Commentary: A solution to inflation? Allow more immigration

Inflation has no panacea. The Federal Reserve’s rate hikes — two already this year, with more expected — might help, but they do nothing to address one of the key underlying issues: the lack of workers.

According to the most recent government data, there are nearly 11.4 million job vacancies in the country, but only about 6 million unemployed. That’s a shortage of about 5.4 million people.

That’s two jobs for every unemployed person in the United States. This is no longer the case since the Bureau of Labor Statistics began counting job postings in 2000.

Solving the labor shortage will go a long way in mitigating inflation. The most immediate solution for both: importing a workforce.

If employers can’t find the workers they need, they’re not efficiently manufacturing everything that’s on our grocery store shelves. Raising wages to keep workers can help, but it means higher prices for the same bag of groceries. What we need to focus on is freeing up supply – and that means supplying workers to American companies.

It would be easy to blame the labor shortage (like everything else) on COVID, but this problem started in December 2017. It was the first month since 2000 in which there were more openings than of unemployed.

The economic costs of COVID marked a temporary exit from this situation but have now exacerbated the problem by shutting down legal immigration. Madeline Zavodny, an immigration economist, estimates that about 630,000 fewer migrant workers have come to the United States due to COVID restrictions.

Giovanni Peri, another economist, estimates that around 2 million migrant workers are missing over a longer period than Zavodny.

A great option here is to allow our companies to hire overseas. There are plenty of opportunities in the United States, but not enough workers. In much of the world, countries have the opposite problem: not enough jobs for too many workers.

The magnitude of the economy’s labor needs is unprecedented today. The opening of US borders improves both sides of this trade.

You may have seen stories of record border crossings in 2021 – US border agents made 1.9 million border arrests. This is an overcount of actual immigrants since about a third of them were repeat claimants. So the actual number of unique crossovers would have been closer to 1.3 million.

Take a moment and imagine that the United States has adopted open borders. This means that anyone wishing to live and work in the United States would be free to do so. Now imagine that instead of being arrested and detained or deported, all of those 1.3 million immigrants were allowed to become productive workers and fight inflation. Even in this fanciful and politically improbable daydream, the United States would still be missing at least 4 million people.

Those missing workers is like missing your car’s suspension system. Every bump in the road is going to hurt a whole lot more without the cushion that immigrant workers provide to consumers and employers.

Would inflation have spiked if the US hadn’t closed our borders for COVID? Most likely. Would our current inflation have been so high if we had continued to import the workers we need? Unlikely.

The United States is in a privileged position. We have far more jobs than unemployed, and people from all over the world want to come here and fill those positions. The solution to our labor shortage is obvious. This is an opportunity to strengthen America’s economic position that we should not waste.

— Tribune content agency

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