labor shortage and lack of immigration | econofact (2023)



AfterJohn PeriGReem Zaiour·January 11, 2022
University of California, Davis

(Video) Lack of immigration is a contributing ‘cause of the labor market shortage’: Economist

labor shortage and lack of immigration | econofact (1)


Due to increased immigration and travel restrictions, which began with the COVID-19 pandemic in the first months of 2020, the net flow of immigrants to the United States effectively stopped for almost 2 years. At the end of 2021, there were about 2 million fewer working-age immigrants living in the United States than there would have been if the pre-2020 immigration trend had continued unchanged. Of these lost immigrants, about a million would have had a college education. Data on labor shortages across industries suggest that this sharp decline in overseas labor supply growth is likely to contribute to current labor shortages and could slow the recovery and job growth as the economy accelerates .

Sectors highly dependent on migrant workers had significantly higher vacancy rates in 2021.


  • During 2020 and 2021, the number of immigrants arriving in the United States has decreased significantly.In the early months of 2020 and in response to the health crisis caused by Covid-19, the Trump administration closed the borders with Mexico and Canada and imposed restrictions on international arrivals. The visa process at US embassies and consulates around the world has also been severely disrupted, resulting in a dramatic reduction in the flow of foreign nationals for any type of temporary visa. According to the State Department, slow visa processing has led to far fewer and large visa applicationsa backlog of over 460,000 peoplewith visas pending at the end of 2021. Similarly, the number of permanent residents coming to the US has also dropped significantly.statistical estimatesin relation to the financial year 2020 (from October 1call2019 to September 30on2020) show a 45% drop in immigrant visas and a 54% drop in nonimmigrant visas compared to the previous year.
  • This decline in immigrant and nonimmigrant visa arrivals resulted in zero growth in foreign-born persons of working age in the United States.Before 2019, the foreign-born working-age (18-65) population was growing by about 660,000 people a year, according to data from the current monthly population survey (see first chart). This trend had already stalled in 2019 before the pandemic, due to a combination of stricter immigration measures andThe entry of Mexican immigrants is falling. The suspension of international travel in 2020 contributed to a significant decline in the working-age migrant population. At the end of 2021, the number of foreign-born people of working age in the United States remains somewhat lower than it was in early 2019 and compared to the level it would be if the 2010-2019 trend continued. , there is a shortage of about 2 million people. A similar calculation using monthly Current Population Survey (CPS) data on the foreign-born with a college degree shows that of the missing two million foreign-born workers, about 950,000 would be college-educated if the pre-2020 trend continued. for a very significant loss of skilled workers, equal to 1.8 percent of all college-educated people who worked in the US in 2019.

labor shortage and lack of immigration | econofact (2)

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(Video) Canadian government makes immigration push to fill labor shortage

