Immigration And Inflation: What’s Not Being Talked About
Immigration has been a political debate for almost as long as our country has existed. There has been a prevailing theory that foreigners are stealing jobs for Americans. The reality is that there are more jobs than there are American workers, so there is nothing to steal. Currently we are grappling with both a labor shortage and ongoing inflation. I believe immigration is the solution to solving America’s labor shortage and could be one alleviating factor for the inflation that’s been impacted by rising salaries. Here are a few reasons why.
Immigration Can Increase Labor Supply to Curb Inflation & Rising Wages
Historically the average unemployment rate is 5%, and today we are sitting at just 3.5%, according to the Bureau of Labor Statistics. This is driving up wages by creating competition for employers to offer higher salaries so they can better attract and retain workers.
The Fed is trying to combat inflation by raising interest rates to help cut consumer spending that is driving up prices, but the job market remains strong and wages continue to rise. Rising wages mean people will continue to pay higher prices for goods and services, such as for food, cars and healthcare.
All the pressures are towards moving wages up, and we’re not doing anything to relieve that pressure because we are not doing anything to resolve it. Leveraging immigrant labor can increase the overall supply of workers to help curb the pressure to increase wages — which is important for industries with labor shortages, such as the food service industry, and in regions experiencing low population growth, such as rural areas.
We’re basically trying to artificially inflate the unemployment rate back to 5% (shrink the economy), which means immigrants aren’t stealing your jobs, inflation is. There are two ways to get to 5%: Either you cut the number of jobs and keep the same number of workers, or you increase the number of workers but keep the same number of jobs.
Americans can’t procreate fast enough — it’s at least an 18-year process to get a productive worker. Moreover, Boomers are retiring at high rates. It is a simple supply and demand issue: the least painful solution is to replace population loss with immigrants. Otherwise, the cost of labor is never going to fall, which is a big cause of inflation.
America’s Labor Force Is Declining
While companies like Meta, Twitter, Amazon and CNN are laying off workers, the truth is that a talent shortage remains. According to some estimates, we’re short about four million workers.
More people are retiring while Americans are simultaneously having less kids. This means the number of people in the labor force is declining, with two million people retiring from the workforce. For a thriving economy, we have to replace the population. Currently, birth rates are at about 1.5 children per woman, and we need an average of 2.1 births to keep the population steady. In addition, we have not restored H-1B visas to the level of 2016, which let U.S. companies hire foreign workers in specialty occupations. That has reduced the available workforce by an additional two million people.
In general, industries that could benefit from immigrant labor to fill labor shortages are agriculture, construction, hospitality (think: restaurants, housekeeping, theme parks), healthcare, manufacturing, and trucking and transportation.
Foreign Labor Can Help Bridge The Skills Gap
If we want to remain a country that stays on top in terms of science and other breakthroughs, increasing immigration is again a solution. The evolving landscape of work calls for a diversity of skills, yet there is a growing skills gap, or a difference between the skills employers are looking for and those that job candidates possess, such as data analytics or computer programming. In fact, 69% of U.S. human resources professionals say their organization has a skills gap, up from 55% the previous year.
With potential job candidates missing the skills needed to fill jobs in industries such as healthcare and technology, immigrant labor may help fill this gap in the workforce by bringing a diversity of skills and training to the U.S. workforce.
Immigrants Contribute to American Innovation
International talent can help spur innovation. Immigrants are about 80% more likely to start businesses than native-born Americans. About 55% of the U.S.’s billion-dollar companies, a.k.a. ‘unicorns,’ are founded or cofounded by immigrants. The total sales of immigrant-owned businesses is about $1.3 trillion, contributing to the U.S. economy.
The bottom line is that immigrants are more likely to become entrepreneurs than their native-born counterparts, as many come to this country with a drive to succeed and in search of new opportunities. Building businesses at higher rates means immigrants are more likely to be job creators rather than job stealers.
As leaders, supporting immigration is a business imperative, such as by partnering with organizations such as Upwardly Global to help immigrants work in their chosen fields and helping immigrants understand their rights by offering them resources and access to information. The bottom line is that immigrants aren’t stealing jobs, because there aren’t enough workers to fill them. This is driving up wages, which is currently one of the biggest factors for inflation.
