Remember the labor shortage? Immigrants are helping to fix it.

Remember the labor shortage? Immigrants are helping to fix it.
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Over the past year, immigrant workers have fueled US job growth and helped ease the labor shortage.

  • Foreign-born workers have fueled US job growth and helped ease the labor shortage.
  • Immigrants’ job gains generally haven’t come at the expense of US-born workers. 
  • Immigrant workers could be a key reason the US economy could grow by an additional $7 trillion over the next decade.

Month after month, the US economy continues to add hundreds of thousands of jobs

While some industries are still struggling to find workers, the number of job openings has fallen over the past two years — signaling that the worst of the labor shortage that started during the pandemic is over.

Without immigrants, it likely wouldn’t have been possible. 

Roughly 2.7 million more Americans are working today than they were in January 2020. But the number of US-born workers fell by roughly 100,000 over the same period.

That means the strong job numbers of recent months have largely been due to immigrants, specifically foreign-born workers, entering the workforce in large numbers. 

“Foreign-born labor force participants have accounted for all of the job growth over the last year,” Bill Adams, an economist at Comerica Bank, told The New York Times.

Since January 2020, the number of foreign-born workers in the US has risen by roughly 2.8 million. Foreign-born workers’ share of the US workforce rose from 17% to nearly 19% between January 2020 and 2024, higher than the record figure reached in 2023. 

On a recent "Daily Blast" podcast, economist Paul Krugman said a growing foreign-born labor force is a major reason the US economy has performed better than many other advanced countries in recent years — and that the boost in labor supply has helped bring down inflation

Additionally, he said these job gains haven’t come at the expense of US-born workers either.

“They're not stealing American jobs,” he said of foreign-born workers, adding, "What they do is they open up space to run the economy hotter, and almost certainly actually lead to higher employment among people born here."  

As of 2022, foreign-born workers were more likely than US-born workers to be in service, natural resources, construction, and maintenance jobs, according to the Bureau of Labor Statistics.

Over 80% of Americans between ages 25 to 54 are working — among the highest level in the past decade — and the US unemployment rate remains low relative to historical levels. 

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In the years ahead, immigration could continue to provide a boost to a US labor force supply that's facing headwinds from an aging population and low fertility rate. Immigrants joining the workforce and spending their income are key reasons the US economy could grow by an additional $7 trillion over the next decade, according to a new estimate from the Congressional Budget Office. 

Why the immigrant workforce has grown in recent years

There are a few explanations for why more foreign-born and fewer US-born workers have joined the workforce in recent years.

Many US-born Americans are reaching retirement age, and some retired earlier than planned during the pandemic — when COVID-19 concerns and rising home and stock values nudged some people out of the workforce. 

The US has roughly 2.7 million more retirees than expected, according to a model designed by St. Louis Fed economist Miguel Faria-e-Castro.

The typical immigrant, in comparison, is younger and more likely to be working. As of January, 65.7% of foreign-born workers were working or looking for work, compared to 61.4% of US-born workers. 

While some foreign-born workers have been in the US for a long time, others have benefited from an immigration uptick in recent years. In 2021, a decade-low 376,000 more people moved into the US than moved out — due in part to pandemic restrictions and President Donald Trump-era immigration policies. 

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But in 2022, this figure rose to about one million, the highest level since 2017. A rising number of temporary work visas and permanent green cards — due in part to the US clearing through pandemic backlogs — has been partially responsible for the increase in foreign-born workers. 

What's more, immigration has been a big topic of discussion lately on Capitol Hill. In recent weeks, Congress debated a border security bill that would have included new funding for the detention of migrants, implemented tougher measures around asylum seekers, and given the president's administration more authority to expel migrants.

While the bill came together after months of bipartisan deliberation, Republican opposition led it to stall out in the Senate.

Have you recently moved to the US and found work? If so, reach out to this reporter at [email protected].

Read the original article on Business Insider


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