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Slowing Immigration Is Worsening Worker Shortages

Jan 19, 2022

As labor shortages continue to make headlines, U.S. government data is showing that falling immigration is contributing to the crisis.

The number of people entering the United States is less than one quarter of what it was in 2016, falling from over 1 million to less than 247,000 in 2021. The year-over-year decline in migration into the country means that there are an estimated 2 million fewer working-age immigrants in the country today than there would have been if migration had continued at a steady pace. Combined with the steep decline in birth rates identified by the 2020 Census, and the decision of many workers over age 45 to leave the workforce during the pandemic, the cratering of migration into the country is making the U.S. labor shortage worse.

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Industries hit the hardest include service, natural resources, and construction, given that more than 20% of the service labor force is foreign born, while only 14% are U.S. citizens, and the natural resources and construction workforce is nearly 14% foreign-born, versus only 8% native-born. Though these foreign-born workers are not the majority of workers in these fields, they make up a large enough portion that removing them from the workforce has exacerbated shortages at a time when employers are desperate to hire. Additionally, of the two million working-age immigrants locked out of the United States in the past two years, an estimated one million of them were college educated. By some estimates this resulted in 2.5 million fewer jobs being created, not to mention the loss of bright foreign students or entrepreneurs who never entered the United States.

The absence of these foreign-born workers is also tied to the rise in inflation. The U.S. Chamber of Commerce believes that increasing immigration is the only way to quickly reduce inflation, by easing the supply chain disruptions at the heart of the rise in inflation, such as the shortage of truck drivers.

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