New Data Suggests Immigration Policy is Slowing Jobs Market, with Guy Berger

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[00:00:35] Guy Berger, welcome to the conversation today. It's good to be here, John. It's a pleasure to be sitting down with you. You're joining us from the Bay Area. I'm south of Salt Lake City in Utah. And today we're going to be talking about a recent report that shows how immigration policy is slowing the jobs market. You know, I think this is a really important conversation to be had, and it's always great when we have some new data to be able to, you know, have a data-informed conversation around it.

[00:01:02] And certainly, you know, there's lots of political conversation around this topic. There's lots of, you know, divided conversation around this topic. And so to be able to peel back, you know, the political divide and to peel back, you know, any partisan kind of rhetoric that's happening and to just talk the numbers and to be able to talk about what's actually happening, I think is always helpful.

[00:01:29] And so that's what we aim to do today. And I'm excited to sit down and have that conversation with you. As we get started, I wanted to share Guy's bio with everybody. Guy Berger is a macroeconomist with expertise in U.S. labor markets. Aside from his role as chief economist at Homebase, he is currently senior advisor on labor markets at Access Macro.

[00:01:51] He was previously the principal economist at LinkedIn and has also worked as an economist at Bank of America and the Royal Bank of Scotland. His work includes the creation of novel economic indicators and the development of models linking the macro economy to business performance and the design of economic reports. His commentary has been featured frequently in the media, including The New York Times, Wall Street Journal, Washington Post, Marketplace, CNBC, Bloomberg, Yahoo Finance and Axios.

[00:02:20] Guy holds a doctorate in economics from Yale University. Clearly a tremendous background. Thank you for sharing your expertise with me, my audience. And before we dive on in, anything else you would like to share about your personal background before we dive on in? Just that I'm a giant labor market data nerd. And even though we only have, I think, some set amount of time to chat, you know, I could keep going all day. Yeah.

[00:02:45] So it's good you have an endpoint because I may have other things to do today besides to talk about data, but we could keep going for a long time, John. Oh, I love it. I love it. So labor market nerd is a new label and we should get you a T-shirt and that maybe you already have one, but. I should. I should. I'm going to talk to my peers and do it. Yeah.

[00:03:05] Well, why don't we start with a little bit of an overview to this new report out from Homebase on the immigration policy and how it's impacting the jobs market? Tell us a little bit about the report, a little bit about the methodology, and then we can start to unpack it a bit. Yeah, sure. So to start with, I mean, Homebase is a platform for hourly for small businesses and we have lots of hourly workers and these hourly workers clock in and tell us, you know, I'm working.

[00:03:32] Some tells us how many hours they work with the wages they get, some other stuff that we're rolling out. But most of the support basically tracks that labor market activity that's associated with small businesses and their hourly workers. And so, for example, we can track how many people worked in a certain month, how many hours they work total, what happens to wage growth over time. We can track turnover. That is how many workers are being hired and also how many workers are turning over, exiting the roles.

[00:03:59] And that can be quits or layoffs or retirements, for that matter. So there's this huge range of data as a labor market nerd. I mean, if you allow me to know that, I'm really excited about this. I mean, we've been producing this for a long time, by the way, but we are we're doing a bunch of stuff that makes this data more tractable. And we're going to be adding more things that we track that are pretty unique to the status set in the coming months. So stay tuned. But this report comes out every month. And so just before the BLS report, a few days before.

[00:04:28] So you can always come back to it and say what's happening on Main Street and in America's small businesses and their labor market universe. Yeah. Awesome. Awesome. So if you were going to highlight, you know, maybe two or three main core findings from this report, what would they be? Well, I'd say the number one thing that I would highlight. And I think this is striking because I've sort of been staring at this report now for as long as I've been at Homebase and waiting for this to happen. And I keep telling my my comms partners is coming. This is coming.

[00:04:58] And it finally happened this month is hiring, turning positive year over year. We have been in this extent. This is not unique to Homebase, but has been visible on Homebase is that this extended period of labor market cooling or hiring that is people starting in jobs is coming down. It's generated all sorts of phrases like, you know, the frozen labor market. At some point I was using the term the great stay and it was starting to slow already last year. And now it's finally stopped and it's visible in our data.

