Many employers in manufacturing, aviation and other industries are having trouble finding enough workers.
The gap between the demand for labor and its supply was already forming in 2017. By 2018, the U.S. economy had increasingly more job openings than unemployed workers. That gap has widened during the COVID-19 pandemic as more people have died, retired early or simply dropped out of the job market.
By July, as the pandemic’s effects on the workplace were easing, the U.S. had 11.2 million job openings but only 5.7 million unemployed workers who might fill them.
I’m a scholar of immigration and economics who researches a trend that’s driving labor shortages: declining numbers of immigrants allowed to legally work in the U.S. When I study these numbers, I see an important opportunity to resolve labor shortages.
An estimated 45 million people living in the U.S., roughly 14% of the population, were born elsewhere. About 1 in 6 U.S. workers is an immigrant.
Some of these foreign-born workers are legally employed on a temporary basis with an array of visas. In some cases, these employees can obtain legal permanent residency – often called “a green card.” H-1B visas, which require a high level of education for fields such as computer programming, last three years and can be renewed for another three.
The government issued a record 813,330 temporary employment-based visas in 2019. The total fell by about a third to 566,000 in 2020, as the COVID-19 pandemic got underway, and the numbers were basically flat in 2021 at 566,001.
Of course, it’s important that the government not issue visas in such a way that foreign workers depress wages or lead to the dismissal of gainfully employed Americans.
These lower wages could occur in the short run, but most empirical studies show there are long-term benefits in terms of what native-born people earn when immigration rises.
The sharp reduction in the number of temporary visas for foreign-born workers in 2020 and 2021 harmed the U.S. economy. Based on my own calculations, the total cost was around 0.4% per year of total gross domestic product – at least $82 billion per year in 2020 and 2021.
Immigration restrictions affected far more people. All told, these policies resulted in an estimated 2 million fewer working-age immigrants in the U.S. in 2020 and 2021.
Including those additional losses nearly triples the economic cost of U.S. immigration restrictions to about 1.1% per year of U.S. GDP.
Unless the U.S. reverses course and issues more work-related visas, I estimate that the worker shortage will double to over 4 million by 2030. My calculations also suggest this will shave about 4.3% off of GDP, on average, annually for the next eight years. Adding that all up, that would amount to about $9 trillion in lost economic output.
Labor shortages are especially severe today in certain industries that rely heavily on immigrants as employees.
For example, in 2020 foreign-born workers accounted for 39% of the farming, fishing and forestry workforce, 30% of all people employed in construction and extraction, 26% of everyone working in computer science and mathematics, and 22% in health care support.
If these labor shortages continue, I’m certain that they will keep hurting job markets, supply chains and productivity.
Of course, there are other factors besides a lack of foreign-born visas issued that are responsible for the shortage of workers.
But none are easy to resolve. I believe boosting the number of immigrants allowed to legally work in the U.S. is an important way the authorities can ease labor shortages.
Jose Ivan Rodriguez-Sanchez is a research scholar of economics at Rice University. Distributed by The Associated Press.