Visa Crunch

Reconfiguring Immigration System Can Fix US Labour Shortage

Many companies across the United States are struggling to locate qualified workers. One simple immediate answer is to hire more foreign labour. To fill job gaps across the country, the US needs around 10 million people, including low-wage and high-skilled professionals – but only 8.4 million Americans are actively looking for employment.

Moreover, job vacancies reached a new record in July and prolonged unemployment compensation expired in September. The Americans are not going back to work, particularly in low-wage professions and workers are leaving in historic numbers at the same time.

And, while consumer spending has increased this year, businesses lack the workers to satisfy demand; as a result, some businesses are boosting their prices to compensate. The bottlenecks in the supply chain are even threatening to disrupt Christmas.

When the national economy is in trouble, there is a natural tendency to restrict immigration in order to safeguard American workers. And, unfortunately, that is what the United States has done during the pandemic, effectively halting legal immigration and closing the southern border to migrants and asylum seekers. In a typical year, the US welcomes approximately one million immigrants, with roughly three-quarters of them eventually entering the labour force.

By 2020, that figure is expected to fall to around 2,63,000. In general, economic research has demonstrated that the entry of low-wage immigrant employees has little to no detrimental influence on the salaries or employment of native-born workers. In the current environment, inviting additional low-wage foreign workers could address acute labour shortages in specific industries, assisting hard-hit sections of the country to recover while avoiding increased inflation.

Infrastructure, warehousing and distribution, lodging and hospitality, and personal service firms such as hairdressers, dry cleaners, repair services, and undertakers are now experiencing the most severe labour shortages.

According to data analyzed for Vox, the pro-immigrant New American Economy thinks group, all four industries experienced increases in job posts of more than 65 per cent when comparing the months of May to July 2019 to the same time period in 2021.

Immigrants account for at least 20% of the workforce in certain industries. Immigrants contribute for about a quarter of construction personnel, albeit this figure is likely an undercount because many construction workers are hired on the spot and are not included in normal economic statistics.

Workers in the informal economy have suffered as a result of the pandemic: During the early months of the crisis, an estimated 1.6 billion of them worldwide witnessed a 62 per cent drop in income. In the absence of willing and available American workers, the sector is forced to employ H-2 visas, temporary workers.

The economic growth from the virus outbreak has been unequal, not only across income levels but also across geographies. Other parts of the country have been slower to recover, in part due to “stickiness” in the labour market – people who have established roots in locations where there are no jobs aren’t necessarily able to relocate to areas where “help wanted” signs abound.

Increasing the number of foreign labour would help with both issues. Americans are increasingly unwilling to do these tasks. Immigrants already have grabbed the opportunity to replace that hole, particularly in industries experiencing the greatest spikes in job advertisements as a result of the pandemic. Worker shortages in specialized industries ranging from health care to technology have historically stifled economic growth and innovation.

Ultimately, the United States will require approximately 10 million people to fill job openings across the country, including both low-wage and high-skilled workers.

The H-2 visa program, which allows companies to hire seasonal workers in industries ranging from tourism to fishing, is one of the only existing visa programs designed to bring in low-wage labour. The program has a yearly cap of 66,000 temporary foreign workers, while agricultural labourers are exempt. Without requiring an act of Congress, the Department of Homeland Security can expand that allotment by up to 64,000 visas per year. The Biden administration chose to provide an additional 22,000 visas earlier this year, and more could be added in the future. However, the H-2 program has several limits.

While it helps firms fulfil peak demand, many of the industries now battling labour shortages require additional workers all year. And, while it allows immigrants to work legally in the United States on a temporary basis, it provides little confidence that they will be able to stay in the nation in the long run. That is why it is critical for the United States to use the maximum number of green cards it may issue each year, and why Congress may explore expanding those numbers.

Due to processing delays, the United States failed to issue around 80,000 green cards in 2021. All of those will now be thrown away and will not be recovered for next year. The Biden administration must overturn restrictive rules implemented by outgoing President Donald Trump and remove bureaucratic impediments. This includes repealing the federal government’s pandemic-era border policy and increasing refugee resettlement capacity in the United States.

The Biden administration should also fully reopen the several consulates that have remained closed or are only open with limited services, as a result of the pandemic, to ensure that immigrants may be interviewed and processed abroad in a timely manner. That would go a long way toward easing the huge visa and green card backlogs.

Congress action would be required in order to raise the immigration levels and number of green cards further.

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