Marketplace - The economics of immigration

Episode Date: September 5, 2024

As the presidential race heats up, we’re sure to hear more about immigrants and how they affect the U.S. economy. In this episode, we break down immigration’s impact on housing, tax revenue, consumer spending and the labor market. Plus, 8 million student loan borrowers are in limbo while President Joe Biden’s SAVE plan is challenged in court. Also: Lots of small businesses can’t afford to hire, and energy storage batteries may be coming to an electric grid near you.

We'll start the show by taking the temperature on jobs, straight from some people who do lots of hiring, and we'll end with a nice cold glass of lemonade. From American Public Media, this is Marketplace. In New York, I'm Kristin Schwab in for Kyra's Doll. It's Thursday, September 5th. Good to have you with us. The week is inching closer to tomorrow's jobs report, which will give us a clearer picture of what happened with the labor market in August. All we know now is it seems like things are slowing down.

Yesterday we talked about the Job Openings and Labor Turnover Survey or JOLTS for July, which showed job openings fell more than expected. Today we got the latest private sector payrolls report from ADP. It says job growth slowed, which anecdotally seems true if you take a look at the Federal Reserve's beige book out this week. Some businesses told the Fed's researchers that they reduced the number of shifts they made available and they left open positions open, as in unfilled. Others said they've been getting more selective when hiring and that they feel less pressure to hike wages. So we asked Marketplace's Justin Ho to call up some small business owners to get our own anecdotal report of what's happening

with hiring. This time of year tends to be pretty busy at Red Hen Baking Company in Middlesex, Vermont. Co-owner Randy George says his cafe gets a lot of tourist traffic in the summer and early fall. This time last year, he couldn't find enough staff to handle the busy season. We ended up even having to get to a point in September where we had to close one day of the week in our cafe. This year, George says more applicants have been showing up when he posts a job.

Meanwhile, he's focused on making sure his current employees want to stay on board. That means trying to help them find affordable housing in a tough market, also keeping his wages competitive. We've made three fairly significant increases in our pay scale in the last four years, and we feel that we probably need to do that again pretty soon. At some small businesses, the job market is a non-issue. We're pretty much staffed to capacity at the moment. That's Chris Duong, general manager of Hawaii Supermarket near Los Angeles.

He says grocery sales have been sluggish this year. So instead of hiring new staff, he's focused more on working with his suppliers to keep his prices down. We would rather err on the safe side and just kind of buckle down and work with what we have than try to hire more and not be able to sustain the new hires that we bring on. Meanwhile, in Oceanside, California, Jenny Nisgoda has been running her market and catering business called Alfresco Solo. You know, it was just like me working triple the hours staying open, you know, from like 11 in the morning to like 10 p.m. at night. Nisgoda says she can't afford

to hire anyone else. The whole situation has not been easy. I did kind of have, you know, I wouldn't call it a meltdown, but I think we all have our moments as entrepreneurs where you're like, can I keep going? Nisgoda hasn't given up. Next month, she's launching a wine subscription service. I'm Justin Ho for Marketplace.

Wall Street Today waffled as it waits for tomorrow's jobs report. We'll have the details when we do the numbers. Next Tuesday will be the first time Vice President Kamala Harris and former President Donald Trump debate each other. The state of the economy will certainly be an important topic. Also, relatedly, immigration and the unprecedented number of migrants who've arrived at the southern border in recent years. The Congressional Budget Office says 3.3 million people came to the U.S. last year, many of them undocumented, and it expects about the same number to enter the country this year. That compares to less than a million a year on average in the 2010s. Marketplace's Mitchell Hartman reports on the economic impact of new immigrants' hunt for housing and jobs. Border states like Texas have had to shoulder the brunt of costs from migrants crossing

into the United States. The influx of immigrants primarily from Central America has clearly created a lot of logistical infrastructure challenges, particularly some of the smaller cities along the border, Eagle Pass or Del Rio. Texas-based economist Ray Perryman points out the state has more than five million immigrants, about a million and a half of them undocumented.

He says their labor is crucial, but there's definitely a short-term burden from recent arrivals. Those sheer numbers do create some economic problems for how you house people, how you feed people, how you provide health care for people in the border communities. And of course, Texas has transported some of these folks to other places. Like New York. Some have ended up in Buffalo, where new arrivals from Latin America have joined more established refugee and immigrant populations from Ukraine, Afghanistan, Somalia, Bangladesh,

says Rob Letest at Invest Buffalo, Niagara. A lot of the jobs that our refugee community is taking are more of the entry-level manufacturing healthcare that the employer has not been able to fill with the typical talent pipeline that we have in town. But what about the idea that immigrants, legal and undocumented, will accept lower wages and take jobs from native born Americans? I think people are reasonable to think that there is competition with immigrants on any given afternoon. There's a certain number of jobs

available and immigrants might be competitors. But economist Michael Clemens with the Peterson Institute for International Economics says the economy is not a zero-sum game. When an immigrant gets a job, that doesn't mean a native-born worker loses one. Jobs ultimately come from economic growth and new people joining the American economy are a cornerstone of economic growth. We've had 3% real GDP growth, which is extraordinary for this stage of a business cycle. Harvard economist Jason Furman chaired the White House Council of Economic Advisers in the Obama administration.