  • As the US economy recovered from the crisis caused by COVID-19 in 2021 and increased employment, employers found it increasingly difficult to fill positions. In all sectors, this deficit is significantly related to the loss of foreign workers.The recent economic recovery has led to an increase in job vacancies and long-term vacancies. Despite upward pressures on wages in several sectors,such as catering and food-related services, the number of vacancies relative to employment remained very high. The absence of foreign-born workers plays an important role in this. Industries that had a higher percentage of foreign workers in 2019 had significantly higher vacancy rates in 2021 (see second chart). Our estimates show that an industry that relied 10% more on foreign workers in 2019 than another industry in 2019 had a 3% higher vacancy rate in 2021.
  • The loss of foreign workers is not the only reason for the high vacancy rate.Increased retirement and increased bargaining power of workers are likely to play an important 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 appear to be the cause of the current shortage.since most of these benefits have expiredmid-2021 Recent anecdotes and preliminary data reveal employee motivation for morework flexibility, security and generally better conditionscausing resignations and helping to create vacancies. In addition, rising retirement rates have contributed to a decrease in available workers. TOa recent studyfinds that excess retirements and reduced re-entry of retirees into the labor force alone have increased the ratio of US retirees to workers by 1.3 percentage points over the past 2 years (compared to an annual growth rate of about 0.3 percentage points before the pandemic) . These factors have affected labor availability, particularly in low-paid, manual-intensive jobs in sectors such as food service and hospitality. The second graph shows that the vacancy rates in these two sectors are much higher than what would be predicted by the cross-industry statistical relationship between job vacancy rates and industry dependence on foreign workers, suggesting that other factors play a role in them the sectors
  • The loss of two million potential immigrants, one million of whom are college-educated, could have long-term effects on productivity and employment.recentlystudyOne of the authors shows that university-educated immigrants are likely to work in science, technology, engineering and mathematics (STEM) fields. These jobs are drivers of innovation and productivity growth. Except,researchA focus on high-skilled STEM jobs shows that they are responsible for creating employment multipliers at the local level, creating opportunities for up to 2.5 additional jobs for every additional high-skilled worker employed through local demand for goods and services and with business expansion and employment of other workers. In light of these effects, the loss of a million college-educated immigrants could leave the U.S. economy with lower productivity, which translates into lower growth. By applying the estimated labor multiplierresearch mentioned aboveThe observed loss of college-educated immigrants implies 2.5 million fewer jobs in those local economies where the immigrants would work.
  • Losing immigrants could mean a big loss of entrepreneurship.Immigrants are three times more likely than native-born Americans to start a business;according to estimates from an article published in 2020. Immigrants are more likely to start small businesses (with 0-10 employees), but also medium and large businesses (with 1000 employees and more) compared to natives. Using the estimated immigrant entrepreneurship rate from this study, two million fewer immigrants would result in a reduction in business openings, due solely to the lack of entrepreneurs, corresponding to a loss of more than 200,000 jobs.
  • The loss of foreign students will affect American educational institutions.foreign studentsthey are the segment of the foreign-born population with the largest decrease in the last 2 years. After a decade of steady growth in foreign enrollment at US colleges and universities, which peaked in 2018-19, their numbersdecreased by 20% in 2020. This had a negative effect on higher education, one of theAmerica's largest export of services. In addition, foreign students, especially postgraduate students, had a very important contributionResearch and Innovation and US Patents. Their lack could undermine the innovation and patent capabilities of these universities, research institutions and companies that depend on cutting-edge research and innovation.

What does this mean:

The lack of immigration over the past two years has had an immediate negative impact on job creation and also hurts the long-term prospects of the US economy. The decline in the number of foreign students and highly skilled migrants is of particular concern because of the long-term effects on productivity, innovation and entrepreneurship. The decline in the number of lower-skilled immigrants may be contributing to current shortages in several industries where they were overrepresented. In view of this, the government should make an effort this year to facilitate the processing of immigrant and non-immigrant visas to avoid a further decrease in the number of immigrants and the negative economic consequences that will arise.



(Video) How Florida's new immigration bill could create a labour crisis | About That

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Immigrant Workers and Elderly Care in the United States Immigrant Workers and Elderly Care in the United States

afterChristine butcher,Kelsey MoranGTara Watson

(Video) Can Immigration Solve Canada's Labour Shortages? | The Agenda

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How does immigration affect the labor shortage? ›

Role of immigration in population and labor force growth

Immigrants contribute to the U.S. economy through the supply of labor as well as through entrepreneurship. Entrepreneurs increase the demand for labor by creating job vacancies and therefore increasing labor tightness (Azoulay et al. 2022).

How can we solve labor shortage? ›

How can the shortage of labor be overcome?
  1. Recruiting: More Referrals = Better Employees.
  2. Optimize the Onboarding Experience.
  3. Make Training an Ongoing Process.
  4. Provide Context Around Why Policies and Processes Change.
  5. Better Scheduling for Better Lives.
  6. Build Better Teams Through Better Communication.
  7. Recognize and Reward.
Apr 19, 2023

Why is there such a huge labor shortage? ›

The pandemic caused a major disruption in America's labor force—something many have referred to as The Great Resignation. In 2022, more than 50 million workers quit their jobs, many of whom were in search of an improved work-life balance and flexibility, increased compensation, and a strong company culture.

