A Blog by Jonathan Low


Oct 29, 2021

Immigrants Could Help Fill the US Labor Shortage

The industries currently facing the worst labor shortages - construction, hospitality, personal retail and logistics - are also the ones that typically hire the most immigrants. 

Until the US relaxes the immigration rules it tightened during the Republican administration, labor shortages are likely to persist. JL 

Nicole Narea reports in Vox:

The US needs 10 million people, including low-wage and high-skilled workers, to fill job openings nationwide — and only 8.4 million Americans are actively seeking work. In a normal year, the US welcomes 1 million immigrants, and three-quarters of them participate in the labor force. In 2020, immigrants dropped to 263,000. The industries facing the worst labor shortages include construction; transportation, warehousing, hospitality and personal services like salons, dry cleaners, repair services, and undertakers. Immigrants make up 20% of the workforce in those industries.

Companies across the United States can’t find enough employees. One immediate solution is simple: Bring in more foreign workers.

The US needs roughly 10 million people, including low-wage and high-skilled workers, to fill job openings nationwide — and only 8.4 million Americans are actively seeking work.

And despite job openings hitting historic highs in July and extended unemployment benefits ending in September, Americans aren’t returning to work, especially in low-wage industries. At the same time, workers are resigning in record numbers. And though consumer spending has surged this year, businesses don’t have the people to meet demand — to cope, some companies are raising their prices. Supply chain bottlenecks are even threatening to ruin Christmas.

When the economy is fragile, there’s an instinct to shut borders to protect American workers. And indeed, that’s what the US has done during the pandemic, practically bringing legal immigration to a halt and closing the southern border to migrants and asylum seekers. In a normal year, the US welcomes roughly 1 million immigrants, and roughly three-quarters of them end up participating in the labor force. In 2020, that number dropped to about 263,000.

Generally, economic research has shown that the arrival of low-wage foreign workers has little to no negative impact on native-born workers’ wages or employment. And under the current circumstances, welcoming more low-wage foreign workers could address acute labor shortages in certain industries, helping hard-hit areas of the country recover while staving off higher inflation.

The industries currently facing the worst labor shortages include construction; transportation and warehousing; accommodation and hospitality; and personal services businesses like salons, dry cleaners, repair services, and undertakers. All four industries had increases in job postings of more than 65 percent when comparing the months of May to July 2019 to the same time period in 2021, according to an analysis conducted for Vox by the pro-immigration New American Economy think tank. Immigrants make up at least 20 percent of the workforce in those industries.

Officially, immigrants account for nearly a quarter of construction workers, though that’s likely an undercount because many construction workers are hired informally and don’t appear in standard economic statistics. Informal economy workers have suffered during the pandemic: On average, 1.6 billion of them worldwide saw an estimated 62 percent decline in income during the first months of the crisis.

Chart: “Industries facing the biggest labor shortages rely on immigrants”

Tony Rader, senior vice president of National Roofing Partners, said his construction company — which provides commercial roof maintenance and repair services across 200 locations nationwide — is one of those struggling to hire enough workers to meet sky-high demand.

“It is beyond belief, the amount of work that is out there to do right now,” Rader said. “We are nowhere near 100 percent staffing. You can’t find an estimator right now. You can’t find a project manager right now. It’s very, very difficult to hire good people.”

In the absence of willing and available American workers, the company has hired temporary immigrant workers on H-2 visas. So, too, have many other employers in the roofing industry, where immigrants make up 29 percent of the workforce and there are more job openings than job seekers.

Rader said his company would “support the expansion of the [H-2] program” and hopes that businesses like his will have the opportunity to “work with the Biden administration to get this fixed in a positive manner.”

“The upside of the shortage is that you’re seeing wages go up, which is fabulous for American workers,” said Jeremy Robbins, executive director of New American Economy. “The downside is if you can’t get workers to come fill these roles, you can’t run businesses.”

For many people who worked undesirable or low-paying jobs before the pandemic, the economy’s seeming abundance of employment options and bargaining power is an improvement in circumstances. But economists worry the worker shortage is so drastic that it will threaten economic growth overall and perhaps lead to higher inflation.

The federal government can’t force people to work. But it can make it easier for immigrants to fill needed roles — and avoiding economic problems as the US works its way out of the pandemic recession is a good reason to do so.

The case for bringing in more foreign workers

The economic recovery from the pandemic has been uneven, across income levels certainly, but also geographically. Pockets of the country reliant on tourism, for example, were hit especially hard. Other parts of the country have been slower to recover in part because of “stickiness” in the labor market — people who have laid roots in areas where there are no jobs aren’t always able to move to places where “help wanted” signs are everywhere. Bringing in more foreign workers would help both problems.

Low-wage workers, many of whom have been deemed “essential” during the pandemic, are particularly important to ensuring that those places can bounce back. According to an analysis by the Brookings Institute, low-wage workers make up between 30 and 62 percent of the jobs in nearly 400 metropolitan areas nationwide and are the backbone of “Main Street” businesses that support jobs for others and make neighborhoods attractive places to live and work.

