April 21, 2024
Economy

Immigration powered the economy, job market amid border negotiations


Immigration has propelled the U.S. job market further than just about anyone expected, helping cement the country’s economic rebound from the pandemic as the most robust in the world.

That momentum picked up aggressively over the past year. About 50 percent of the labor market’s extraordinary recent growth came from foreign-born workers between January 2023 and January 2024, according to an Economic Policy Institute analysis of federal data. And even before that, by the middle of 2022, the foreign-born labor force had grown so fast that it closed the labor force gap created by the pandemic, according to research from the Federal Reserve Bank of San Francisco.

Immigrant workers also recovered much faster than native-born workers from the pandemic’s disruptions, and many saw some of the largest wage gains in industries eager to hire. Economists and labor experts say the surge in employment was ultimately key to solving unprecedented gaps in the economy that threatened the country’s ability to recover from prolonged shutdowns.

“Immigration has not slowed. It has just been absolutely astronomical,” said Pia Orrenius, vice president and senior economist at the Federal Reserve Bank of Dallas. “And that’s been instrumental. You can’t grow like this with just the native workforce. It’s not possible.”

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Yet immigration remains an intensely polarizing issue in American politics. A record number of migrants have crossed the southern border since President Biden took office, with apprehensions topping 2 million for the second straight year in fiscal 2023, among the highest in U.S. history. Cities like New York, Chicago and Denver have struggled to keep up with busloads of immigrants sent from Texas who are overwhelming local shelters.

Washington is deadlocked on a solution to the crisis. Senate Republicans and a handful of Democrats voted down a sweeping $118 billion national security package that included changes to the nation’s asylum system and a way to effectively close the border to most migrants when crossings are particularly high. House Republican leadership called the legislation “dead on arrival,” which seemed all but guaranteed after former president Donald Trump came out strongly in opposition.

Opinion polls show that voters widely disapprove of Biden’s handling of the border, and Trump, who is closing in on the Republican nomination, is touting plans for aggressive deportation policies if he wins in November. Republicans have increasingly campaigned on the idea that immigrants have hurt the economy and taken Americans’ jobs. But the economic record largely shows the opposite.

There isn’t much data on how many of the new immigrants in recent years were documented versus undocumented. But estimates from the Pew Research Center last fall showed that undocumented immigrants made up 22 percent of the total foreign-born U.S. population in 2021. That’s down compared to previous decades: Between 2007 and 2021, the undocumented population fell by 14 percent, Pew found. Meanwhile, the legal immigrant population grew by 29 percent.

Whoever wins the election will take the helm of an economy that immigrant workers are supporting tremendously — and likely will keep powering for years to come.

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Fresh estimates from the Congressional Budget Office this month said the U.S. labor force in 2023 had grown by 5.2 million people, thanks especially to net immigration. The economy is projected to grow by $7 trillion more over the next decade than it would have without new influxes of immigrants, according to the CBO.

Alexander Santander, 49, is among those immigrants. Santander trekked for two months with his family, including two young children, from Venezuela to the Texas border last fall to seek asylum. He said it was a “very, very traumatic” journey that involved many nights sleeping on cardboard in the jungle.

For Santander, who is on humanitarian parole as he waits for his asylum case to be processed, the decision to uproot his life in Venezuela, where he worked as an operating room nurse, was difficult but necessary, he said. His family had faced years of food shortages and, more recently, threats for protesting the government.

“Thank God we made it here,” Santander, who now works in manufacturing in Denver, said in Spanish. “We have many more opportunities and already a better quality of life.”

Research broadly shows that immigration has long helped the U.S. economy grow. But today’s snapshot still represents a stark turnaround from just a short time ago.

The flow of migrants to the United States started slowing during the Trump administration, when officials took hundreds of executive actions designed to restrict migration.

Then the coronavirus hit, restricting border crossings even further. Right before the pandemic, there were about 1.5 million fewer working-age immigrants in the United States than pre-2017 trends would have predicted, according to the San Francisco Fed. By the end of 2021, that shortfall had widened to about 2 million, researchers at the Global Migration Center at the University of California at Davis have shown.

But the economy overall wound up rebounding aggressively from the sudden, widespread closures of 2020, bolstered by historic government stimulus and vaccines that debuted faster than expected.

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The sudden snapback in demand sent inflation soaring. Supply chain issues were a main reason prices rose quickly. But labor shortages posed a problem, too, and economists feared that rising wages — as employers scrambled to find workers — would keep price increases dangerously high.

