U.S. unemployment would be higher if illegal immigration was properly counted, Goldman Sachs estimates

By Steve Goldstein

The U.S. unemployment rate would be higher if the full impact of immigration, much of it illegal, were included, according to a new report from Goldman Sachs economists.

The household survey used in the calculation of unemployment relies on a population estimate from the Census as a benchmark, and that estimate is based on the 2022 American Community Survey.

Related: Immigration wave may be causing labor-supply shock only partly tracked in data.

As a result, the labor force should be 1.1 million higher and employment should be 1 million higher, according to Goldman Sachs economists Elsie Peng and Ronnie Walker. That would increase the unemployment rate slightly, to 3.9% from 3.8%.

The official data, the Goldman economists, should be reconciled in the Jan. 2025 employment report, which will incorporate information from the new 2023 American Community Survey.

The establishment report, the source of the monthly payrolls data, is less impacted since companies don't report the immigration status when submitting jobs data. The Goldman pair estimates the payrolls count underestimates the real number by between 100,000 and 400,000.

That said, it expects the next revision to nonfarm payrolls to be downward because it's reconciled with data from the Quarterly County Employment and Wages, which is produced from state unemployment insurance records that the economists believe are more likely to exclude unauthorized immigrants.

Related: Here's where the surge of immigrants come from and end up, according to Goldman Sachs

Goldman estimates that 64% of immigrants in 2023 are unauthorized, and one-third have likely filed for asylum, which means they can apply for work authorization after 150 days.

Since the QCEW report also helps produce gross domestic income, that means undocumented workers may have contributed roughly 0.1 to 0.2 percentage points of the gap between GDI and gross domestic product.

-Steve Goldstein

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

04-18-24 0709ET

Copyright (c) 2024 Dow Jones & Company, Inc.