American businessmen say it is a difficult time to find and retain talent. Workers are retiring at an almost record rate, while millions of open jobs remain unoccupied. One of the reasons for this labor crisis that has gone largely under the radar is that immigration to the U.S. is plummeting, a shift with potentially huge long-term implications for the labor market.
By the middle of the last decade, the U.S. was adding about a million immigrants a year. But those numbers, which slowed during the Trump administration, hit a brick wall when COVID-19 exploded in 2020.
“This decline reflects both tougher immigration policies and the pandemic that reduced legal immigration and caused some recent immigrants to return to their home countries,” said David Kelly, chief global strategist at JPMorgan Funds. a recent report.
After COVID-19, most trips were closed. The immigration process stalled and many foreign workers returned to their home countries. In 2020, immigration fell to half the level of 2016; last year, it dropped to just over a quarter.
2 million people missing
The U.S. workforce is estimated to have 2 million fewer immigrants today than it would have if immigration had continued at pre-pandemic levels. This gap is especially felt in low-paying industries such as leisure and hospitality, retail food services and healthcare.
“Sectors that are especially dependent on immigrant workers had significantly higher jobless rates in 2021,” economists Giovanni Peri and Reem Zaiour of the University of California, Davis recently wrote.
Immigrants are especially crucial in health care, where they represent a disproportionate proportion of workers. One in five nurses, one in four nurses and nearly one in two nurses and gardeners is an immigrant, according to research co-authored by Williams College economics professor Tara Watson.
The drop in immigration coincides with other demographic trends that are squeezing the workforce. Americans are retiring en masse as baby boomers, the older generation of workers, reach retirement age, a long-lasting demographic change that accelerated during the pandemic.
The last year has seen the slowest population growth since America was founded, and one of the main reasons is declining immigration. Birth rates in the US have been falling for years, to the point that immigration has been the main driver of population growth.
But the current low levels of immigration are unlikely to be reversed quickly given the ongoing pandemic and delays in the U.S. immigration system that have millions waiting for a visa or green card.
In the short term, this is good news for existing workers and bad news for employers. Since the supply of workers is more or less taken advantage of, "the labor market should remain very tight by historical standards," Kelly of JPMorgan wrote. "[F]Stronger wages are likely to rise, as companies that can hire workers more profitably offer their compensation. "
In the long run, the picture is mixed. With labor shortages and rising labor costs, companies will look to automate more jobs, Kelly said. And because the U.S. economy as a whole depends on population growth, there are real doubts about what will happen when there are too few young workers to support the elderly.
"The financial health of Social Security and Medicare, as well as the ability to care for the elderly, will be strained without continued positive population growth," Watson of Williams College recently wrote.
The lack of immigrants could also mean a less dynamic labor market in general. Immigrants not only tend to be younger than the general U.S. population, but are more likely to work and three times more likely to start a business, according to one estimate.
- In:
- Immigration
Add Comment