That’s because the labor force that emerged as the pandemic ebbed was smaller than it had been: Millions of people retired early, stayed home to take over child care or avoid getting sick, or decided to look for new jobs entirely. In the span of a year or so, employers went from having businesses crater to sprinting to hire enough staff to keep restaurants, hotels, retail stores and construction sites going. Wages for the lowest earners rose at the fastest pace.

About the same time, the path was widening for migrants to cross the southern border, particularly as the new Biden administration rolled back Trump-era restrictions.

In normal economic times, some analysts note, new immigrants can drag down wages, especially if employers decide to hire them over native-born workers. Undocumented workers, who don’t have as much leverage to push for higher pay, could lower average wages even more.

But the past few years were extremely abnormal because companies were desperate to hire. Plus, it would be exceedingly difficult for immigration to affect the wages of enormous swaths of the labor force, said Alex Nowrasteh, vice president for economic and social policy studies at the conservative Cato Institute.

“What it can do is lower the wages of a specific occupation in a specific area, but American workers aren’t stupid. They change jobs. They change what they specialize in,” Nowrasteh said. “So that’s part of the reason why wages don’t go down.”

Experts argue that the strength of the U.S. economy has benefited American workers and foreign-born workers alike. Each group accounts for roughly half of the labor market’s impressive year-over-year growth since January 2023, according to an Economic Policy Institute analysis that used three-month rolling averages in labor force participation to account for data volatility.

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Particularly for immigrants fleeing poorer countries, the booming U.S. job market and the promise of higher wages continue to be an enormous draw.

“More than any immigration policy per se, the biggest pull for migrants is the strength of the labor market,” said Catalina Amuedo-Dorantes, an economics professor at the University of California at Merced. “More than any enforcement policy, any immigration policy, at the end of the day.”

Upon arriving in Denver in October, Santander hadn’t acquired a work permit but needed to feed his small children. Even without authorization, he found a job as a roofer for a contractor that ultimately pocketed his earnings, then one cleaning industrial refrigerators on the overnight shift for $12 an hour. Since receiving his work permit in January, Santander has started “a much better job” at a wood accessories manufacturer making $20 an hour.

But for the vast majority of migrants who arrive in the United States without prior approval, including asylum seekers and those who come for economic reasons, getting a work permit isn’t easy.

Federal law requires migrants to wait nearly six months to receive a work permit after filing for asylum. Wait times can stretch for additional months because of a backlog in cases. While they wait, many migrants find off-the-books work as day laborers or street vendors, advocates say. Others get jobs using falsified documents, including many teenagers who came into the country as unaccompanied minors.

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Still, many migrants miss the year-long window to apply for asylum — a process that can cost thousands of dollars — leaving them with few pathways to work authorization, advocates say. Those who can’t apply for asylum often end up working without official permission in low-wage industries where they are susceptible to exploitation.

That includes many of the migrants coming to the United States to escape economic hardship, which alone does not qualify as a valid reason to seek asylum or qualify for a work permit.

One such worker — who spoke on the condition of anonymity out of fear of reprisal due to his immigration status — said he left his remote village in Mexico in 2022 because he had no hope of ever being able to afford to build a house with his income as a civil servant.

He said it was easy to find his current job in Chicago — scouring a tortilla factory on the overnight shift for $16.75 an hour. But the city is vast and hard to navigate without a car, he said.

“My dream is to save enough money to build a house on my land in Mexico to return to,” he said in Spanish. “Then if for some reason I get deported to Mexico, at least I’ll have somewhere that’s mine to live.”

In Dalton, Ga. — known as the “Carpet Capital of the World” — Jan Pourquoi said the entire economy would collapse without immigrant workers. Pourquoi owns a rug company with a warehouse near the city’s railroad tracks and pays $11 an hour for jobs like cutting and sewing door and bathroom mats. He said that he doesn’t question anyone’s paperwork, and that he knows workers will reliably line up at his door looking for openings every morning.

Pourquoi emigrated from Belgium 37 years ago and said he understands his workers’ desire for more job security. But he also said that more needs to be done to stop the flow of immigration at the southern border, and that the government is responsible for opening pathways to citizenship that would make economic security more certain. As for his business, if stricter immigration policies slashed his workforce and he had to raise wages to $15 an hour, he wouldn’t be able to compete against foreign firms with cheaper wholesale prices.

“If I was a poor Mexican, I would be the first one to cross the Rio Grande illegally myself,” he said. “I don’t blame these people. I blame our politicians and our government for letting it happen.”

Nick Miroff contributed to this report.



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