We've been adding more than 200,000 jobs a month on average. That's way higher than anyone thought could be sustained. A lot of the job increase has been in undocumented workers. It could never have happened without a large inflow of immigrants. The Congressional Budget Office predicts that by 2034, new immigrant workers will add more than a trillion dollars a year to GDP. But some economic studies have suggested they can also harm lower-skilled native-born workers, says University of Maryland economist Peter Morisi. In some situations, adding immigrants might, you know, suppress wages a lot. But right now,

we have such a labor shortage for restaurants and so forth that I doubt that closing the shortage is going to have much of an effect. In Texas, Ray Perryman has studied the construction industry, where 30 to 40 percent of workers are undocumented. He says there's little evidence they undermine native-born workers. The wage structure is pretty much the same. Many of them pay social security and payroll taxes that, of course, you'll never be able to obtain the benefits from. It helps the government. Another economic boost happens right away. Immigrants become American consumers. Durgam Al Yasseri, now a bank program manager, arrived in Buffalo as a refugee from Iraq at age 15. It was October 2006. The family was on public assistance. No

one spoke English and... Within the first few weeks that worst snowstorm in 50 years. Other refugee families had offered key retail advice. Don't buy any winter clothes yet because there is this magical day in America where everything is 50% off. That day was Thanksgiving, Black Friday. So they had nothing warm for the October blizzard. Just running shoes in waist-high snow. I'll tell you, my mom was ready to pack up and leave.

Instead, they went shopping. I'm Mitchell Hartman for Marketplace. School is officially back in session, and with a fresh new class of students entering college and grad school comes a fresh new batch of student loans. The total amount of outstanding student loan debt in this country is over $1.7 trillion. That, of course, includes lots of people who've already graduated, and some of them are facing a lot of uncertainty right now. The Eighth Circuit Court of Appeals has temporarily blocked a new program

by the Biden administration that would reduce monthly payments for many borrowers to just 5% of their income. Marketplace's Samantha Fields has more on what this means for borrowers as the program winds its way through the courts. Around this time last year, the Biden administration rolled out

something called the Save Plan. It was designed to be the most affordable repayment plan ever for people with student loans. When Aaron Reiklin Melnick heard about it, he figured why not sign up if it would lower his monthly payment. I have been paying my student loans for years. Reiklin Melnick is a lawyer at an immigration rights nonprofit in D.C. and anyone who works at a nonprofit is eligible to have their loans

forgiven after making payments for 10 years through a program that's been around for a long time called Public Service Loan Forgiveness. Mike Pierce, Student Policy Advisor, Public Service Loan Forgiveness I am four months away from reaching my 10 years after which my student loans are going to be forgiven. However, right now I am unable to pay my student loans. He's unable to pay because his loans were put into forbearance while the lawsuits over the save plan are ongoing. Mike Pierce at the nonprofit Student Borrowers Protection Center says the administration

put 8 million borrowers into forbearance. They basically pause their payments and they're not charging them interest either. For most people who are just trying to make their ends meet every month, this is a pretty good deal. But for people like Reiklin Melnick who work in public service, it's not such a good deal. Because right now those months are not counting towards public service loan forgiveness. That means those borrowers will be in debt longer. It also means they're stuck working in a nonprofit job until they're able to finish making payments.

And if they get laid off, they could lose the chance for loan forgiveness. They also can't switch into another kind of income-driven repayment plan right now either. Mark Dennell tried calling to ask. His wife is a longtime public school teacher in Springfield, Missouri, and she's also tantalizingly close to getting her loans forgiven. So we're like four payments shy and everything is now frozen. So we're basically just stuck in limbo. And they have no idea how long that will be the case.

It's very much a mess for borrowers. Adam Minsky, a lawyer who specializes in student loans, says it could be months because the legal challenges are likely headed for the Supreme Court. And even a fast-tracked Supreme Court decision may not come out until next summer. Which means millions of borrowers could be looking at nearly a year in limbo. I'm Samantha Fields for Marketplace. Coming up. They just had such a passion for lemonade. It's really like a joy to see.

