Labor Shortages Fuel Inflation – Why U.S. Economic Growth Needs More Immigrants
Economists, demographers, and other experts are sounding the alarm: the country needs immigrants – from meat packing, to home building, to STEM professionals, to nurses – to keep pace with the job-creating post-pandemic economy and long-term economic growth.
While public discussion focuses on the estimated 2 million border crossings for the fiscal year (not the same as 2 million people), the economists are focusing on the fact that about 10-15% of job openings that typically employ immigrant or foreign-born workers, are still vacant.
And yet, the legal immigration system is in dire straits, there’s a monstruous backlog of green cards, generations of people are waiting for legalization, the asylum system is virtually paralyzed and there’s absolutely no appetite in Congress – mostly on one side – to ease restrictions for even the most popular of legal immigrants. Dreamers and STEM PhDs come to mind.
At an Ethnic Media Services briefing, Aug. 26, speakers – Giovanni Peri, PhD., Professor of Economics at the University of California, Davis, Research Associate of the National Bureau of Economic Research in Cambridge, Massachusetts, and the Founder and Director of the UC Davis Global Migration Center; Julie Collins, CCP, LP, MS Program Director Department of Cardiopulmonary Sciences, College of Health Sciences; and Gregory Z. Chen, Esq. Senior Director of Government Relations, American Immigration Lawyers Association – explain what’s at stake and why the policy stalemates on immigration can damage the economic recovery and long-term economic health of the United States.
Giovanni Peri, PhD., Professor of Economics at the University of California, Davis shared his research and data on this issue.
Peri began with explaining the numbers of this immigration decline or halt that has happened in the last two and a half years, then connected this decline in immigration to price increase and consequences for the economy, and then explained what this means for the medium-to-long-run and what can we do about it.
“Since mid 2019, until the end of 2021, there has been essentially zero net immigration in the U.S. There has been no entrance in the U.S. in aggregate over this, almost two-year period.
“The current population surveyed every month by the U.S. Census, give us a measure of all the immigrant documented and not present in the U.S.
“In late 2020 and early 2022, this number started growing again. If you think of how many immigrants were coming into the U.S. up to mid-2019 from 2010, and if we had continued that trajectory of inflow of immigrants, as of July 2022 we would have had 1.7 million more immigrants if we had not had this halt and decline.
“Already in 2019 some of the visa restriction intensification, some of the slowness of the processing of the visa had started, reducing the number of entry but when COVID hit, essentially this was brought to zero. The number of entries for those 2019, 2020, and part of 2021, was a very slow growth only picking up in the late 2021 and 2022.
“We’re missing 1.7 million, this is 1.1% of the U.S. labor force and this number comes from research, but if you look at the official projection of the Census, they match. The Census before 2020, predicted to have in 2022, about 1.6 million more migrants that there are, so these both sides converge to say that there is this big a gap.
“Who are the immigrants that we’re missing?
“First of all, of this 1.7 million, 900,000 would have been college-educated immigrants who work in large part in the STEM sectors. They would have been doctors, computer scientists, biomedical engineers, bio experts; and then 800,000 instead would have been non-college-educated, concentrated in a few sectors in particular, food, hospitality, restaurant, personal services, like elderly care, childcare, disabled care, and these sectors are among those which have the highest incidence of shortages or number of job openings unfilled.
“Food, hospitality have about 14 percent of openings relative to their employment of job and field relative to their employment.
“In 2020, 2021, and 2022, about 400,000 college students per year, foreign college students which will translate according to other estimate in the next three four years in another 100-150,000 fewer workers per year of college graduates.
“This decline in immigration or halting immigration happens at a time in which there is an incredible shortage of workers. Immigration is one of the causes there are fewer of these people.
“A lot of people in their 50’s and 60’s, retired, are unlikely to come back.
“There has been a group of especially U.S. citizens that have decided to change a job given that their opportunity of working from home increased in some sectors which were relatively work intensive, maybe a little dangerous, because they were exposed a lot of people, decided to stay at home re-qualify themselves and look for more online jobs. This retirement, resignation, and changing jobs, plus immigration decline, has generated this very large increase in the number of vacancies.
“In July 2022, there were 10 million unfilled jobs in the U.S. There are always some field jobs but this number in 2019 was 6 million so there are four million extra jobs unfilled, that cannot find a person, and that 1.7 million immigrants that were missing clearly would have gone almost halfway in filling this.
“If companies have a very hard time hiring people, they will need to push up wages to attract them. If a restaurant needs more workers and they cannot find them, they will have to pay more, and some of this cost of labor will be translated in higher prices for the restaurant.
“Also, these shortages will imply that the restaurant can serve fewer customers, so the supply of these services is not as high, and with demand going up, the price of the restaurant services, the price of healthcare services, the price of assistance of the elderly, goes up, so price effects because the costs go up.
“If you have a bottleneck in some jobs, it may well be there consequently, employers don’t grow as much, and they also generate reduction in job opportunity elsewhere.
