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It’s great timing for the US’s first immigration boost in years — but experts say Biden needs to reverse more Trump-era policies for the economy to feel the maximum effect

Joe Biden and Donald TrumpFormer President Donald Trump enacted restrictive policies that hampered both immigration and labor force numbers. President Joe Biden has pared some back, but left others in effect.

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  • Census Bureau data shows that US immigration is bouncing back from its decline over the last few years.
  • That’s good news for the labor shortage, which has been exacerbated by the lack of immigrant workers.
  • But some experts say that current restrictions are still holding immigration back.

The US labor force has been struggling to recover from pandemic turmoil, but there may be a bright spot: a recent increase in immigration.

A post last month by Anthony Knapp and Tiangeng Lu of the Census Bureau highlights just how much net international migration has bounced back from the massive slowdown it has seen over the past few years, one that experts say has reduced the number of workers the US could rely on. It’s been one of the major factors in the country’s ongoing labor shortage. 

David Kelly, chief global strategist at JPMorgan Asset Management, previously told Insider that “if we increased the number of people who were allowed to immigrate into the United States based on the skills they bring to the marketplace, we could fix this huge excess demand for labor problem pretty quickly.” 

But Knapp and Lu’s post shows that after a decade-low net international migration figure in 2021 — with only about 376,000 more people moving into the country from abroad than moving out between July 1, 2020 and June 30, 2021 —  that number soared in 2022 to about a million.

While net international migration in 2022 wasn’t as high as in 2016 —  the high point for immigration between 2010 to 2022 — it’s still the highest since 2017.

Additionally, the authors note that 2022 is the “first time net international migration increased since 2016.”

Cory Stahle, an economist at Indeed, told Insider that he’s optimistic about the data. 

“Seeing the numbers from the Census Bureau are really, really encouraging,” he said. “We are in a pretty tight labor market right now, and immigration can play a really important role in filling a lot of those positions and providing additional labor to employers.” 

He warned that one data point doesn’t indicate a trend on its own, but since the drop in immigration was in part due to pandemic-specific factors, it gives him confidence that the US is in an immigration upswing.

Additionally, policies enacted by former President Donald Trump also restricted immigrants from entering the country, which also kept them out of the US workforce. The US would have had about two million more immigrants if not for those policies, Insider estimated based on the average growth rate from 2011 to 2016 for net international migration. And immigrant workers typically fuel the industries experiencing shortages, such as transportation and construction. 

“We have a case where jobs continued to be added during the pandemic, but immigration was going down,” Stahle said.

“This one point is an encouraging sign of turning back, but we still have far fewer foreign-born workers than would have been here had the pandemic not happened,” he added.

Immigration is rebounding, but federal laws are still holding numbers back  

Giovanni Peri, professor of economics at the University of California, Davis, told Insider that the increase since 2016 in net international migration to the US actually isn’t too surprising given what it’s coming back from.

Peri noted that it shows a rebound “because immigration had decreased so drastically in 2020 and in 2021 as a consequence of all the restrictions that had been with Covid,” where many visas and permits weren’t being processed. 

“So there was a little bit of a backlog of immigrants who wanted to come into the United States and were essentially blocked because of all the Covid restrictions,” Peri said. “So in part it’s expected — this rebound.”

He’s less optimistic than Stahle for what that means going forward. 

“I would say that it makes up for some of the immigration that we lost during COVID, but I would say also it makes me think that this slow trend of decrease in immigration is probably going to continue because it’s linked to more long-term and structural types of issues,” Peri said. 

According to Peri, “the number of immigrants who can come in legally is constrained” by laws and procedures that haven’t really changed. The last major change was decades ago in 1986.

“This is not likely to change unless there is some change in legislation,” he said. “And so in that respect, probably this slow decline or stagnation of immigrants will continue.”

And that means the essence of the labor shortage persists. Since entering office, President Joe Biden has reversed a number of Trump’s restrictive immigration policies, although a number of them are still in place. This month, for instance, the Biden administration announced that it would expand one of Trump’s policies, which expels migrants from certain countries attempting to seek asylum at the Mexican border. 

“There is a very big gap between the job and the people who are searching for a job,” Peri said. “I would say that we will need this type of immigration to stay at 1 million plus people net per year for the next four or five years to fill the gap. And my prediction is that that’s not very likely to happen,” Peri added. 

He did say, however, that in the short-term, this is some “good news” for the labor market.

Nikolai Roussanov, a finance professor at the University of Pennsylvania, told Insider that above all, these numbers reflect a “pent-up need” among people who couldn’t enter the country during the pandemic immigrating now, as the restrictions have been lifted. 

“They also reflect the dire need for workers, but given the ongoing labor shortage it is far from being fulfilled,” he said. “In fact, additional immigration restrictions are being put in place for purely political reasons. In order to make a real difference in easing the labor shortage the U.S. would need to significantly revamp immigration policy, in particular to simply and encourage skill-based migration.” 

“Immigration has been a crucial force behind the US economic growth” 

As employers are finding, immigrants are key to building different aspects of the US economy. 

Chinese students have helped bankroll US universities, for instance, as well as the industries they enter once they graduate. But the US has declined significantly as their top choice for academic expatriation, recent data shows

“Immigration has been a crucial force behind the US economic growth,” Oleg Itskhoki, an economics professor at the University of California, Los Angeles, told Insider. “It kept the population growing and age structure relatively young, especially in comparison with other developed countries.” 

He added that a young, growing population is important to keeping the labor supply high, but also the creation of new businesses, which “translates into sustained economic growth.” 

“This is why the decline in migration since 2016 is very troublesome from the point of view of growth prospects,” he said. 

Read the original article on Business Insider