I mean, that just sounds delightful. But first, let's do the numbers. The Dow Jones Industrial Average lost 219 points, half a percent, to close at 40,755. The NASDAQ gained 43 points, a quarter percent, to finish at 17,127. And the S&P 500 shed 16 points, three-tenths percent, to end at 5503. We just heard from Samantha Fields about federal student loans. Let's look at some private iss Fields about federal student loans. Let's look at some private issuers of student loans. SoFi Technologies fell 2.9%. Navient lost 2.0%. The Biden administration is looking to block the merger of Japan's Nippon Steel with U.S. Steel, as first reported

by the Washington Post. U.S. Steel gained 2%. Compet competitor Cleveland Cliffs fell 3.7%. Bonds rose, the yield on the Tenure T-Note fell to 3.72%. You're listening to Marketplace. Some of the toughest moments we'll experience in life often come with the hardest financial decisions. Like, how much to spend when your pet is dying. Or what to do if you uncover a loved one's financial secrets after they've passed. It's like having this albatross, this like monkey on your back that you don't want amongst everything else.

I'm Rima Grace, host of This Is Uncomfortable, a podcast from Marketplace. This season, we've got a wide range of stories about life and how money messes with it, including the unexpected ways money can shape our journeys through loss and grief. Listen to This Is Uncomfortable wherever you get your podcasts. This is Marketplace. I'm Kristin Schwab. These days, batteries make the world go round. They're in our phones, our cars, and increasingly our electric grids. A report by the Energy Information Administration out today shows rapid growth in utility-scale battery energy storage as a source of electricity. Around five gigawatts have been added so far this year out of about 21 gigawatts total.

How exactly are these batteries being used? Marketplace's Elizabeth Troval has the story about the role of batteries in the energy transition. Big batteries play three major roles on the electric grid, says Sam Huntington with S&P Global Commodity Insights. A flexibility role? Batteries play three major roles on the electric grid, says Sam Huntington with S&P Global Commodity Insights. A flexibility role. Balancing second-to-second variations in the grid. A reliability role, helping the grid meet peak demand.

And a clean energy role. Extending the reach of renewables into the market. In sunny states like Texas and California, batteries move clean energy produced from solar panels during the sunshiny part of the day into non-renewable hours. So starting to eat into the market share of gas. Huntington expects by 2030, the grid will have roughly four times the battery storage it has now. In California, policy changes have driven the increase in storage, says Caitlin Smith with Jupiter Power. We have these renewable goals. Oh, now, oh, wait, now we need dispatchable energy. Now we need storage. Whereas in Texas, she says, it's more market driven because there's money to make off storing renewable energy.

Omar Cardamon is with Stanford. Battery will charge when the electricity prices are low. Like when the sun is shining. But when it's dark, electricity prices are gonna be high. Which is when these companies will sell power to turn a profit. Still, batteries can't yet replace fossil fuels, says Ramteen Siasciansi with Carnegie Mellon. It's a handful of hours when the wind and solar is not producing enough. Well, we still have gas generators that can basically fill that gap. And energy consultant Doug Lewin says it's important to note it's not just green energy

that can be stored by these batteries. Batteries are well suited to renewables, but frankly, they can kind of work with almost anything. Natural gas, nuclear power, as the technologies evolve, he says the market applications are still TBD. I'm Elizabeth Troval for Marketplace. Housing looks a little different everywhere you go in this country. So before we get into this next story, I want you to picture a house in San Francisco. What do you see? Maybe an old Victorian painted a lovely pastel sitting on a hill? What I'm describing here are the Painted Ladies, ornately decorated houses all in a row that are famous for appearing in a bunch of movies, ads, and TV shows, including

the opening credits of Full House. For the next installment of our series, Adventures in Housing, we look at how the Painted Ladies reflect San Francisco's economic history. My name is Woody Labonte. I'm the president and CEO of San Francisco Heritage. The row of Painted Ladies to me represents what San Francisco's ideal is. It's a place that loves and cherishes the past, and it's always looking to the future. San Francisco starts with the Gold Rush, 1849. The first houses you have here are very rustic.

They're going to look like cabins, utilitarian. As the city gets more wealthy and has a larger middle class, then you start getting these imported Victorian styles, more and more opulent decorations on the facades, until it really reaches a height with what's called the Queen Anne style. And essentially, these are houses that are built with redwood, which was very plentiful in 19th century. And through technologies of millwork, they have a lot of what's called gingerbread on them. Scrolls, fans, cherubs, anything to really sort of gussy up

the front of a building. A contractor, a builder named Matthew Kavanagh built a row of these on a hillside called on Steiner Street today, across from Alamo Square Park. That block with those, quote, painted ladies there provides an excellent photo opportunity because you can see this row of the past, these 1890s houses, and in the background, San Francisco's modern skyline.

The first people to live in that row would have been middle class workers, they would have been clerks, they would have been small business owners, not particularly wealthy. Over the years, as the population changed here, these houses would often be split up into rooming houses. But today, most of them have been restored and are just beautiful showplace homes. If you want a painted lady, you're going to have to spend millions of dollars. Today I go, and it is a major tourist destination.