“A hospital or an elderly care facility cannot admit more elderly people because they don’t have the assistance because there are fewer immigrants, some retired. They cannot expand their facility so they will also need fewer clerks, accountants, web managers of the facility, they will need fewer workers. When companies don’t grow as much, the company cannot afford this. So, higher prices, slower growth, and reduction in opportunity for other jobs – what can we do and what is the perspective?
“We should put a lot of resources in at least processing the visa the Green Card, and all the backlog that has been created, so some of these visa programs and Green Card, which is the permanent resident program, can speed up and at least catch up in part.
“If we really want to address the issue, we should introduce some new policies in terms of immigration, for instance economic-driven type of visa for workers who would work in this type of sector – hospitality, construction, health care, elderly care – which go well beyond the existing visa, which now we only have this temporary seasonal H-2B for seasonal worker and H-2A for agricultural worker. The high skilled visa worker visas H-1B, that that has been the only one which has admitted a significant number, is in huge demand and always be incredibly constrained, so we could expand that.
“That will require some legislative action. I don’t see that happening. I think most of all we need to talk about immigration reform in this framework. The way I see that, the economy right now could absorb them. The economy now, would need it.
“Some damage has been done and that’s going to be hard to recover. This couple of millions of immigrants that didn’t come, many of them are doctors, highly educated college students, they have gone somewhere else, to other countries. These are people, who are mobile. They can go to Canada, and many of them did, because of the immigration restrictions.
“Luckily for the U.S., the U.K., and Australia, during COVID, they had their own big trouble in admitting immigrants and so there were not many places, but these people can go elsewhere, and they will never come in the U.S., so their contribution to innovation, science, teaching, technology, is in part, lost, and this is a large part of the economic growth of the U.S.
“In the medium to long run, these issues of shortages are not going to go away immediately. The economy has changed, the people are reallocating, but most importantly one thing will happen is that we have this massive baby boomer generation that will retire. The labor force in the U.S. will continue to shrink, the projection before COVID, where that immigrant would have offset the shrinkage of the labor force due to retirement, but if immigrants don’t come, or come less because of that, that will not happen. In the long run, we may lose some of the productivity growth. We may continue to have these shortages and I honestly see uh tackling immigration policies as one of the key issues to address,” said Dr Peri.
Julie Collins, a professional perfusionist, spoke next. She saw firsthand the impact of the pandemic on nurses and the critical shortage of nursing professionals that is sometimes crippling medical care in the United States.
“I have been a perfusionist for roughly 15 years, and a perfusionist’s primary role is to run the heart-lung machine during open heart surgery and a secondary piece of machinery that we run is an ECMO device which a lot of COVID patients were put on to try to give them a last-ditch effort to save their lives.
“During the pandemic I was on the COVID floor, working per diem, helping to cover shifts and I saw how burnt-out nurses were becoming.
“As COVID began slowing down, nurses sought early retirement, some of them changed professions from being burnt-out and some even died of COVID. This left us with fewer nurses to fill the open positions in our units. Now that the COVID floors have been essentially shut down and there’s only a handful of patients, the nurses in these hospitals are working short staffed. They’re being asked to pick up extra shifts, they must care for more patients than it’s safe. There used to be one-on-one patient care and some even two nurses to one patient, and now oftentimes, the nurses are caring for multiple patients, and it’s increasing their chances of creating errors and not providing the care that they want to provide, and causing emotional distress.
“Due to all open positions there’s sign-on bonuses given by hospitals and nurses are moving from job to job for the best pay or to stay until the sign-on bonus period has ended.
“It takes a few months to train a nurse, after you’ve trained them, now you only have a shortened period before they could potentially go to another hospital to have a new sign-on bonus and start somewhere that might have a better work-life balance for them.
“The increasing number of open positions and level of burnout is why we need to look for qualified immigrant nurses to fill these open positions.
“There are roughly 194,000 open positions for nurses in the United States right now. There is not enough U.S. nurses to fill these positions and immigrants can help fill those roles. In the 1980’s and 1990’s, when hospitals were understaffed due to the AIDS epidemic, immigrant nurses paid a vital role in alleviating the shortages.
“U.S. hospitals could draw nurses here by advertising the wages being offered, supplementing moving costs and visa fees, offering housing assistance, and even a relocation advisor.
“In order for this to be effective, the H-1B approval process needs to be timelier.
“Effective immigrant visas for close families such as a spouse, a parent, or a child, are unlimited but family-sponsored preference visas such as those for extended family are limited to 226,000 annually, and the H-1B’s are limited to 140,000 annually.
“I think one of the biggest ways that we can help alleviate the job shortages in nursing and other healthcare professions is to keep the number of H-1B’s elevated for the next couple of years, until this shortage and the great resignation has slowed down.
“There are three bills that were introduced by the House of Representatives to support immigration and health care – there was the Immigrants in Nursing and Elevate Allied Health Act that would create a grant program to cover licensing, certification, training, and education; the second one is an International Medical Graduate Assistant Act that will allow immigrants to work under supervision with their home country’s license while getting U.S. license and also create residency opportunities for them; and the last is the Professionals Access to Health Care Force Immigration Act that would provide current immigrants with foreign licensure and training, assistance in working towards their U.S. licensure.
