Tuesday, January 18, 2022

Labor shortage and immigration shortage | Econofact



by Giovanni Perri and Reem Zaur,11 January 2022

University of California, Davis


Due to increasing restrictions on immigration and travel, which began with the COVID-19 pandemic in the early months of 2020, the net flow of immigrants into the United States has essentially stalled for almost 2 years. There were about 2 million underage working-age immigrants living in the United States by the end of 2021, if immigration trends from before 2020 had remained unchanged. Of these lost immigrants, about a million will be college educated. Labor shortage data across industries suggest that this dramatic drop in foreign labor supply growth is a contributor to the current job shortage and could slow job recovery and growth as the economy picks up.

Sectors that are particularly dependent on migrant workers had significantly higher rates of unfilled jobs in 2021.


  • During the years 2020 and 2021, the number of immigrants coming to the United States has decreased significantly. In the early months of 2020 and in response to the COVID-19 health crisis, the Trump administration closed borders with Mexico and Canada and banned international arrivals. Visa processing at US embassies and consulates around the world was also severely disrupted, leading to a dramatic drop in the influx of foreign nationals on all types of temporary visas. According to the State Department, the slowdown in visa processing generated very few visa entries and a large Backlog of over 460,000 people With an unprocessed visa by the end of 2021. Similarly, the number of permanent residents immigrating to the US has also declined significantly. statistical inference Relative to the financial year 2020 (from 1st Octoberscheduled tribe 2019 to 30 Septemberth 2020) indicate a 45% reduction in immigrant visas and a 54% reduction in nonimmigrant visas compared to the previous year.
  • This decline in immigrant and nonimmigrant visa arrivals resulted in a zero increase in foreign-born people of working age in the United States. Before 2019, the foreign-born population of working age (18 to 65) increased by about 660,000 people per year, according to data from the monthly Current Population Survey (see the first chart). This trend took off before the pandemic in 2019, which was marked by stricter immigration enforcement and a . was due to a combination of Decline in the influx of Mexican migrants, The stoppage of international travel in 2020 has led to a significant decline in the working-age immigrant population. By the end of 2021, the number of foreign-origin people of working age in the United States is still slightly lower than at the beginning of 2019 and, relative to that level, would have been achieved if the 2010-2019 trend continued. There is a shortage of about 2 lakh people. A similar calculation using the Current Population Survey (CPS) monthly data on persons of foreign origin with college degrees indicates that about 950,000 of the two million foreign workers missing will be college educated, a trend before 2020 continued. That’s a huge loss of skilled workers, equivalent to 1.8 percent of all college-educated individuals working in the US in 2019.

Labor shortage and immigration shortage | Econofact

Click here for a larger version of the graph

  • As the US economy recovers from the Covid-19 crisis in 2021 and job creation surges, it will become more difficult for employers to fill jobs. In all sectors, these reductions are significantly linked to the loss of foreign workers. The recent economic recovery has seen many job openings and long jobs unfilled. Despite upward pressure on wages in many sectors, such as hospitality and food related servicesThe number of incomplete job openings relative to employment remains very high. In this the absence of workers of foreign origin plays an important role. Sectors that had a higher percentage of foreign workers in 2019 had significantly higher rates of unfilled jobs in 2021 (see second chart). Our estimates show that an industry that had a 10% higher reliance on foreign workers in 2019 than any other industry saw a 3% higher jobs rate in 2021.
  • The shortage of foreign workers is not the only reason for the high rate of unfilled jobs. Increased retirement and increased bargaining power of workers may play a significant role. While more generous unemployment and welfare benefits introduced during the crisis may have discouraged workers from taking low-paying jobs in 2020 and early 2021, they do not seem to be the cause of the current shortage, Since most of those benefits have expired mid of 2021. Recent anecdotal and preliminary evidence finds a push by workers for more Job-flexibility, security and, generally, better conditions Reasons for resignation and contribution to incomplete job openings. In addition, increased retirement rates have contributed to the decline in available workers. a a recent study finds that only additional retirement and less re-entry of retirees into the labor force have increased the share of retirees relative to the US labor force by 1.3 percentage points over the past 2 years (compared to the annual growth rate, or about 0.3 percentage points). in) before the pandemic). These factors have affected labor availability, particularly in low-paying manual-intensive jobs in sectors such as food services and hospitality. The second chart shows the unfulfilled jobs rate in those two sectors, predicted between the statistical union-estimated jobs rate across all industries, and the industries’ dependence on foreign workers, suggesting that other factors are at work. . Area.
  • The loss of two million potential immigrants, one million of whom are college educated, could impact productivity and employment in the long run. recently Study One of the authors suggests that college-educated immigrants are more likely to work in the science, technology, engineering and math (STEM) fields; These jobs are drivers of innovation and productivity growth. apart from this, Research The focus on high-skilled STEM jobs suggests that they are responsible for creating a job-multiplier effect at the local level, with 2.5 additional jobs for each additional employed high-skilled worker through local demand for goods and services. create opportunities. Companies are expanding and hiring other workers. In light of these effects, the loss of one million college-educated immigrants could leave the US economy with lower productivity that translates to lower growth. Applying the estimated job multiplier from research referenced above The observed loss of college-educated immigrants implies 2.5 million fewer jobs in the local economies where immigrants would have worked.
  • The loss of immigrants can lead to a major loss of entrepreneurship. Immigrants are three times more likely to start a firm in the US than natives, According to an article published in 2020, Immigrants are more likely to start small firms (with 0-10 employees) but medium-sized and larger firms (with 1000 employees or more) than natives. Using the estimated entrepreneurial rate of immigrants from this study, two million fewer immigrant firms would indicate a decline in manufacturing, due to a lack of entrepreneurs alone, corresponding to the loss of more than 200,000 jobs.
  • American educational institutions will be affected by the departure of foreign college students. foreign college students The share of the population of foreign origin with the greatest decline in the last 2 years. After decades of steady growth in foreign enrollment in US colleges and universities, their numbers peaked in 2018-19. 20% drop in 2020, This has had an adverse effect on higher education, one of the largest US service export, In addition, foreign students, especially graduate students, have made a very significant contribution to American Research & Innovation & Patenting, Their absence could undermine the innovation and patentability of universities, research institutions and businesses that rely on cutting-edge research and innovation.

The shortage of immigrants over the past two years has had immediate adverse consequences for filling jobs and hurting the long-term prospects for the US economy. The decline in the number of foreign students and highly skilled immigrants is particularly related to the long-lasting impacts on productivity, innovation and entrepreneurship. The decline in the number of low-skilled immigrants may have contributed to the current shortage in many industries in which they were over-represented. In light of this, the government should strive to facilitate the processing of nonimmigrant and immigrant visas this year in order to further reduce the number of immigrants and avoid the resulting negative economic consequences.


employment / immigration

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