Due to the lack of immigrants in the United States, a huge labor shortage has formed

American employers say it's hard to find and retain talent right now. Workers are leaving at a near-record rate, and millions of vacancies remain unfilled. One reason for this labor shortage that has largely gone unnoticed is that US immigration is plummeting, which could have huge long-term implications for the labor market. More about the problem told the publication CBS News.

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In the middle of the last decade in 2016, the United States received almost 1 million immigrants a year. But those numbers, which had slowed under the Donald Trump administration, dropped to a critical level when the COVID-2020 pandemic hit in 19.

“This decline reflects both tighter immigration policies and the pandemic, which has reduced legal immigration and forced some recent immigrants to return to their home countries,” said David Kelly, chief global strategist at JPMorgan Funds.

Due to COVID-19, most travel has stopped. Immigration processing has stopped and many foreign workers have returned to their countries. In 2020, immigration fell by half (477 thousand immigrants) compared to the level of 2016; in 2021 - up to a quarter (247 thousand).

2 million people missing

It is estimated that there are 2 million fewer immigrants in the US workforce today than there would be if immigration had remained at pre-pandemic levels. This gap is particularly felt in industries such as leisure and hospitality, retail and healthcare.

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“Sectors that are particularly dependent on immigrant workers saw significantly higher levels of unfilled jobs in 2021,” say economists Giovanni Peri and Rim Zaiur of the University of California.

Immigrants are especially important in the healthcare sector, where they make up a disproportionate share of the workforce. According to a study co-authored by Williams College economics professor Tara Watson, one in five nurses, one in four nurses, and almost one in two housekeepers and gardeners are immigrants.

The fall in immigration levels coincides with other demographic trends that are shrinking the workforce. Americans are retiring en masse as baby boomers, the largest generation of workers, reach retirement age, a long-standing demographic shift accelerated during the pandemic.

Last year saw the slowest population growth since the founding of America, and the main reason for this is the decline in immigration. The US birth rate has been falling for years to the point where immigration has become the main driver of population growth.

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But the current low level of immigration, given the ongoing pandemic and delays in the US immigration system that has left millions waiting for visas or green cards, is unlikely to change quickly.

In the short term, this is good news for existing workers and bad news for employers. With labor supply more or less exhausted, "the labor market will remain very tight by historical standards," writes JPMorgan's Kelly. “There is likely to be further significant wage growth.”

In the long term, the picture is mixed. With a shortage of workers and rising labor costs, businesses will look to automate more jobs, Kelly said. And since the US economy as a whole depends on population growth, there are serious doubts about what will happen when there are too few young workers to support the aging ones.

“Social Security and Medicare and senior care opportunities will be hampered without continued positive growth in the U.S. population,” Williams College’s Watson wrote.

A shortage of immigrants could mean a less dynamic job market overall. Not only are immigrants generally younger than the general US population, they are more likely to work and three times more likely to start a business.

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