Immigration to the US is rebounding after a sharp two-year slowdown, but the pickup is unlikely to plug the pandemic-induced gap in new arrivals amid persistent employee shortages in industries reliant on foreigners.
Nearly a year after the US reopened its borders, non-American workers are flowing in at a pace just under that last seen in 2019, an analysis by University of California at Davis economics professor Giovanni Peri showed.
But as of June, there were about 1.7 million fewer working-age immigrants living in the US than there would have been if immigration had continued at its pre-2020 pace, he said. About 600,000 of those are college-educated.
“Unless we put more resources into processing this or we expand the number of visas, I don’t think we’re going to catch up,” said Peri. “We’re going to continue to grow, but not make up for this gap that we lost during Covid.”
The once-in-a-generation labor deficit has seen US employers struggle to hire and keep employees over the past two years, with those in construction, hospitality, and services — which all historically rely on a greater proportion of immigrants — feeling more pain. The shortage of both US-born and foreign workers has also triggered higher wages across industries, adding more fuel to the hottest inflation seen in about four decades.
While most of the growth in immigration to the US over the past decade is from legal migration, according to Peri, the country is grappling with the contentious issue of arrivals 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, vowing to curb unauthorized migrant crossings. The Republican spearheaded an operation to transport migrants from Texas border towns to New York, Washington and Chicago that has delivered more than 10,000 people since April.
The Federal Reserve is raising interest rates aggressively to help lower spending on goods and services and reduce demand for workers, which could in turn soften wage growth.
Hiring needs are moderating as a result of the tighter policy, but remain far above the supply of available workers. The number of US job openings dropped in August to 10.1 million but is still high, resulting in about 1.7 positions for every unemployed person, Labor Department data showed.
If not addressed, the immigration and staffing shortfall could lead to reduced business investment and slower US growth, said Pia Orrenius, a senior economist with the Federal Reserve Bank of Dallas.
Immigration to the US began to drop in 2017 after a slew of restrictions were enacted under former President Donald Trump. The influx of foreign workers plunged further in 2020 and 2021 after the pandemic shut borders and travel across countries came to a standstill.