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Slowing immigration worsens job shortages

According to the census, net international migration into the U.S. last year was one-quarter what it was in 2016.
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WASHINGTON — One of the biggest stories in the U.S. at the start of 2022 is what has been called the Great Resignation: people of all ages and occupations walking away from their jobs in the Covid-19 pandemic, leading to worker shortages.

The forces behind the shortages are complex, from fears of infection to child care needs to worker burnout, but one factor that may be overlooked is that fewer new Americans are coming into the country. Immigration has dropped sharply in the last few years, and the declines have had real impacts on the worker pool.

The impacts can be seen by looking at the most basic measure, net international migration into the U.S. According to the census, that figure last year was one-quarter what it was in 2016.

The latest figure for that population was 247,000. Five years earlier, it had been more than 1 million. (The figures are gathered midyear to midyear, so the above numbers represent figures from July 1 of one year to June 30 of the next.)

There may be some questions about the 2021 number, because data collection occurred during the pandemic, when reaching survey respondents was difficult. The challenge around data collection remains the biggest unanswered question about the 2020 decennial census. Just how reliable was the tally?

But the trend of declining immigration numbers began long before the pandemic started. The net international migration figures have been falling every year since 2016. So even though the pandemic has almost certainly played a role in the last few years, policy changes also seem to have had an impact.

And all those declines since 2016 mean there would have been millions more immigrants in the country today if migration had kept at a steady pace.

The big story out of the 2020 census was slow population growth. The last decade had one of the slowest rates of growth for any decade in U.S. history. And behind the slow growth was a declining birth rate, coupled with slower immigration. Add in longtime workers’ opting out of the workforce and you have the makings of an economic problem.

When you look at the kinds of jobs foreign-born workers tend to fill, you can see some of the industries that have taken hits in the pandemic.

Foreign-born workers, for instance, are more likely to work in service jobs than native-born citizens. Among the foreign-born, 21 percent work in the service industry, compared to 14 percent of the native-born population, according to the Bureau of Labor Statistics. Preparing and serving food, along with building and grounds maintenance, are examples of jobs for which the differences between the two population groups are notable.

Natural resource extraction and construction also over-index for foreign-born workers — 14 percent of foreign-born workers, compared to 8 percent of native-born workers.

To be clear, that doesn’t mean foreign-born workers dominate those fields, but if you remove enough immigrants from the labor pool, you are more likely to have shortages in them. That means employers are probably going to have to look harder to find good candidates.

And then there is the question of wages.

Pay is another area to keep in mind as the number of immigrants declines. First, worker shortages tend to mean higher pay for employees, which is simple supply and demand. But beyond that, foreign-born workers tend to earn less than their native-born counterparts.

Median weekly earnings for foreign-born workers were about $885 a week in 2020, compared to $1,000 a week for native-born workers, according to the Bureau of Labor Statistics.

There are several possible reasons. Foreign-born workers tend to have lower levels of education than native-born workers, and the jobs they tend to get (in the service professions, in particular) tend to pay less.

Regardless of the reasons, however, or whether the wage differences are fair, the reality is that foreign-born workers earn less. When you remove enough of them from the labor force, wages are likely to rise.

That's not the only force behind rising inflation — there are many things — but it plays a role. And that's the larger point in all these data and the immigration decline.

The pandemic has caused major disruptions to the U.S. economy in a long list of areas. Many workers are re-examining the courses of their lives and trying to chart new ones. Supply chain issues have wreaked havoc. And the sheer uncertainty around the coronavirus and the "return to normal" has left businesses and investors playing a perpetual game of "let's see what things look like next month."

But the drop in immigration and the workers it provides has played a role. And as the stories about worker shortages continue, the political discussions around immigration may be in for an adjustment in the next few election cycles.