[00:05:27] Our data is not the only place where it's visible. You'll see it in other sources. But I think it's a big deal because I think hiring is one of the biggest indicators of how warm a labor market is. When it's going down, labor market's getting worse. And when it's picking up, labor market's getting warmer. And so it seems like we are exiting the cooling stage and things start to get warmer. From the perspective of employees, this is a good thing because it means more opportunities for them and essentially more burning power.

[00:05:54] From the perspective of employers, I mean, it's an environment that encourages it. So I think from that perspective, it's happening in a good time, but it does mean that employers are going to have to, if this continues, are going to have to hustle a little harder to lure and retain their employees. Yeah, which ultimately, you know, from my perspective, my bias as a human capital guy, you know, I think that's a good thing. It is a good thing.

[00:06:20] You know, I, you know, I've looked in somewhat horror, you know, as I've looked at the oracles of the world, you know, it's one thing to have layoffs, right? Like tech layoffs are not new. And so you've had lots of the big tech companies that have done layoffs, but it's one thing to have layoffs. It's another thing to send out 6 a.m. mass emails to, you know, people who've been at a company for 20 years and to just say, thanks, bye.

[00:06:45] You know, just the lack of humanity in it, it is, it just blows my mind. And I can't, I can't believe almost what we've seen this past year in how, you know, companies have, you know, from my point of view, have been like totally taking their employees for granted. And so, you know, I'm, I'm excited to maybe see the pendulum swing a little bit. A little, by the way, like I, it's kind of like, it is the way I joke about it is it's jarring just because it's happened.

[00:07:14] We've had a few years of this, like moving in the wrong direction. And so it's surprising to see it moving in the right direction, but like to get, but even back to where we were in the late 20 teens, much less to get back to where the peak of the Great Erics Nation, it's going to take a lot more than what we've seen. We're moving in that direction, but at this current pace to get there is going to take a long time. Yeah. Yeah. So, so that's, that's super interesting though, that you've seen, you've seen it moving this direction.

[00:07:40] Finally, this month, we, we've kind of hit that tipping point towards hiring. Uh, that that's a really positive development. So that's, that's wonderful. And we'll see how it continues, um, in the coming months, uh, to see if it's a blip, to see if it continues in that direction. Uh, yeah, that's super interesting. Uh, what, what are some of the other, uh, key, uh, findings, key trends that you've seen in this report? Well, so that brings us to what you, you teased earlier regarding immigration.

[00:08:09] Again, I'm going to give you an economist perspective on immigration. I think it's a hot button issue. We've got all different perspectives. I'm not going to touch that and I'm going to like, I'm going to focus on what we actually see. I mean, the interesting about this is we are used to, and I think this is sort of a very standard way that people think about the job market. When you read like the front page of a major business publication, your times, the journal, et cetera, and we're, or, or just talking heads on CNBC.

[00:08:32] They're, or just talking heads on CNBC. They're, or, or, or, or, or, or, or, or, or, but the, or, or, or, or, or, or, or, or, or, or.

[00:09:02] has slowed a lot and there's two factors behind it one of which is a very long-term one one which is a short-term one the long-term ones are populations aging they're working that the out of people that are already here the native born population the native born population is getting older and really immigrants are already here as well are getting older and so the working population is basically barely growing and so just to keep that let's keep that population's lay

[00:09:28] market steady you need basically close to zero um employment growth and that's lower in the past it was still growing because you still had like you know people are having more kids and so the work you i need a lot of jobs each month just to keep ahead of the job market that's not true anymore the other thing this is a recent thing that has happened in the past let's say two years is we're coming from a period of unusually high immigration where that kind of offset those

[00:09:54] that aging of the the the population already living here to a period where there's very little virtually no immigration i think there's some debate i think we don't have great stats on whether immigration has totally stopped or turned negative um i think people tend to focus on um because of the headlines on and again the superior from an economic perspective not judging the ethics or policy of it i think you'll tend to overrate deportations versus the fact that we've turned off the tap of

[00:10:24] people coming in i think that actually has been probably a bigger a much bigger like numerical effect and so as a result i do not subscribe necessarily let me say this way i'm not convinced by arguments that this is what's caused the labor market to turn around last year with the labor market got worse and we saw a big slowdown in employment growth i don't i do not find that to be or at least let me say this way i haven't seen very persuasive like arguments that that there's sort of that the labor