Tour buses come and disgorge all these people who want to go up and take a picture of the painted ladies with the skyline in the background. It's got a coffee truck up there. They're used in guidebooks, almost any sort of tourist pamphlet or handout or postcard shows this image. It's a great visual ambassador for the city of San Francisco. That was San Francisco historian Woody Labounte. You can ask us a question about housing history or tell us a housing story of your own at

marketplace.org. The sort of classic story of a kid's first business venture is setting up a summer lemonade stand. Get some ingredients, get some neighborhood friends, and post up on the sidewalk selling some refreshing drinks. Well, what if I told you that lemonade stands have actually become a profitable business for adults. Washington Post senior video journalist Amber Ferguson looked into the trend. Amber, welcome to the program. Thank you. I'm glad to be here. So the first thought I had when I first saw this story was, do people really make money selling lemonade?

Oh, yes. It is actually really competitive to sell lemonade. I had no idea before I saw this really going viral on TikTok. Wow. And how much money are people actually making? Okay, so it ranges anywhere from $500 to $10,000 per event. And this is like super seasonal, obviously. So really, it depends on where you live in the country, but usually it starts around in May and then ends usually at the end of October, maybe the beginning of November, if it's still warm in your area. And these, I call them lemonade entrepreneurs.

They set up these lemonade stands at festivals and concerts and like fairs and things like that. And it's like amazing. And some people just do it on the weekends and some people, they've made it their full-time job. Nicole Sadegara So these are not the lemonades in your front yard on your local street corner that we think of as the OG lemonade stands of childhood. Kite Yes, no, absolutely not. It's a lot more modern. But the concept's the same. It's extremely simple. It's literally four ingredients,

you know, lemons, water, ice, and sugar. Lauren Got you. And you mentioned a little bit about this, but where are they actually selling and where are people having the most luck with sales? Most people are having the most luck at like farmers markets. That's huge. And it's so competitive where you basically have to like get into a spot like months beforehand. And a lot of these farmers markets have vendor fees. So sometimes it could be $2,000 just to set up.

So you're really banking on making more than that at these places. And at one fair or festival or market, there could be multiple people selling lemonade. So you really have to stand out. So is this, you said this is sort of seasonal, is this people's side hustle? Are there people who are doing this as sort of their full-time jobs? Yeah.

So how I even found this story was on TikTok, this young woman named Malia Blake, she's in DC, she said that she was trying to pay down her debt. She's 28, she has $40,000 in debt. So she just opened up a lemonade one day. It took her two weeks. She got a simple business license. She got her lemons from Costco. She got her like little flavors from Amazon. And she just opened up a lemonade stand like very like by herself. And she didn't make much money the first time. But then the second time she made like $500, then $800. And this past weekend, she just posted another video, she made $4,000 in one day from her market. And then, you know, I spoke to a married couple

that paid off their wedding debt by selling lemonade and they decided to leave their full-time jobs. Well, before everybody listening to this decides to quit their jobs and sell lemonade, I assume it's not as easy as just, you know, mixing water, sugar, and lemon juice. There are probably, as you mentioned, some uncertainties and lots of hard work involved. Oh, yeah. I mean, the beauty of this is that, you know, anyone can really do it, but it is a manual job. Like you're on your feet for several hours a day in the hot sun because you need it.

The sunnier it is, the hotter it is, the more money you're going to make. And you know, everyone I spoke to was in their 20s and 30s and they said, you know, younger people are looking for outlets that aren't drinking and alcohol specific. And they said they just found just a lot more kind of community that way. It's like they just had such a passion for lemonade. It's really like a joy to see. Amber Ferguson is a senior video journalist at The Washington Post. Amber, thanks again for chatting. Thank you. This final note on the way out today, there are lots of indicators out there that help

us sort out what's going on in the world. And they come from all sorts of places, including, oddly, companies that make water coolers. Saw this in Business Insider. Bevy, which makes smart water coolers that measure how much Business Insider. Bevy, which makes smart water coolers that measure how much water its machines dispense over time, Bevy says there's been an uptick in office attendance across every day of the week. Tuesday is the most popular day. And no surprise here, Friday is the least popular. Also, people are shifting their hours to start earlier or later than the traditional 9 a.m. time. John Buckley, John Gordon, Noya Carr, Diantha Parker, Amanda Peacher, and Stephanie Sieck

are the marketplace editing staff. Amir Bivawi is the managing editor. And I'm Kristin Schwab. We'll be back tomorrow. This is APM. Hi, this is Rob from London, Ontario. Marketplace is an amazing resource and part of my daily routine. I get highly credible information delivered in an intelligent, interesting, and at times humorous but always engaging manner. My day would be lessened without access to Marketplace. Join me in supporting Marketplace with a gift today.

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