Millions of American workers have decided to opt-out of the churn of low-paying, dead-end work in recent months, resulting in one of the tightest labour markets in modern history.
This exodus has had far-reaching consequences for the economy, most notably the interruption of distribution networks and the scarcity of many consumer goods. It was reported last week that these shortages caused the largest year-on-year increase in inflation in more than 30 years.
Worryingly, Americans’ denial of front-line work has generated a choke point in the production process, restricting opportunities for advancement for these workers. There are fewer pizza delivery drivers when there are very few supervisors to monitor them and fewer accounting professionals to pay them. A few of these front-line job positions could be filled by a large pool of immigrants eager to join the US labour force. It would help alleviate the distribution network pressures that are presently stifling development, reduce inflation, and provide a bump up to Americans looking for better jobs.
What has received less focus is the fact that a new influx of immigrants would enable America’s midsized cities to maintain their recent economic growth, much of which can be attributed to immigration over the last decade. Immigrants overturned long-standing population declines in many of these cases.
More notably, immigrants’ high rates of entrepreneurship and labour force participation aided in the revitalization of regional industries that had been relatively stagnant for years. From 2010 to 2019, the cities with the fastest-growing immigrant populations were all medium-sized cities with growing economies, led by Charleston (SC), Des Moines (IA), Louisville (KY), Columbus (OH), and Nashville (TN).
According to a proposed amendment established by the Brookings Workforce of the Future team, midsized metro areas now have the tightest labour markets in the country. There are more than three job openings for every unemployed worker in places like Lincoln (NE), Huntsville (AL), and Omaha-Council Bluffs (NE-IA). The infrastructure investment bill, which has now been passed by Congress, will start creating hundreds of thousands of jobs in the construction, installation, and maintenance of new infrastructure.
Capital-intensive initiatives are, by definition, employment creating machines that increase workers’ wages within the industry as well as in related industries that compete for these labourers. These construction projects will drive more workers away from industries such as hospitality and department stores, exacerbating the scarcity of the front-line workforce. Fast-growing areas like midsized metro areas, which will obtain a disproportionate share of the funding, will be noticeable in those sectors. Even in “normal” times, research shows that immigrants complement American workers and propel them up the economic staircase; when companies are desperate for workers, as they are present, this combination should be even greater.
To achieve these objectives, major policy work will be required. As demonstrated by the tens of thousands of unfilled work visas due to administrative long delays, immigrants with long work histories in the United States who are unable to renew visas, and the sluggish progress is being made in overturning Trump administration immigration rules, the current visa system is under enormous strain. Immigration has the potential to be a solution to the most pressing economic challenges confronting the United States.