[00:10:50] market warming is a result of it but i think it is true that we can have labor market warming now with much much much lower growth in employment and in fact in our data and this may have to do with industries because the bls data showing some ongoing slight growth but in our data we're actually seeing this warming the labor market happening even as the volume of employees working is falling a little bit not by a lot but by a little bit i suspect that our industries the industries are in our data

[00:11:19] on main street are probably more vulnerable to this immigration slowdown or crackdown than um the general workforce yeah yeah interesting and and i think you're right like like the the turning off of the tap or the closing of the tap of the inflow of immigration the chilling effect of policy on on the inflow of immigration certainly has a big impact right probably much greater than any deportations uh would have

[00:11:46] that's a relatively small number in comparison i would imagine um yeah i think that's right and so i'm also wondering so so we have we have uh you know the warming in the hiring we have an interesting uh situation with with immigration and its impact on jobs we also are in this dynamic with agentic ai uh and how that's impacting organizational hiring trends i'm wondering if

[00:12:16] you're seeing anything come out in in your report as it relates to that it's a good question so so um the way i'd say it is and i think this is important is so far especially the industries that tend to be heavily represented in in in our report we're talking about food drinking places retail entertainment healthcare are not the industries i mean ai adoptions picked up but it's still really really

[00:12:43] early days for these industries to be affected like when we think about industries and i'm sort of stepping outside the zone of home basis data that have been like radically affected by ai because there'd be adoption it's still pretty narrow we're talking about basically software development maybe a few other related roles in tech um a lot of industries where most of the activity involves people doing stuff physically or in relation to other people which a lot of the workers in our in our

[00:13:12] our data are so far with the current state of technology um that it's pretty let the impact's pretty limited because you so far cannot have an ai agent serving food you can have it in the back end potentially doing things i mean we have stories about ai people using effort reservations so i think even there candidly i think we're still in the very early stages of adoption um i think this is you know if we have advances i mean maybe in five years you and i are chatting about these amazing

[00:13:38] advance in robotics and how it's starting to affect what exactly so the other retail but the other side of it is automation right so the ai component of automation automation it certainly in the hospitality industry you know there's at least little um sneak peeks into automation and some big hotel chains some restaurants where where you know you have the

[00:14:04] serving robots or you have the the um hotel chains with that you know send room service to your you know room with with the robot or or the big you know essentially the big Roomba vacuums that that uh polish the floors or vacuum the hallways you know or things like that like so there's more and more of those things popping up but it's still relatively small right extremely like i mean i'd say even in court again the

[00:14:32] roles that we don't don't have that much on their port the back end of these things i still think even that is early like the way i think about it is like outside of a few niches where it's very advanced like again like software development a lot of it's chatbots i mean i like it sounds ridiculous but like we're so a lot of us that are very online and i mean i use claw very heavily in my research so upfront i use it and i'm probably by the way i still feel like i'm like a grandpa using this technology

[00:15:00] in this really primitive way um but i use it a lot and um i think it's i would guess that i'm still even though i feel like i'm very clunky in how i use it i'm probably still like the 99th percentile of power users um and so i think this is sort of it that by the time this eventually this will make more and more of a difference but i think it transfers just to be very slow and a lot of these workers that degree to which it's going to affect their day-to-day lives outside of like interacting

[00:15:26] with a chatbot or maybe at some point having an agent that does stuff that they query but like is going to be is not going to change all their day-to-day you're still serving drinks by hand you're still like working in the kitchen or or you know being a health care worker and doing all that work very much as you have for a long time right right very interesting all right so we have the the

[00:15:49] hiring uh warming we have immigration uh issues uh at least on main street small business which is 80 percent plus of of um of workers in america right uh are are in small business um at least in in small business we don't see a huge impact at the moment of of ai automation and those sorts of disruptive

[00:16:13] technologies having an impact on hiring and and labor market uh dynamics uh anything else from the report that is sticking out or at least giving you pause as you look into the future well so i think the other thing and this is again something where i'm like really much like the hiring thing i've sort of been looking out for it and i see it a little bit but not quite ready to say we're like we are out of the woods but one thing you would expect when the market's warming is you'd expect wage growth to

