US unemployment would be higher if illegal immigration were counted correctly: Goldman Sachs

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Employbridge’s Joanie Bily explains what the March jobs report says about the state of the U.S. economy on 'Making Money.'

The U.S. unemployment rate would be higher if the government properly accounted for the recent surge in illegal immigration, according to a new analyst note from Goldman Sachs.

The Goldman strategists, led by chief economist Jan Hatzius, projected the immigration spike has actually increased the American labor force by about 1.1 million and household employment by 1 million. 

When accounting for those figures, they found the unemployment rate in March would increase to 3.9% from the previously reported 3.8% figure. 

The inconsistency in the data stems from the way that immigration is covered.

GOVERNMENT HIRING SPREE PROPPING UP THE US JOB MARKET

A construction worker hammers a beam while renovating a road in the Union Market district in Washington, D.C., on Sept. 8, 2023. (Photographer: Al Drago/Bloomberg via Getty Images / Getty Images)

The Labor Department's monthly employment report is based on two surveys. The establishment survey, which gathers data from about 122,000 businesses and government agencies, is used to calculate how many jobs the U.S. adds each month. The other is based on monthly interviews of about 60,000 households and is used to determine the unemployment rate.

But the latter household survey relies on a population estimate from the Census Bureau as a benchmark that has «failed to capture the recent immigration surge» because it uses a lagged migration estimate based on the 2022 American Community Survey, the economists said. 

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While the census estimates the U.S. population grew by