As the United States faces growing worker shortages, new government data is showing that falling immigration is playing a major role in the crisis. Immigration numbers have dropped sharply in recent years, and this slowdown is contributing to the current labor shortages across many industries.
According to U.S. government data, immigration into the United States has fallen dramatically, with the number of people entering the country dropping by more than three-quarters from 2016 to 2021. In 2016, over 1 million people entered the U.S., but by 2021, that number had fallen to under 247,000. This sharp decline means there are about 2 million fewer working-age immigrants in the country today than if immigration had continued at a normal pace.
When you add this to the recent drop in birth rates (as shown in the 2020 Census) and the large number of workers over age 45 who left the workforce during the COVID-19 pandemic, it becomes clear that the slowdown in immigration is making the U.S. labor shortage even worse.
Which Industries Are Most Affected by Immigration Decline?
Certain industries are being hit hardest by this shortage of immigrant workers. The service, natural resources, and construction industries, in particular, are feeling the effects. Here’s why:
- Service Industry: Over 20% of workers in the service sector are foreign-born, compared to just 14% of workers who are U.S. citizens.
- Natural Resources & Construction: Nearly 14% of workers in these fields are foreign-born, while only 8% are native-born U.S. citizens.
While foreign-born workers do not make up the majority of workers in these sectors, they make up a significant portion. Losing these workers has created significant labor gaps, especially when employers are struggling to find enough workers to fill positions.
The Loss of Skilled Immigrants
The impact of reduced immigration goes beyond the loss of manual labor in certain industries. Among the 2 million working-age immigrants who were excluded from entering the U.S. in the last two years, about 1 million of them were college-educated. This means the U.S. has lost out on millions of skilled workers—professionals, entrepreneurs, and foreign students who would have contributed to the U.S. economy.
Some estimates suggest that the absence of these highly educated immigrants has led to a loss of 2.5 million jobs. This also includes the missed opportunity to welcome talented foreign students and entrepreneurs who might have created jobs, started businesses, and fueled innovation in the U.S.
Immigration’s Link to Inflation
The shortage of foreign-born workers isn’t just hurting employers—it’s also tied to rising inflation. As the U.S. Chamber of Commerce has pointed out, increasing immigration could be one of the fastest ways to help reduce inflation.
Here’s why: Many supply chain problems, such as the shortage of truck drivers, are at the root of inflation. By allowing more foreign workers to enter the U.S. and fill these critical roles, the country could ease some of the disruptions causing higher prices. More workers would help reduce supply chain bottlenecks, making goods and services more available and lowering costs.
The sharp decline in immigration over the past few years is significantly impacting the U.S. labor force. With fewer workers available to fill jobs in key sectors like service, construction, and natural resources, industries are struggling to meet demand. The loss of college-educated immigrants is also holding back job creation and innovation in the U.S.
To solve these problems and reduce inflation, many experts argue that increasing immigration should be a priority. By welcoming more immigrants, especially skilled workers, the U.S. could ease labor shortages, boost the economy, and help bring inflation under control. For noncitizen workers, entrepreneurs, and students who want to contribute to the U.S. workforce, this is a critical time to stay informed about immigration policies and opportunities. If you have questions about visas or work permits, consulting with an experienced immigration professional can help guide you through the process.