[00:16:41] pick up this is something by the way that's been an enigma in a lot of your labor statistics data yeah um because there we still are seeing monthly data where like the wage wage growth has slowed in our data i think we're seeing like tiny glimmers of wage growth picking up a little bit again i don't want to declare victory because it's a small increase so far maybe it turns out to be noise but i generally would expect when hiring and turnover pick up employers start ramping up pay and benefits

[00:17:09] to retain workers and to attract new ones so that's the thing i'm paying attention to the other thing that is outside the scope of this report but should be in the back people's minds because it's kind of a downer because we went through this period of about a decade from about the mid-20 teens until probably two or three years ago where benefit costs to employers at least the part that shows up in a monetary amount were growing more slowly than wages so what that meant was that an employer when business was going well and employers were thinking of raises they're like well i can't hand over more cash

[00:17:39] to my employees what's changed in the last two or three years is that especially these benefit costs and especially health insurance are starting to get much more expensive and so we are starting to see more of a bite to people's paychecks coming from that now it can happen a lot of ways one is employers reduce their contributions another one is that they increase their contributions but they take it out

[00:18:05] of the paycheck the other ones that like you know they basically like pick skimpier plans so that right the paycheck's not affected the premiums aren't affected but employer but but workers are on the hook for a lot more more more expenditures down the line um and i think regardless even when i look here is to some extent one aspect of them be thinking about more and it's somewhat less relevant to hourly workers some who do not get health care from their from their insurance from their employer

[00:18:30] but they face the problem in a different way is just wage growth is going to be a less a mildly misleading barometer of how well the late market is and by the way as far as employers employees are going they're like guy you are telling this pollyanna story i don't think it's bad but all i'm saying is that i think from the perspective of like is late market warming up or not wage growth

[00:18:54] might understate it a little bit because of the fact that it's not taking like and it's focusing only on part of the comp package um and i think that um i don't again i'm not a health care policy guy i don't know this is a good good thing or i'll let other for employer employees this sucks but like i don't know from like a public policy thing like what should be done but i'll just say that um we got spoiled

[00:19:19] during this period of low benefit and low health insurance premium cost growth that is going we're really gonna we're really people hated this last time it happened in the early 2000s about 20 years ago and they're going to hate it they already hate it and they're going to increasingly hate in the years ahead yeah and what's crazy to me you know i i can't help you know but compare outside of the u.s you know compared to other parts of the world you know because you're you're absolutely right when

[00:19:47] you look at the 2000s and then you look at the teens like there there is a stark difference but still in comparison to pretty much anywhere else in the world we still saw a huge year over year like increases in cost of health care um you know for for employees and employers uh in the u.s uh and yeah and and now it's just going to be even more and so it's just we have this really

[00:20:15] challenging situation in the u.s that's really unsustainable uh in terms of you know how how we're going to deal with the cost of health care and in our our model um you know it's a head scratcher you know but because to your point like what what ends up happening for most not not all but for most

[00:20:36] is is employees end up paying more um employers end up uh taking more out of employers the employees paychecks they also end up paying more and the coverage is less and you know i'm a professor i'm at a state university um that actually relatively has awesome benefits compared to most people

[00:20:59] and i've been here 18 years and my benefits are so much worse than they were when i got hired 18 years ago um they're so much more expensive uh so much more comes out of my paycheck and they're so much worse than than 18 years ago and that's just the reality right that's the reality for everybody um and yeah i don't know like i don't know what to do about it uh and i'm lucky i'm lucky compared to

[00:21:26] most people uh and so uh yeah we we just get to deal with that and we get to deal with uh wage issues more generally total comp issues more generally so we'll see how things continue to play out um one other quick quick question yeah i had is just in relation to you know underemployment um and i'm not sure how much that comes out in in your report and in your data but you know we when

[00:21:52] we get the official jobs numbers uh every month you know that's one thing that sometimes you know uh people uh really dig into and they kind of critique is you know as we look at jobs and we look at unemployment rates and then we start to look at um who's being counted and who's dropped off um you know even looking for jobs and how much underemployment is you know is in the number um

[00:22:19] yeah what what are you seeing in terms of underemployment in in your report great question so i have like two perspectives though the first is i think people are totally right the unemployment rate does not capture it's not like an all-encompassing measure of what i call broadly distressed late market it doesn't include people that for example have a job but don't work want full-time hours and can't get them it doesn't include people that have want a job but aren't

