The U.S. finds itself grappling with the highest levels of inflation since the 1980s, caused largely by an imbalance between the demand and supply of both labor and goods and services. As labor makes up around two-thirds of the total production costs of private businesses, economists now worry that with the U.S. economy reaching full employment, without more workers, wage increases could push prices—and inflation—even higher.
The U.S. labor force was already facing an aging crisis before the pandemic. Then COVID-19 discouraged even more people from working. On top of this, there has been record turnover among active workers, with many looking for better pay and working conditions in what is being called the Great Resignation.
This leaves no clear way of meeting current labor demands domestically or filling the millions of new jobs that will be created over the next decade. While many jobs will be taken on by young people entering the workforce, demographic trends suggest that the labor market will still need immigrant workers to make up the shortfall.
Using employment projections from the Bureau of Labor Statistics (BLS), data on job openings from Burning Glass, and data from the American Community Survey, we explore how immigration can help meet labor demands and steer the economy back to a sustainable growth path.