Is there really a labor shortage? ›

“The labor market is tight nationwide,” says Moody's economist Justin Begley. “There is more demand than there is supply across all regions. We do think it is more pronounced in the South.” In other words, worker shortages are widespread but improving across the U.S.

What problems are caused by labor shortage? ›

If the worker shortage persists, we can expect to see rising wages, inflation, and supply chain issues in the short term. Additionally, the tight labor market has given workers more power, gaining leverage over employers.

How did immigration affect the labor movement? ›

Immigrants also helped to galvanize the “alt-labor” movement, flocking to worker centers across the nation that deployed new strategies to challenge wage theft and other employer abuses in sectors where obstacles to traditional unionism were especially formidable.

What will happen if the labor shortage continues? ›

If we do not address these issues, a continuing labor shortage would pose a serious risk to the 2022 US inflation and economic growth outlook. First, wages for new hires will continue to rapidly grow. That, on top of an escalating cost of living, will increase wage growth for workers who stay in their jobs.

Why are Americans not working? ›

It's no secret that the COVID-19 pandemic changed the world of work. Many companies had to downsize or close, millions retired early, and the average employee sought more freedom and flexibility in their working schedules. All of this resulted in a lower labor force participation rate where less Americans were working.

How do you attract workers during labor shortage? ›

How to attract employees during a labor shortage: 12 tips
  1. Raise wages. ...
  2. Leverage your current employees. ...
  3. Add a benefits package. ...
  4. Support health and wellness. ...
  5. Include fun perks. ...
  6. Promote diversity. ...
  7. Involve yourself in the recruitment process. ...
  8. Refine retention efforts.

Why do people not work anymore? ›

Many workers who quit their jobs said they weren't being paid enough, didn't see a path to advancement and felt disrespected. The stunning number of Americans who quit means many industries are facing serious labor shortages. Here are a dozen jobs nobody wants anymore.

Will the labor shortage ever end? ›

Economists agree that the labor market theme of the year will be "a return to normal." The number of job openings, which reached its highest level in 21 years last year, has already begun to fall and will continue to slowly decline in 2023.

What does a labor shortage mean for the economy? ›

During a labor shortage, the labor pool is low, recruiting qualified workers is difficult, filing open positions takes longer, and the retention rate is poor. Employers may need to pay higher wages and improve benefit packages to attract and retain employees.

How can people afford to live without working? ›

The only way to make a living without a job is to generate passive income. You can't just charge everything to a credit card. Passive income is money you generate without having to consistently work for it. It typically involves making an upfront investment in the form of time or labor.

Are there enough jobs in America for everyone? ›

We have a lot of jobs, but not enough workers to fill them. If every unemployed person in the country found a job, we would still have 4.2 million open jobs.

How many Americans are employed? ›

As of May 2023, there were 134.58 million full-time employees in the United States. This is a slight increase from the previous month, when there were 133.89 million full-time employees.

Why is everyone understaffed? ›

During the pandemic, stimulus and unemployment payments made it possible for employees to step back and take stock of what they wanted from a career. Many people used this time to change careers, which led to higher shortage rates in entry-level industries such as manufacturing and hospitality.

Is the great people shortage coming? ›

The Great People Shortage is coming, warn experts. A Korn Ferry report revealed that by 2030, there will be a global human talent shortage of more than 85 million people – roughly the population of Germany. Wondering why that is?

How does labor shortage affect society? ›

If left unchecked, the U.S. worker shortage will lead to even higher inflation, reduced incomes, higher taxes and a smaller economy that will hurt all Americans. Policymakers need to expand education alternatives, encourage flexible work, end welfare without work and constrain out-of-control federal spending.

