U.S. immigration is rebounding after a sharp two-year slowdown, but the recovery is unlikely to close the pandemic-induced gap in newcomers amid continued shortages of employees in industries dependent on strangers.
Nearly a year after US borders reopened, non-US workers are pouring in at a rate just lower than last seen in 2019, according to analysis by economics professor Giovanni Peri of the University of California, Davis. .
But in June, there were about 1.7 million fewer working-age immigrants living in the United States than there would have been if immigration had continued at its pre-2020 rate. , did he declare. About 600,000 of them have a college education.
“Unless we put more resources into this processing or increase the number of visas, I don’t think we’re going to catch up,” Peri said. “We will continue to grow, but not close this gap that we lost during Covid.”
The once-in-a-generation labor shortage has seen U.S. employers struggle to hire and retain employees over the past two years, those in construction, hospitality and services – all of which historically depend on a greater proportion of immigrants – feeling more pain. The shortage of U.S.-born and foreign workers has also triggered higher wages across industries, adding more fuel to the highest inflation seen in about four decades.
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While most of the growth in immigration to the United States over the past decade has come from legal migration, according to Peri, the country is grappling with the contentious issue of the arrival of thousands of undocumented people. along its southern border.
Texas Governor Greg Abbott has focused his campaign for re-election next month on border security and immigration, pledging to limit unauthorized migrant crossings. The Republican has led a migrant transport operation from Texas border towns to New York, Washington and Chicago that has delivered more than 10,000 people since April.
Rate Effects
The Federal Reserve is raising interest rates aggressively to help reduce spending on goods and services and reduce demand for workers, which in turn could slow wage growth. See the article : Ohio Politics Explained podcast: police reform after Akron death, abortion and impeachment.
Hiring needs are moderating due to the political tightening, but remain well above the supply of available labour. The number of job openings in the United States fell to 10.1 million in August, but remains high, representing about 1.7 positions for every unemployed person, according to Labor Department data.
If left unaddressed, immigration and labor shortages could lead to reduced business investment and slower U.S. growth, said Pia Orrenius, senior economist at the Federal Reserve Bank of Dallas.
“If companies can’t hire, they won’t invest in further expanding their operations because they can’t even staff their existing operations,” Orrenius said.
Fed Chairman Jerome Powell described the US labor market as “clearly out of balance” with demand outstripping supply for workers. Other Fed officials say the immigration deficit is making the labor shortage worse.
Immigration to the United States began to decline in 2017 after a series of restrictions were passed under former President Donald Trump. The influx of foreign workers plunged further in 2020 and 2021 after the pandemic closed borders and halted travel across countries.
Job openings rose more for companies that hire a larger share of immigrants, according to research from the Kansas City Fed. Besides construction, leisure and hospitality, these businesses include household cleaning, laundry and beauty services, wrote economist Elior Cohen and research associate Samantha Shampine.
In contrast, openings grew at a lower than average rate for industries that had a smaller proportion of foreign workers, including finance, public administration and mining, they said.
“We really depend on a foreign-born workforce for many parts of the economy,” said Tara Watson, an economist at the Brookings Institution.
Late last year, the United States reopened its borders and began processing more applications for work visas and green cards. About 858,000 workers and their family members were admitted to the United States on temporary visas from January to March this year, according to a Pew Research Center analysis of data from the Office of Immigration Statistics.
This represents an increase from the low of 226,000 reached from April to June 2020, and only slightly below the roughly 1 million people who arrived each quarter on average during the four years preceding the start of the pandemic, a said Pew. Around 96,000 people entered the country as lawful permanent residents from January to March this year, nearly the 106,000 who entered from January to March 2020.
The State Department now processes about 800,000 nonimmigrant visa applications per month, including foreign workers seeking to settle in the United States, according to an agency spokesperson. That’s about 80% of the pre-pandemic figure, and immigrant permit processing is almost back to the previous rate, the spokesperson said.
U.S. policymakers should lift the cap on the number of immigrants eligible to enter each year or increase resources to expedite processing to compensate for workers who may have joined the labor force during the shutdowns. Both of these changes will likely have even less political support if Republicans manage to unseat Congress in November.
As more Americans reach retirement age and the national workforce begins to shrink, insufficient immigration could lead to a long-term labor shortage, Orrenius said.
“Normally, immigration accounts for about half of our labor force growth,” she said. “It has a huge effect on the availability of workers.”
