New Immigration Data Point To Larger U.S. Workforce Issues

New immigration data show foreign-born workers are a growing proportion of the U.S. labor force. The statistics released by the Department of Labor indicate foreign-born workers continue to play a vital role in the American economy. The data also point to significant U.S. workforce issues in the years ahead.

New Data On Foreign-Born Workers

“In 2022, the foreign born accounted for 18.1% of the U.S. civilian labor force, up from 17.4% in 2021,” according to new data released by DOL’s Bureau of Labor Statistics. The Wall Street Journal reported, “Foreign-born workers’ share of the U.S. labor force rose last year to the highest level in 27 years of records, as labor demand surged and the pandemic faded. . . . More foreign-born people joined the labor force than native-born Americans, accounting for more than half of the 3.1 million overall gain last year.”

Low U.S. Unemployment Rate

According to economists, many people, including some elected officials, mistakenly believe there is a fixed number of jobs and new people entering the labor force means fewer jobs or possible unemployment for Americans. The latest data from the Department of Labor is further proof that immigration does not lead to greater unemployment for U.S. workers.

“The unemployment rate for foreign-born persons in the United States was 3.4% in 2022, down from 5.6% in 2021,” according to the Bureau of Labor Statistics. “The jobless rate of native-born persons declined to 3.7% in 2022 from 5.3% in 2021. Both measures are down considerably from their highs in 2020.”

In March 2023, the Black unemployment rate hit a record low, reports Reuters. Experts took notice. “It’s often asserted that illegal immigration is especially harmful to black wages and job prospects, but we now have two consecutive presidencies that seem to undermine that claim,” writes Jason L. Riley, Wall Street Journal columnist and author of The Black Boom. “Illegal immigration is at a record high, and black unemployment is at a record low. Maybe immigrants don’t steal jobs after all—not from black workers or from anyone else. And given that the country has experienced significant nominal wage gains among all groups, both before and after the pandemic, foreign nationals don’t seem to be driving down earnings either.”

National Security And Broader Workforce Issues

The latest economic data point to broader economic issues. These issues include the aging of the U.S. workforce and the lack of Americans in science, technology, engineering and math fields (STEM). Solutions in STEM fields will include education initiatives.

The Department of Defense (DOD), in its Fiscal Year 2020 Industrial Capabilities Report, released in 2021, identified the department’s priority industrial base risks and vulnerabilities. “Exacerbating the need to strengthen organic software expertise is the national STEM shortage,” according to the report. “Today’s education pipeline is not providing the necessary software engineering resources to fully meet the demand from commercial and defense sectors, and resources required to meet future demands continue to grow. STEM covers a diverse array of professions, from electrical engineers to researchers within the medical field, and includes a range of degree levels from bachelor’s to Ph.D.”

Since population growth and labor force growth are connected, the issues DOD identifies in STEM fields likely will be seen economy-wide. According to the Congressional Budget Office, “After 2033, population growth is increasingly driven by net immigration, which accounts for all population growth beginning in 2042.”

Immigrants Increase U.S.-Born Labor Force Participation

The latest data also provide more support for economists who have explained that immigrants improve the labor force participation rate of U.S.-born workers.

“The results of the state-level analysis indicate that immigration does not increase U.S. natives’ unemployment or reduce their labor force participation,” concluded a study by economist and University of North Florida Professor Madeline Zavodny for the National Foundation for American Policy (NFAP). “Instead, having more immigrants reduces the unemployment rate and raises the labor force participation rate of U.S. natives within the same sex and education group.”

According to Zavodny, “Immigrants may boost consumer demand, start their own businesses, and reduce offshoring . . . of manual-labor intensive jobs in the U.S.” She also points out immigrants tend to work in different sectors, in different parts of the country and even other labor markets within a state.

Another Zavodny study found that the presence of H-1B visa holders was associated with lower unemployment rates and faster earnings growth among college graduates, including recent college graduates.

Mark Regets, a labor economist and NFAP senior fellow, notes immigrants can be critical in helping U.S.-born women reenter the labor force or work more hours.

“The presence of foreign domestic workers has increased the labor supply of high-skilled native [U.S.-born] women, has helped narrow the gender earnings gap in high-paying powered occupations, and that these advances have not come at the cost of native [U.S.-born] women investing less time in their children or having lower birth rates,” according to new research by economist Patricia Cortes (Boston University Questrom School of Business).

Earlier research by Cortes found that a lack of immigrants can contribute to inflation and harm Americans by reducing their purchasing power. Cortes used data from the Consumer Price Index and estimated the impact of immigration on consumer prices: “I find that, at current immigration levels, a 10% increase in the share of low‐skilled immigrants in the labor force decreases the price of immigrant‐intensive services, such as housekeeping and gardening, by 2%.”

The latest economic data from the Department of Labor show U.S. labor force growth and immigration policy are connected. The aging of the American workforce and the need for scientists and engineers will remain significant issues in the U.S. economy.