US immigrant labor shortages fuel price hikes

The US is currently experiencing a labour shortage, which in part has been fueled by a slump in immigration to the US. During the coronavirus pandemic, former US President Donald Trump put restrictions in place that brought immigration to the US to a halt, which almost saw United States Citizenship and Immigration Services (USCIS) collapse due to lack of funds.

In the aftermath of Trump shutting down immigration to the US, the country has since struggled with mass labour shortages. According to federal government data, it’s estimated that two million fewer immigrants have arrived in the US since the start of the pandemic, leading to a desperate scramble for workers across many industry sectors.

Industries from meatpacking to homebuilding are battling to secure workers, which is contributing to supply shortages and price rises. Economist at the University of California, Giovanni Peri, said that the ‘shortfall of two million immigrants is part of the reason for America’s labour shortage’.

Adjusting to shortages

Mr Peri said: “In the short run, we are going to adjust to these shortages in the labour market through an increase in wages and in prices.”

The lack of immigrant labour is among several reasons for America’s highest inflation rate in 40 years, which has been triggered by mangled supply chains caused by the pandemic and surging energy and commodity prices following Russia’s invasion of Ukraine.

Researcher at the Center for Immigration Studies, Steve Camarota, claims that a spike in illegal immigration to the US under President Biden will make up whatever shortfall lingers from the pandemic. Mr Camarota also argued that increases in low-paying wage sectors, such as agriculture, are ‘minor contributors to US inflation’.

“I don't think wages going up is bad for the poor, and I think mathematically it is not possible to drive down inflation by limiting wages at the bottom,” Camarota told The Associated Press.

US immigration returning to pre-pandemic levels

Researchers claim that US immigration is rapidly returning to pre-pandemic levels, but warned that the US needs to see a swift acceleration if it is to make up its deficit. Amid declining birth rates in the US over the past 20 years, some economists fear that the overall pool of potential workers will start shrinking by 2025.

The decline in immigrant worker numbers comes as the US political system shows ‘less of an appetite for immigration’, according to a report published by The Independent. 

The Democrats, who currently control all branches of the US federal government and more recently have been the party to favour immigration, haven’t tried to advance any major US immigration legislation that would permit more new residents to the country.

Meanwhile, a recent poll conducted by Gallup shows that fears over illegal immigration among the US public is at a 20-year high. With the Democrats facing a tough election in November, the party is increasingly divided over the Biden administration’s attempts to end pandemic-related restrictions on seeking asylum.

Immigration policy changes unlikely

Douglas Holtz-Eakin, an economist and former official in President George W. Bush’s administration who is president of the centre-right American Action Forum, said: “At some point, we either decide to become older and smaller or we change our immigration policy. However, a change in US immigration policy is unlikely. The bases of both parties are so locked in.”

In the Republican state of Texas, which is home to the longest and busiest stretch of the US southern border, this is certainly the case. Legislation issued in 2017 forced US cities to comply with federal US immigration agents hunting people in the US illegally. 

Texas Governor Greg Abbott deployed the Texas National Guard to patrol the southern border and recently created a traffic jam by ordering more inspections at US border checkpoints.

However, Abbott’s tough stance on immigration has not been well-received by all Texans, with business owners, in particular, saying that immigration is very important to their workforces.

US Census

Data from the most recent US Census shows that the share of the US population born in another country stands at 13.5% - the highest it’s been since the 19th Century. Despite Trump winning the 2016 US Presidential elections and launching a hate-filled campaign to cut immigration, data shows that migration to the US was already slowing.

The Great Recession meant that there was a shortage of jobs in the US for immigrant workers – both legal and illegal. Meanwhile, rising living standards in Latin America have meant more people staying put or returning to their homeland from the United States.

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