Migrants replenish tight US labor market

The flow of migrants into the United States started to increase as the COVID-19 pandemic was easing up and helped to replenish the tight US labor force, new data suggest.

A December report by the US Census Bureau estimated that between July 2021 and July 2022, more than a million migrants were added to the US population, marking the first net international migration increased since 2016 and the largest single-year increase since 2010.

Between 2010 and 2017, the US added about 800,000 to 1.2 million migrants each year. However, that number dropped dramatically during the pandemic, and 376,000 migrants were added to the population in 2021.

The drop in migration occurred for multiple reasons. The cap on refugees allowed to enter the US was reduced to 15,000 in 2020, the lowest level in decades. Measures like a ban on immigrants from seven majority-Muslim countries during the Trump administration deterred people from trying to come.

As the pandemic lockdowns eased, US Citizenship and Immigration Services had a difficult time ramping back up because fewer cases due to the pandemic led to less processing fees, which led to a shortage of funds to replenish staff who had left.

The decline of migrants has contributed to the shortage of the labor market, especially in leisure, hospitality and construction sectors where immigrants make up a higher share of employment. It is also in these sectors where wages and job vacancies are higher in the current job market, according to the Census Bureau.

An analysis by the Federal Reserve Bank of Kansas City showed that between 2016 to 2021, the mean salary has increased an average of 8.7 percent for all jobs, but the increase was between 10 to 12 percent for leisure, hospitality and construction.

The analysis also showed that in 2019, more than 25 percent of direct-care workers such as nursing assistants, home health aides, and childcare workers were foreign born.

The analysis suggested that as migration declines, wages rise, as the reduced labor supply drives employers to raise wages to attract more workers.

Migrants are now being hired more quickly, at higher pay and under better working condition than at any time, according to The Wall Street Journal.

For example, the Journal reported that restaurants are having a hard time finding cooks and dishwashers. Luis Reyes, who owns a restaurant in Washington DC, resorted to distributing fliers in subway stations and at bus stops in neighborhoods with large migrant communities to find workers.

"The scarcity is huge," Reyes told the Journal. "It's a terrible stress. Many times I suffer from insomnia thinking about what we are going to do to give service."

Reyes has raised wages and boosted benefits to retain staff, the vast majority of whom are migrants. Before the pandemic, he used to distribute free lunch certificates during Christmas. Last December, he handed out cash bonuses ranging from $250 to $5,000 for kitchen workers.

The Journal also reported that migrant construction laborers in the Washington area made on average $120 a day before the pandemic. The rate has since risen more than 60 percent to about $200 a day. Hourly pay for all US construction workers has risen about 15 percent since late 2019, according to the Labor Department.

Another unofficial indication of higher migrant pay might be gleaned from remittances to Latin America from the US. The World Bank estimates remittances to Latin America grew more than 9 percent in 2022 to $142 billion, reported the Journal.

Despite a big dip in migration in 2021, a Labor Department report showed that from 2020 to 2021, among the foreign born, employment increased by 1.6 million, an increase of 6.5 percent. Employment among the native born increased by 3.2 million, an increase of only 2.6.

The Federal Reserve study warned that despite that the increase of migrant workers started to get back to pre-pandemic level, the demand for workers will likely continue to exceed the supply of these workers in the absence of broader changes in immigration policy, which has been a contentious issue between the two major political parties.