A recent report from Goldman Sachs highlights a significant increase in immigrant participation in the U.S. workforce, potentially adding around half a million jobs in the next three quarters. This surge in immigrant labor force plays a crucial role in alleviating the challenges posed by the historically tight U.S. labor market while simultaneously contributing to job creation.
- Between January 2020 (pre-pandemic) and July 2023, the immigrant labor force expanded by 9.5%, in stark contrast to the native-born workforce’s meager 1.5% growth rate.
- This growth in the foreign-born labor force can be attributed to three primary factors:
1. Immigration: The issuance of visas, including temporary work visas and permanent green cards, has risen significantly over the past year, welcoming approximately 335,000 new workers annually. This increase stems in part from the successful reduction of the pandemic-induced backlog, which had surpassed 500,000 visa applications.
2. Participation: More immigrants are actively participating in the labor force. The foreign-born labor force participation rate has surged by 2.3 percentage points, reaching 67% in the past two years. In contrast, the native-born labor force participation has only seen a modest 0.4-point increase, reaching 62.2%.
3. Demographics: The retirement wave primarily affects the native-born population, while immigrant workers are not yet facing significant retirement rates. As a result, to maintain, let alone expand, the native-born labor force, millions of new native-born workers must enter the workforce annually.
Typically, in normal conditions, the unemployment rate remains stable when employment grows by approximately 75,000 workers per month. However, thanks to immigrants, the U.S. can now absorb around 125,000 new jobs each month without further lowering the unemployment rate.