Traditionally, when it comes to job numbers reported by the BLS's Establishment (the source of the monthly nonfarm payrolls change) and Household (the source of the monthly unemployment rate data) surveys, there is a substantial discrepancy. However, in May's far stronger than expected report, the two for the first time were almost identical: the Establishment Survey reported an increase of 280K jobs, while according to the Household survey 272K jobs were added.

Impressive numbers in a month in which only 215K jobs were expected to be added.

There were the usual kinks, of course. Two thirds of all jobs, according to the Establishment survey, were low-paying, low-quality jobs, primarily teachers, retail, temp help and waiters (something even CNBC has been forced to acknowledge):

This has been the case throughout the recovery, and helps explain why while wage growth while barely rising for all workers, remains depressed and even negative inr eal terms for production and non-supervisory workers, which account for 83% of all US employment.

There were other curiosities: the vast majority of jobs added in May, over 200K, were in the 20-24 age group, and the number of self-employed workers mysteriously soared by 350K to 10 million.

But the biggest surprise came from Table 7, where the BLS reveals the number of "foreign born workers" used in the Household survey. In May, this number increased to 25.098 million, the second highest in history, a monthly jump of 279K.

Assuming, the Household and Establishment surveys were congruent, this would mean that there was just 1K native-born workers added in May of the total 280K jobs added.

Alternatively, assuming the series, which is not seasonally adjusted, was indicative of seasonally adjusted data, then the 272K increase in total Household Survey civilian employment in May would imply a decline of 7K native-born workers offset by the increase of 279K "foreign borns."

But while all of these comparisons are apples to oranges, using the BLS' own Native-Born series, also presented on an unadjusted basis, we find the following stunner: since the start of the Second Great Depression, the US has added 2.3 million "foreign-born" workers, offset by just 727K "native-born".

This means that the "recovery" has almost entirely benefited foreign-born workers, to the tune fo 3 to 1 relative to native-born Americans!

How does the BLS determine a foreign-born worker? This is its definition:

The foreign born are persons who reside in the United States but who were born outside the country or one of its outlying areas to parents who were not U.S. citizens. The foreign born include legally-admitted immigrants, refugees, temporary residents such as students and temporary workers, and undocumented immigrants. The survey data, however, do not separately identify the numbers of persons in these categories.

In other words, the "foreign-born" catogory includes both legal and illegal immigrants unfortunately, the BLS is unable, or unwilling, to distinguish between the two.

As a result, it may well be, that the surprise answer why America's labor productivity (which recently posted its worst 6 month stretch in 22 years) has plummeted in recent years and certainly months, confounding economists who are unable to explain why "solid" labor growth does not translate into just as solid GDP growth...

... and why wage growth has gone precisely nowhere, is because the vast majority of all jobs since December 2007, or 75% to be specific, have gone to foreign-born workers, a verifiable fact. What is unknown is how many of these millions of "foreign-born" jobs have gone to illegal immigrant who are perfectly willing to work hard, and yet whose wage bargaining power is absolutely nil (after all they are happy just to have a job) thereby leading to depressed wages for native-born workers in comparable jobs, resulting in wage growth which over the past 8 years has been non-existant.

Incidentally, this is the same lack of wage growth which has allowed the Fed to pump some $4 trillion into the stock market. Because far more than merely a domestic politics issues, the lack of wage growth and downstream inflation, is precisely what has permitted the Fed to maintain QE as long as it has.

In other words, how many illegal workers cross the US border, may be the biggest variable shaping US monetary polic at the moment! And, in thought-experiment land, the more porous US immigration policy the longer the Fed will be allowed to maintain its ZIRP/QE experiment, and the higher the S&P will rise.



Could it be that illegal immigration is the best friend of that 0.1% of the US population which has benefited exclusively from the Fed's relentless injection of liquidity into risk assets via either ZIRP of QE?

Note: this article is not meant to side on either side of the illegal immigration debate: the upcoming presidential elections will do enough of that. It merely seeks to fill a gaping hole in economist models which are unable to explain or rationalize why America's seemingly "booming" jobs recovery, which is "firing on all fours" according to the BLS, is not manifesting itself in either inflationary pressures, or broad economic productivity.

Source: Native-born workers; Foreign-born workers