Why is immigration important? ›

Why we need immigration. Immigration fuels the economy. When immigrants enter the labor force, they increase the productive capacity of the economy and raise GDP. Their incomes rise, but so do those of natives.

What is labor immigration? ›

Movement of persons from one state to another, or within their own country of residence, for the purpose of employment.

How did immigration affect society? ›

Immigrants by their sheer numbers have provided a lifeline in many cities that were losing population; played a key role in the growth of places like Las Vegas and Orlando that were becoming major metropolitan areas for the first time; and revitalized many far-flung rural communities, slowing population loss and in ...

Is the labor shortage causing inflation? ›

The first piece in our labor shortages series demonstrated how labor shortages negatively impact Americans' quality of life. The staggering inflation rates were an added blow over the last year, and these two phenomena are connected as labor shortages contribute to the inflation rate's unsustainable growth.

How does labor shortage affect supply and demand? ›

Labor shortages in all industries can directly impact local, regional, and global supply chains. For example, understaffing at a factory will cause production slowdowns, resulting in inventory stock-outs for distributors and retailers.

Why is it so hard to hire right now 2023? ›

A global pandemic impacted every employment sector, as well as supply chains. Conditions brought significant changes to the workforce, such as remote work and hybrid work. Relocations away from major cities, a reaction to some quarantines, also occurred.

Is the US in a job crisis? ›

In 2022, more than 50 million U.S. workers left their jobs—the most ever recorded in the history of the Job Openings and Labor Turnover survey.

How many US citizens are not working? ›

In May 2023, the inactive labor force amounted to about 99.92 million people in the United States. Labor force measures are based on the civilian non-institutional population 16 years old and over.

How many Americans don't want to work? ›

One of the stats was 45% don't want to work anymore, period,” said Chris Mullen, executive director of the UKG Workforce Institute. With co-workers leaving for new jobs and careers or to spend more time with family, remaining workers often feel underappreciated and overworked.

What will increase labor demand? ›

An increase in the number of companies producing a given product will increase the demand for labor resulting in a shift to the right. A decrease in the number of companies producing a given product will decrease the demand for labor resulting in a shift to the left.

How do you overcome surplus of workers? ›

How to manage surplus
  1. Physical exchange of resources without leakage. ...
  2. Post-transaction documentation. ...
  3. Retaining value within systems with rentals. ...
  4. Operationalizing reuse through reward mechanisms and change management. ...
  5. Adaptive to individual needs while building community.

What are the major reasons organizations engage in downsizing? ›

Companies typically downsize in order to:
  • Improve efficiency (by replacing employees with machinery).
  • Reduce costs.
  • Rightsize resources relative to market demand.
  • Take advantage of cost synergies after a merger.
  • Increase profits by reducing overhead costs.

Why do people need to work? ›

People work to make money. They need money for food, for rent, and to have fun with their friends and family.

Why can't some people stop working? ›

Work addiction, often called workaholism, is a real mental health condition. Like any other addiction, work addiction is the inability to stop the behavior. It often stems from a compulsive need to achieve status and success, or to escape emotional stress. Work addiction is often driven by job success.

What is quiet quitting job? ›

Quiet quitting doesn't actually refer to quitting a job—it means completing one's minimum work requirements without going above and beyond or bringing work home after hours.

Who is to blame for labor shortage? ›

Here's the thing: Early retirement — whether forced by the pandemic or made possible otherwise — is having a huge impact on the labor market. And data show that retiring boomers, far more than “lazy” millennials, are the biggest force behind the labor shortage.

How big is the US labor shortage? ›

About 3.5 million workers are “missing” from the workforce, according to Federal Reserve Chairman Jerome Powell. That is how much bigger the labor force would be if the number of people working or looking for work returned to pre-pandemic levels.