[00:22:44] and are ready to work but aren't actively looking so that's an aside if you're talking about how much what the total volume of distressed late market is it's higher than the unemployment rate that said and i always that's my throat clearing that i do beforehand if you include those measures things have gotten better as well in the past and again this is something that's changed because a year ago that was not the case but unemployment's gone down this broader aggregate that includes these other

[00:23:11] categories has also decreased and so there's not like i almost think of that unemployment rate is if you step away from the count and just think of it as a barometer like are things getting warmer things getting colder it's good as a even if it's not encompassing it's a good proxy for everything else at least the present we've seen the number of people that are working part-time and wish to have full-time hours go down a little bit um this year not by a lot just like that's learning it's

[00:23:36] gone down a little bit not by a lot just like in our data in home base hiring is up a little bit like again none of these are big changes it's not like i would not characterize this the late market suddenly switched on to a boom i think it's more that it's changed direction and we've gotten so used to things and again we haven't had you know everybody was worried about recession on on and on in the late in the early 20s we didn't experience that but we experienced what i almost call like a half

[00:24:03] recession in slow more you know look at our data like wage growth decelerated hiring and turnover fell again these things that happen it happened very slowly over a very long period of time and so by the time we were done with these three years you're like wow we experienced like half a recession in three times as long um and at the end you don't really care if you experience a recession to get there it still is miserable and it's more miserable by the way for younger people that are vulnerable to

[00:24:30] this turn down and hiring than for people that already have jobs are saying aside from a few industries like tech or media are actually relatively insulated because the ups have been low um but i think that the point being that the fact that it's no longer getting worse and maybe slightly getting better is it's happening and i think like again even you look at underemployment even you look at people that um that say they want a job but don't have one they're called the marginally attached they're ready

[00:24:56] to work they have just haven't looked in the past year um or in the past month they have looked sometime in the distant past at least and then so they have some evidence that they would work if they had the opportunity they just not bother to look that number stopped going up and it was going up for a few years and so again this feeling that there's some sort of hidden is is the amount of pain in the job market worse than just unemployment indicates yes but that total pain is going down

[00:25:22] and with luck that's going to continue because you said i would love it if people got bigger pay packets despite rising health insurance premiums i would love it if even the people that are sort of been because it's true by the way of the small hardcore people that are unemployed it's very hard from the fine jobs they found it easier to find jobs it is good that layoffs are so low so that pool that drip into the unemployment bucket is getting like thinner and so eventually employers

[00:25:48] if things stay this warm and warm further are going to look to hire more of the long-term unemployed um but i mean there's more like there's maybe a lot more progress on it and i guess the other question that you're sort of hinting at is yes we're in early days with ai but am i going to be that this sanguine about it in two three five ten twenty years maybe all that's going to be left for work is me and you chatting about job market data i'm hopefully i'm being facetious here i don't

[00:26:16] think so but um i don't think so either yeah yeah well guy great conversation uh this has been a lot of fun like you said i think we could talk about this for a long time but i know at the time and i i probably need to let you go and get on with your busy day as we wrap things up i wanted to give you a chance to share with the audience how they can connect with you uh where they can find the report and uh how they can connect with your team and then give us the final word for today yeah so

[00:26:44] home base um search for the main street health report um and um i should run the exact website i'm sorry i'm like so i'm so ai dependent that i'm forgetting urls these days plus i'm getting old um but home base website look for the main street health report it comes out every month right before the bls jobs report so the september data just came out we track hiring turnover wages employment there's gonna be more stuff we are doing um and take a look i think it's like really valuable

[00:27:11] informative data and it's only getting more informative over time and i guess my final word is i really hope these like the lemurs of things getting better for workers continue not just for the rest of the year but into 2027 uh because i think if you're a worker you deserve a break awesome i love it guy thank you so much it's been a pleasure i encourage the audience to reach out get connected find out more about what guy and his team at home base can do for you and as always i hope everyone can stay healthy and safe that you can find meaning and purpose at work each and every

[00:27:39] day and i hope you all have a great week thanks for joining us for this episode of the podcast we hope you stay healthy and safe and please join us again soon