Immigration Boosts US Labor Force Amid Job Market Rebalance

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As the American job market grapples with a widening gap between job vacancies and available workers, immigration could hold the key to rebalancing the situation. According to economists at Goldman Sachs, immigration could introduce an additional 500,000 individuals into the workforce over the next three quarters, helping to fill the current chasm of 3.6 million more open jobs than unemployed workers, as of June. The Federal Reserve has underscored this trend, suggesting that the growing immigrant workforce could help quell inflation and recalibrate a labor market that has recently been skewed in favor of workers.

The role of immigrants in the U.S. workforce is not a new phenomenon, but it has been growing steadily. As of May, foreign-born individuals constituted a record 18.7% of the U.S. workforce, a figure that has been generally ascending since 2010. This growth has been further catalyzed under the Biden administration, which has worked to reduce the backlog of visa applications and increased the monthly quota of humanitarian refugees by 30,000 earlier this year. The implications of this trend, however, are not without controversy, particularly with native-born workers who fear wage reduction as a result of increased immigration.

Immigration Growth as a Solution to Labor Force Gaps

As the Federal Reserve strategizes to rebalance the jobs market, immigration growth appears to play a crucial role in bridging current labor force gaps.

The Role of Immigrants in Labor Force Growth

According to Goldman Sachs economists, immigration could potentially add 500,000 individuals to the workforce over the next three quarters. As of June, the Bureau of Labor Statistics data showed 3.6 million more open jobs than unemployed workers available to fill them. The growing immigrant workforce could significantly help reduce this gap. Jan Hatzius, Chief Economist at Goldman Sachs, projects that some 500,000 immigrants will join the workforce in the coming months.

Immigrants Form Significant Portion of U.S. Workforce

Immigrants form an increasingly larger proportion of the U.S. workforce. In May, the proportion of U.S. workers born in another country reached a record high of 18.7%, a figure that has been gradually rising since 2010. This trend has been partly facilitated by President Joe Biden’s administration, which has reduced visa application backlogs and increased the number of admitted humanitarian refugees by 30,000 a month earlier this year.

Immigration and Inflation

The Federal Reserve is banking on immigration to help curb inflation. In a recent conference speech in Jackson Hole, Fed chair Jerome Powell emphasized that the growing labor force, driven largely by immigration, has helped "rebalance" a labor market that has recently favored workers. The concern lies in the current market imbalance, compelling employers to raise wages, hence increasing the cost of living, particularly in service-sector industries where labor costs significantly contribute to prices.

Immigration and Wage Growth

Rebalancing the labor market could be interpreted as curtailing wage growth, a trend that might not sit well with native-born workers. The belief that increased immigration will suppress wages has often incited anti-immigration sentiments. Despite this, research on the impact of immigration on wage reduction has yielded mixed results. Goldman economists highlight that immigration creates more jobs even as immigrants fill existing ones.

Public Perception of Immigration

Public opinion on immigration has soured in recent years. As of June, a Gallup poll showed that 39% of U.S. adults view immigration as a positive phenomenon, while 38% see it as a negative, a significant drop from the pre-pandemic era where positive views exceeded negative ones by 14 percentage points.


The role of immigration in the U.S. labor force is clearly multifaceted. While it provides a solution to labor force gaps and aids in rebalancing the jobs market, its impact on wage growth and public opinion presents a complex challenge. Despite the mixed views on immigration, its potential to drive economic growth and development cannot be overlooked. It’s essential that policy makers consider these factors and navigate this terrain with a balanced, informed perspective.

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