What will the job market be like in 2023? ›

Openings were down 384,000, the lowest level since April 2021. In an April survey by the National Association of Colleges and Employers, an industry group for recruiters and higher ed professionals, businesses said they expected to hire 4% more graduates from the class of 2023 than they did from the class of 2022.

Why is a shortage bad for the economy? ›

In general, the less money there is in circulation, the less demand there will be for goods and services, because people have less to spend. Therefore, by cutting back the money supply, the Fed reduces demand, prompting prices to fall.

Why is shortage an economic problem? ›

Economic shortage is a situation where the demand does not meet the supply of goods and services, thus creating a shortage. Here, the demand for goods or services will be high, but the supply does not match the level of demand, resulting in a price rise.

Is shortage an economic problem? ›

A shortage is a condition where the quantity demanded is greater than the quantity supplied at the market price. There are three main causes of shortage—increase in demand, decrease in supply, and government intervention. Shortage, as it is used in economics, should not be confused with "scarcity."

How to survive without rent? ›

14 Ways to Live Rent-Free
  1. Teach English Abroad.
  2. Volunteer with Peace Corps or AmeriCorps.
  3. Become an Au Pair.
  4. Trade Services for Free Rent.
  5. Become a House Sitter.
  6. Become a Resident Assistant at Your College.
  7. Find a Job That Provides Housing.

How do you get out of the 9 to 5? ›

How to transition from a 9-5 job to a new job
  1. Create a plan to leave your job. The first step of transitioning from a nine-to-five job to a new job is creating a plan. ...
  2. Set goals. ...
  3. Research alternative jobs. ...
  4. Plan your work hours and pay rate. ...
  5. Make the transition.
Mar 10, 2023

How to live alone when you can't afford it? ›

1. Save money by cooking at home
  1. Get creative with your living space and furniture arrangements. ...
  2. Find a roommate that has the same schedule as you or the one who does not mind living with you. ...
  3. Use Sites like Spareroom to Find Roommates. ...
  4. Don't Buy Things that You Can Live Without.

What is the most common job to have in America? ›

Most common jobs in America
  1. Cashier. National average salary: $29,297 per year. ...
  2. Food preparation worker. National average salary: $31,542 per year. ...
  3. Stocking associate. National average salary: $36,501 per year. ...
  4. Laborer. National average salary: $39,539 per year. ...
  5. Janitor. ...
  6. Construction worker. ...
  7. Bookkeeper. ...
  8. Server.
Mar 10, 2023

What percentage of US citizens don't work? ›

As of March 2021, just under 5 percent of the prime-age population was actively searching for work but was unable to find a job (the unemployed). The remaining 19 percent of the prime-age population doesn't have a job and isn't looking for one (Figure 1).

What percentage of US citizens are working? ›

The working-age population in the U.S. is 207,406,609 as of December 2022. 61.9% of the U.S. population is of working age as defined by the OECD (15-64), and with a 2022 national population of 334.2 million, we're left with a working age population of approximately 207.4 million.

What is the largest employment in US? ›

Employment by company
United States-based largest private employers
RankEmployerGlobal number of employees
1Walmart, Inc.2,300,000, Inc.1,608,000
3Allied Universal800,000
26 more rows

What is the United States #1 in? ›

The U.S. economy is the world's largest in terms of gross domestic product, and also the most technologically powerful. The country's most significant exports are computers and electrical machinery, vehicles, chemical products, food, live animals and military equipment.

What is a healthy unemployment rate? ›

The unemployment rate is a percentage of the labor force that is unemployed, released on the first Friday of every month. A healthy economy maintains an unemployment rate that hovers between 3% and 5%.

Why did many immigrants find labor in industries? ›

Immigrants would generally arrive in the cities and take up factory work there to make a living. Working-class and immigrant families often needed to have many family members, including women and children, work in factories to survive. The working conditions in factories were often harsh.

