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EDITORIAL: The fastest solution to workforce shortage? Immigration reform

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Despite persistently high inflation, the U.S. economy continues to run unexpectedly hot to start 2023.

The January jobs report floored much of Wall Street when it showed a large uptick in hiring to the tune of more than 500,000 jobs nationwide. And after two quarters of negative gross domestic product output, the U.S. economy produced two quarters of about 3% growth in the second half of 2023.

Jacob Owens Editor Delaware Business Times

The optimism around the economic rebound has lowered the expectations of many economists and business leaders of a recession this year, either avoiding one entirely or only being subject to a mild and short economic contraction

And yet there is one nagging problem that I think many of our top leaders are being short-sighted on and many of those small business owners recognize every day: we’re running out of workers.

The economic resilience in the headwinds of a potential recession means jobs are still readily available. In December, the nation had 11 million open job listings, or roughly two for every available worker.

Despite some persistent criticism that I hear about government assistance and unemployment insurance keeping those workers out of jobs, I haven’t necessarily seen the data to back that belief up.

The roughly 5.9 million Americans deemed unemployed is roughly the same number as those who were unemployed in the fourth quarter of 2019, before the COVID-19 pandemic kickstarted a wave of unemployment benefit increases. In Delaware, the number of unemployed workers has fallen to 21,700 as of last month, or nearly 10% fewer than a year ago.

Inevitably there are some who are gaming the system to collect benefits and avoid working, but with a maximum monthly benefit of $1,600, it won’t leave recipients much to live on here where rent or a mortgage could easily eat up more than half of that allotment.

The reality of our workforce shortage is the dramatic and unexpected loss of so many Baby Boomers and Gen Xers following the pandemic, many of whom would have likely continued working. A Federal Reserve study from late last year estimated that impact at more than 2 million workers. I think we’ve all seen examples of this in our lives as those in their late 50s or 60s have reassessed their life priorities following extended periods at home or traveling.

Their ability to leave the workforce comes after benefitting from a stock market that has boomed in recent decades, even despite the dip to end 2022. The average return on the benchmark S&P 500 index between 2000 and 2023 was 328.70%. If they invested early in their careers, the return between 1980 and today is more than 10,500%.

Add to that their ability to sell a home amid sky-high real estate valuations, as pandemic-era stimulus, savings and wage growth produced a booming housing market over the last few years. I know many people who have sold a home to take advantage of the market and buy a retirement home instead.

The economic forces at hand have rewarded many of our most experienced workers who are rightfully now enjoying the fruits of their labors.

The issue, however, becomes how we replace them.

The economist Anirban Basu, speaking to state business leaders earlier this month, probably said it best: “These unemployment rates are far too low. How do you grow an economy with basically no one left to hire?”

We won’t do it naturally. The nation’s birth rate has dropped by 50% in the last 60 years and now averages just 1.6 children per family, according to federal data.

Which leaves the obvious answer that it seems few leaders actively want to address: immigration.

While America’s immigrant population boomed in the 1990s, adding more than 13 million people in the decade, it slowed in the post-9/11 era and has slowed dramatically following the Trump administration cuts to the legal program. Delaware had about 97,000 immigrant residents in 2019, having grown 350% from 1990. They’ve come primarily from Latin America and Asia and helped fill many jobs across the state in farming, technology and life sciences, according to the American Immigration Council.

With a net migration rate today of 2.7 per 1,000 people, the U.S. ranks ahead of European leaders like the U.K., Germany and France, but it pales in comparison to other large countries like Canada (6) and Australia (5.1).

I recently spoke with Phillip Connor, a senior demographer with FWD.us, an advocacy group for immigration reform, about the workforce issue. He noted that three immigrant groups already in the U.S. – those eligible for Deferred Action for Childhood Arrivals with current protection, advanced degree international students and children of backlogged immigrants – could provide upward of 390,000 workers.

“These are people kind of waiting on the sidelines of the labor force,” he said, noting they cannot obtain the necessary work permits to fill jobs legally in the country. 

“The workforce in the United States is only growing because it is happening through immigration,” he added, noting the demographic factors here.

A doubling of current levels of legal immigration could also add $10 trillion to the nation’s gross domestic product by 2050, allowing it to better compete with the growing Chinese market, according to a FWD.us study. That’s not even counting the contributions that an estimated 6.7 million undocumented immigrants in the country could make if given an easier pathway to citizenship.

“Just one example is how many rural jurisdictions are having trouble finding school bus drivers, yet many undocumented immigrants could fill those roles if given an opportunity toward citizenship,” Connor said.

Yet a recent Gallup poll showed that immigration in the U.S. remains a fraught issue, where 40% of respondents said they wanted to see even less immigration than was currently occurring and only 8% wanted to see more. Just two years ago, only 19% wanted less immigration.

In part, our national politics are driving the discussion on immigration, with Republicans poised to use it as a key part of their 2024 presidential campaign. Democrats have also yet to offer any substantive reforms to the current immigration system that sees fewer people arrive here legally every year.

It’s a concerning predicament, because a boost in legal immigration could help America fill open jobs, boost productivity and help stave off a recession. If retirees want to stay retired, and expect a nurse at their bedside, a waiter at their table, and a mechanic available to look at that check engine light, then it’s high time that America begin its difficult conversation on immigration before it’s too late.

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