Ask around or listen to the news, and you might notice a disconnect between what it feels like financially day-to-day and what Wall Street says. From an eagle’s eye view, businesses and consumers alike look pretty good. Earnings have been beating expectations, employees have seen higher wages overall, and the S&P 500 has been reaching new all-time highs. However, when you talk to your everyday consumer, they are sure to have a different vibe, saying something like, "groceries are too expensive, rent is out of control, and my income isn’t keeping up." So the question becomes: what is driving this disconnect?

To get an understanding, we have to go back to the start of the pandemic and look at some data from the Bureau of Labor Statistics.

At the beginning of the pandemic, the U.S. lost roughly 24.7 million jobs (5.7 million of those jobs were held by foreign-born workers, while 18.0 million were held by native workers). From then until June 2024, a total of 28.5 million jobs were added — more than making up for the loss. But of the 3.8mm in job gains (28.5mm added less the 24.7mm lost), it’s foreign workers that have accounted for more of them—taking 2.3 million or 63% of the total, with native workers holding the remaining 37%, or 1.4mm.

It’s important to note the new jobs held by foreign-born workers have largely been in the service, natural resources, construction, and maintenance industries, which tend to pay less than new jobs held by their native-born counterparts. For example, in 2023, the median usual weekly earnings of foreign-born full-time wage and salary workers was $987 vs. $1,140 for native-born workers. Economic theory and academic research suggest that in the short term, an influx of foreign-born workers can lead to lower wages, and lower inflation. However, wages actually increased, even with greater foreign-born labor participants. I believe this is due to labor supply constraints driven by a significant demographic shift—baby boomers are retiring in greater numbers, helping to push the labor participation rate down to 62.6%, compared to 63.3% pre-covid.

Although wages increased broadly, so-called low-skilled workers saw the largest wage gains while, native-born workers, who tend to occupy higher-skill jobs, saw less steep gains and, in some instances, more pronounced declines.

So, I believe, the difference in opinion between people’s experience and Wall Street’s views is two-fold: Employment gains have been biased to a foreign-born population, and while U.S.-born workers tend to be in higher-paying jobs, those jobs haven’t been as plentiful or had as significant wage growth. In general, and especially in election season, immigration policy is a topic of debate, and a complicated issue that has real implications for the broader labor force and economy. Today, the labor market is cooling. The percentage of individuals with no wage changes has risen, and non-farm payroll additions have notably slowed.

At some point diverting perceptions from everyday life and Wall Street must converge—-and consumers will likely have the final say.