted for 56% of the total box office for the top 100 films of 2022. The outlook for a sustained recovery, beyond this type of high-adrenaline flick, is questionable, TD Cowen noted.
That will further constrain cinemas, said another longtime media executive and investor, who warned there will be too few films released to justify maintaining 39,000 screens in the U.S., a sentiment echoed by TD Cowen. The theater business, this executive said, is “teetering on disaster.”

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