“The great nursing shortage is here, and the U.S. needs to look at creative solutions to fill the positions. Immigrant nurses are a clear answer to helping alleviate this issue and it’s time to encourage representatives to vote ‘yes’ to help make it timelier and more effective to have immigrant nurses fill these positions,” said Collins.
Gregory Z. Chen of American Immigration Lawyers Association spoke about the major issues with the legal immigration system and the lack of political appetite on the Hill to solve this issue. It has been changing from bad to worse over the last couple of decades and particularly after the last administration, and during COVID.
“We have seen in the past six or seven years, tremendous delays in the immigration processes across the country, both in the courts and through the U.S. Citizenship and Immigration Services, which processes most of the applications and petitions in the employment-base, the family-base, also some of the humanitarian applications.
“During the Trump administration, those processing times at USCIS were often increasing by as much as twice, or sometimes three times as long, so if something might take two to three months, we were seeing it might take three to six months to process.
“In the Immigration Court system, at the time that President Obama left office, there were about 500,000 immigration cases in queue. During the four years of the Trump administration, at the time that President Biden then came into office, we had 1.3 to 1.4 million cases in the queue, and as of today we have about 1.6 million cases that are waiting to be heard.
“Typically, it takes four to six years now for somebody that is applying for asylum for their court date to come up for any other kind of proceeding unless you are in physical custody of the Immigration Customs Enforcement. Unless you’re in custody, your case is typically going to take several years before you even get that final hearing.
“In 2020 to 2021, USCIS almost went bankrupt, that had all been built up in the preceding years simply because they weren’t processing their fees properly and because they weren’t managing the system well so, you can blame the system for not working, but what that means is that the economy, businesses, that are relying upon those foreign workers to come in, families that need that stability to be able to have their people participate in education system, in the economy, are all going to be much greater at risk.
“The agency’s processing of work permits which we call EADs or Employment Authorization Documents has declined just as other forms of processes, and benefits have also declined. Data from the early part of fiscal year 2022 from USCIS shows that the processing times for most of these applications have greatly increased. The median processing for EADs based on a pending asylum application rose 318 percent. That’s a dramatic increase and that’s from fiscal year 2017 to almost the beginning of 2022.
“Many other applications have also seen those increases and across the board. Employment Authorization Documents, typically, are taking more than six to seven months to process. That is well beyond the 180-days deadline that is set for these EADs be granted. The impact of this should be obvious. It impacts business and stability and the recovery during the pandemic.
“There used to be various deadlines for when employment documents need to be granted. These permits, that was taken down several years ago, should be re-implemented. That would just put clear deadlines for when these must be granted, if the agency won’t do it, then Congress could step in and require that.
“Another one would be for the agency to expand the amount of time that a work permit can be extended for, so the person doesn’t have to keep reapplying. Every time USCIS must look at an application, another delay happens, just grant it for two years or grant for it for 365 days rather than 180 days. Those would be some straightforward steps. Operationally, that could make it much more efficient.
“The Inflation Reduction Act, formerly known as the Build Back Better Act that was Biden’s signature bill to do across the board COVID pandemic relief, economic recovery, and climate change reduction. It also included, in its initial phase, all last year, a large part to assist in this recovery element, immigration reform.
“That package back in 2021 included legalization of people that were undocumented, a component to ensure that people who are essential workers during the pandemic, including in the medical field, but lots of other fields, could also get their status legalized, if they were working in agriculture, that’s considered essential.
“Visa reforms for employment-based and family-based fields, one thing that we call ‘recapture’ is to allow the agency to process those visas that have been lost in past years. All of those lost visas accrue to be tens of thousands of visas which could be used now.
“A few weeks ago, in early August, the Inflation Reduction Act didn’t have anything included on immigration, especially when there’s widespread polls showing that Americans still want to see immigration reform done at the level of 65 to 70 percent. Even in swing battleground states and Congressional districts, those numbers continue to be very high for the support of immigration reform.
“The obvious reason is that we have such polarization, particularly in Congress itself. The voting population across the country doesn’t necessarily show that but unfortunately because of gerrymandering, because of the way elections have gone in the Republican party has largely been captured now by a very restrictionist immigration viewpoint that President Trump very much represents.
“We have lost the level of interest that used to be there just a decade ago, or maybe 15 years ago, there were many more Republicans willing to partner immigration but that just hasn’t been the case now.
In fact, because of it, President Biden was only able to even entertain this back in 2021, the idea of passing his BBB Act as a Democratic-only bill, because he knew that he wouldn’t be able to get Republicans to partner with him.
“We are not likely to see a major Immigration Reform Bill entertained in the next two months, but even in 2023, the forecasting suggests that Republicans may capture one of the chambers. If that happens, there will be even less willingness to roll up sleeves and work hard on areas that you see broad support in the American public, among businesses, labor unions, different organizations that agree, and policy makers agree, that immigration reform should get done but it just that agreement is no longer there in Congress,” concluded Chen.