A “Help Wanted” sign hangs in the window of Gino’s Pizza on Main Street in Patchogue, New York on August 24. 
Steve Pfost/Newsday RM via Getty Images

Increasingly, Americans don’t want to do these jobs. Immigrants have already seized the opportunity to fill that void, especially in the industries seeing the largest increases in job postings amid the pandemic. Given that these industries already lean disproportionately on immigrants, they are well positioned to capitalize on policies increasing the supply of immigrant labor.

As Abhijit Banerjee and Esther Duflo, Nobel prize-winning economists at MIT, write in their book Good Economics for Hard Times, immigrants are highly mobile and willing to go where there is opportunity. The US could encourage those tendencies by introducing economic incentives, such as giving immigrants a small, one-time “transition grant” if they settle in areas with labor shortages, Banerjee said.

“I do think that getting a bunch of people who would work hard and could be deployed to the right places would be actually great, in particular if they could be sent to the areas where there are supply bottlenecks,” Banerjee said.

But Banerjee said that’s only a short-term solution to the immediate labor shortage problem and should be paired with efforts to help workers already in the US who continue to suffer from unemployment and an unequal economic recovery from the pandemic. Democrats’ stalled $1 trillion infrastructure bill, which is essentially a big jobs program, would be a start. (A companion bill under debate would offer family supports that could help people get back to work, although some benefits won’t kick in right away.)

There have also long been worker shortages across skilled industries, ranging from health care to technology, that hold back economic growth and innovation. In general, foreign-born workers in those sectors have more potential to displace Americans than low-wage workers because they’re highly specialized. That potential tradeoff makes the argument for bringing in more high-skilled immigrants less clear-cut, Banerjee said.

But during the pandemic, demand for high-skilled workers continued unabated, and a June report by New American Economy found that employers requested foreign workers in computer and mathematics-related fields at a slightly higher rate than usual.

“The pandemic has had a limited negative effect on the growth of industries that often rely on high-skilled foreign workers due to chronic labor shortages,” the report says. “Failure to enable employers to fill critical workforce gaps hampers their ability to fulfill their economic potential, stymieing economic growth nationwide.”

Ultimately, the US needs roughly 10 million people, including both low-wage and high-skilled workers, to fill job openings nationwide. Immigrants are willing to fill these jobs, are willing to go where the jobs are, are willing to do so now. Bringing them to the US would solve a labor shortage Americans have been unable to fix on their own, and would speed up the course of the country’s economic recovery. The only thing stopping all this from happening is US policy.

How to bring in more foreign workers

One of the only existing visa programs designed to bring in low-wage workers is the H-2 program, which allows employers to hire seasonal workers in industries ranging from tourism to fishing. The program is capped at 66,000 temporary foreign workers a year, though agricultural workers are exempt from that cap. The Department of Homeland Security can increase that allotment by up to 64,000 additional visas annually without any act of Congress. The Biden administration opted to add an additional 22,000 visas earlier this year, and could add even more going forward.

But there are some limitations of the H-2 program. While it helps businesses meet demand in peak periods, many of the industries currently facing shortages require more workers year-round. And while it gives immigrants a means of working in the US legally on a temporary basis, they have little assurance of their ability to remain in the country long-term.

That’s why it’s also important for the US to use the maximum number of green cards that it can issue annually, and why Congress might consider increasing those numbers. In 2021, the US failed to issue some 80,000 green cards due to processing delays. All of those will now go to waste, and cannot be recovered for next year.

Those green cards should have gone to family members of US citizens and permanent residents, many of whom have faced years-long backlogs. Many of them might not otherwise be eligible for employment-based visas requiring certain skills or educational levels, but could fill low-wage labor shortages.

The same is true of immigrants coming to the US through humanitarian channels such as asylum or the refugee program, and through diversity visas, which are issued to individuals from countries with low levels of immigration to the US.

“I tend to be very skeptical of the argument that migration policy should be based principally on skills, and think the benefits will accrue at all levels,” said Deepak Bhargava, a CUNY labor studies professor and author of Immigration Matters: Visions, Strategies and Movements for a Progressive Future. “We ought to open all four channels of migration — humanitarian, economic, family and diversity — and will see benefits of it.”

To make all of those channels more accessible, the Biden administration has to reverse restrictive policies that former President Donald Trump put in place and remove bureaucratic roadblocks. That includes rescinding the federal government’s pandemic-era border policy and ramping up the US’s refugee resettlement capacity.

The Biden administration should also fully reopen the many consulates that remain closed, or open with limited services, due to the pandemic to ensure immigrants can be interviewed and processed abroad in a timely manner. That would go a long way in addressing lengthy backlogs for visas and green cards. Doing so would likely require additional funding for the State Department, which oversees the consulates, as well as a greater level of visa and green card prioritization from US Citizenship and Immigration Services, which processes applications stateside.

There is a limit to how much the Biden administration can do unilaterally to increase America’s capacity to accept immigrants. Raising immigration levels beyond what they were before the pandemic and Trump would likely require action from Congress.

“What’s really required is a rewrite of the country’s immigration laws that sets a much larger target for admissions under all the categories and probably adds a fifth category for climate migrants, which is going to be an increasingly large part of the flow that we see from the Southern Hemisphere in the coming decade,” Bhargava said. “So ultimately, this is going to require a new political consensus.”


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