Labor shortage and drop in migration: economy under pressure

WASHINGTON — First it was Washington DC and New York. Later it was Martha’s Vineyard. In recent weeks, the great immigration debate has reached new heights, as Republican governors in Arizona, Florida and Texas ship asylum seekers to more liberal Democratic enclaves. Behind their movements hides a simple argument, people crossing the border are a problem to deal with.

But a closer look at the country’s immigration and labor figures, particularly since the Covid pandemic, raises questions about this theory of the case.

Even before the pandemic, net international migration to the United States had slowed according to the US census.

In 2015 and 2016, the United States recorded a net international migration gain of more than one million people. It fell to around 930,000 in 2017 and fell to just over 700,000 in 2018. In 2020, the year the pandemic arrived, it was below 500,000. And last year the figure fell to around 247,000.

It’s a massive and sudden decline that, among other things, took a lot of potential workers out of the US economy and was bound to have ripple effects. Some of these impacts were masked by the disruptions of the pandemic, when businesses were closed and unemployment rates soared.

But one of the main features of the restarting of the American economy has been a labor shortage, a plethora of “help wanted” signs in the windows of retailers, restaurants and other businesses in communities in across the country.

You can see the signs of this shortage in the Labor Force Participation Rate from the Bureau of Labor Statistics.

That figure for August was 62.4% and it was one percentage point lower than February 2020. One percentage point might not seem like a lot, but it equates to around 2.6 million fewer people having a job or actively looking for a job compared to February 2020.

And this figure of 62.4% is historically low. The last time the labor force participation rate hit this number (before the pandemic) was a month ago in September 2015. Before that, you have to go all the way back to the late 1970s to see such a low number.

Post-Covid challenges are especially pronounced in some of the nation’s largest cities, according to the Bureau of Labor Statistics.

In the Boston metro area, the number of civilian workers is still down about 45,000 workers from its February 2020 level, according to BLS data. In the larger Washington D.C. metro, the workforce is nearly 170,000 workers, down from February 2020. And in the massive New York City subway, the labor figure -work is down nearly 400,000 from what it was before. pandemic.

And these are not all the cities of the North. Metro Miami has lost about 21,000 workers from where it was before the pandemic.

In Boston, Washington DC and Miami, the unemployment rate was at or below the national figure in the latest round of data. At the very least, the numbers suggest these are very tight labor markets that could likely benefit from an infusion of potential workers.

And new workers are crucial to the broader US economy beyond the current labor shortage.

The United States has an aging population, an aging workforce, and a declining birth rate. These factors combine to affect a host of government programs, but the impacts could be most profound on Social Security, which relies on a steady stream of new workers to keep contributing to the system to keep it afloat.

The problem becomes apparent when you look at the ratio of workers to Social Security recipients.

In 1960, there were 5.1 workers for every Social Security recipient. That number declined steadily through the 1970s and 1980s and currently stands at 2.8 workers for every beneficiary, according to the Social Security Administration. Over the 30 years, the number is expected to drop to around 2.2 workers for every beneficiary.

The calculation is not very complicated. At some point, longer lifespans and lower birth rates combine to create a huge problem for the program. Without more workers in the economy, judgment day will likely come sooner.

To be clear, the governors who moved the asylum seekers, Ron DeSantis from Florida, Doug Ducey from Arizona and Greg Abbott from Texas, were trying to make a political point or pull off a political stunt, depending on your perspective. . Loads of immigrants by bus and plane were dispatched to other localities and without consultation or coordination with the local governments of their destinations. The goal was to create chaos.

But the larger idea behind all buses and planes, that asylum seekers are problematic or a nuisance, may miss a larger truth. The data suggests that the United States is in dire need of workers right now.

And once settled, the immigrants that governors ship to bluer political lands can turn into an asset to those communities and the U.S. economy as a whole.

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