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The Economist: Potential “New Normal” of Worker Shortages Unless and Until U.S. Gets Immigration Right

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Toll of GOP Nativism on Display, Threatens to Become Chronic Issue Dragging Down U.S. Economy

Washington, DC – A new article in The Economist highlights that anti-immigrant policies not only contribute to current worker shortages, but also threaten to become a longer-term, chronic problem limiting American economic potential. In 2021, net immigration to the U.S. was one-quarter what it was in 2016. The decline is a consequence not only of the pandemic but of long-term demographic trends exacerbated by deliberate anti-immigrant policies put in place by President Trump and still embraced by most in the Republican Party. 

The article is the latest among a chorus of economists and observers who have been stating that until we enact policy reforms that would legalize undocumented workers already in the U.S. and increase and streamline immigration channels devastated under President Trump, America will continue to limit our economic potential and compound worker shortages and inflation concerns. 

Below find key excerpts from The Economist,Staffing shortages in America are a glimpse into its future”:

For much of the past two years, a fair assumption was that as the pandemic ebbed, people would go back to work in droves. That looks less plausible today. Some of the decline in the number of workers appears likely to be permanent. This, in turn, could constrain America’s economic potential, since a shrinking labour pool will be a drag on growth, says Marianne Wanamaker, an economist at the University of Tennessee. ‘I think that we have shifted to another plane here, unfortunately,’ she says.

…For all the attention to illegal border crossings from Mexico, the bigger story is missing foreigners in America. There are about 2m fewer working-age immigrants than there would have been had pre-covid trends continued, according to Giovanni Peri and Reem Zaiour of the University of California, Davis. Roughly half would probably have had university degrees, so their absence hurts high-skill and low-skill industries alike.

An end to the pandemic would ease the backlog in America’s visa system. But shifting political winds—a reluctance to admit as many immigrants as in the past—may cap the inflows. An industry with a 10% higher dependence on foreign workers than another industry in 2019 typically had a 3% higher rate of unfilled jobs in 2021, calculate Mr Peri and Ms Zaiour.

…the extreme tightness today will have offered a glimpse into the future as ageing depletes the pool of potential workers. Ms Wanamaker describes the prospect as a ‘perpetual labour shortage.’ Getting by with less help will be the new normal.

According to Douglas Rivlin, Director of Communication for America’s Voice:

The Republicans’ scorched earth political assault on immigrants not only has an immediate negative impact on our economy – contributing to worker shortages, food scarcity and inflation concerns – but also threatens to become a longer-term drag on American economic competitiveness. With President Biden making inflation and supply chain issues among his administration’s top priorities, no agenda to tackle these challenges will be complete unless they take on immigration and Republican nativism head-on.