What percentage of the labor force do immigrants make up? ›

Foreign-born workers made up 18.1% of the US labor force in 2022 — the most in 27 years of recordkeeping, according to a report from the Department of Labor. Immigrants' record share of the US labor force in 2022 was up from 2021, when people born outside the US made up 17.4% of the American workforce.

How much of the labor force are immigrants? ›

Foreign born workers make up 17 percent of the U.S. labor force. Understanding the differences between foreign- and native-born workers sheds light on important details of the U.S. economy, with implications for our budget and policy choices.

How does unemployment affect immigration? ›

Unemployment insurance, disability, family leave and workers' compensation are all considered earned employment benefits. You only become eligible by working and earning your eligibility. Receiving these benefits cannot be counted against you in a future immigration application.

Does immigration help the economy? ›

For example, immigrants also help counteract the slowing growth rate of the U.S. population, which helps drive the expansion of the labor force and contributes to overall economic growth. The U.S. labor market benefits from the contributions of immigrant workers.

What are the causes of immigration? ›

Some people move in search of work or economic opportunities, to join family, or to study. Others move to escape conflict, persecution, terrorism, or human rights violations. Still others move in response to the adverse effects of climate change, natural disasters, or other environmental factors.

What job do most immigrants have? ›

Construction laborers occupy the top spot among immigrant workers (26 percent) and the third spot for native workers (11 percent). Construction managers and carpenters are also among the most common occupations for both native-born and foreign-born workers in this sector.

What is the most common job for immigrants? ›

Learn more about immigrating to the US by occupation!
  • Construction. The construction business is attractive to new immigrants as a potential source of employment. ...
  • Agriculture. ...
  • Architecture and Engineering. ...
  • Hospitality. ...
  • Healthcare. ...
  • Transportation. ...
  • Computing and Mathematics.
Mar 11, 2022

What is the largest employer of immigrants? ›

The biggest occupational sectors for lawful immigrant workers were office and administrative support, sales, and management (each with 9% to 10% of the total).

How much of the US population are immigrants? ›

While the immigrant population has generally been growing, this growth has slowed. Immigrants comprised 13.6 percent of the total U.S. population in 2021, a slight decrease from the 13.7 percent share they comprised in 2019 and short of the record high of 14.8 percent in 1890.

Why were immigrants ideal for labor? ›

With the growth of factories and the demand for unskilled labor, immigrants, primarily young men in the working years, continued to be the ideal source of labor. Immigrants were generally more willing to accept lower wages and inferior working conditions than native born workers (Zolberg 2006: 69).

Why are migrants coming to the US? ›

Struggling economies worsened by the coronavirus pandemic, humanitarian crises and political upheaval have sent people fleeing their homes for a safer and more stable life in the United States.

What are employment issues for immigrants? ›

Many participants highlighted low wages, but also highlighted other concerns, including inaccuracy and variability in pay, a lack of consistent scheduling, and poor work conditions. Experiences of lower job quality that were directly connected to status as an immigrant, person of color, and/or English language learner.

How does immigration affect income? ›

Economically, those in favor of immigration argue that immigrants boost the economy by increasing the labor supply and promoting innovation. Those against argue that immigrants harm low-skilled laborers by taking jobs that American workers would otherwise get or depressing wages for native-born low-skilled workers.

What are the employment challenges for immigrants in us? ›

Legal status, the process of transferring credentials, the license and certification process, lack of employer recognition, cultural literacy, and the language barrier are the most prominent barriers to immigrants continuing their careers in the US.


1. Down on the farm: A shortage of agricultural labor
(CBS Sunday Morning)
2. 'I genuinely believe that the new FL immigration law is economic suicide': Immigration attorney
3. 'We Need More People': Migration Declines Worsen Worker Shortages, Inflation
(NBC News)
4. Farm workers say they will be leaving Florida
(CBS Miami)
5. Worker Shortage Could Be Bigger Threat Than Inflation, Says Labor Secretary
6. Florida's new immigration law could impact state's economy
(WPTV News - FL Palm Beaches and Treasure Coast)


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