Lower immigration drives up prices amid labor shortages: AP

  • Inflation hit 8.5% in March, a 41-year high due to several factors, including immigration.
  • The Associated Press reported that declining immigration contributes to labor shortages.
  • Business owners told the AP that the lack of foreign workers was increasing costs for consumers.

The national labor shortage and rising inflation have been fueled in part by declining immigration, The Associated Press reported.

Immigration rates have dropped dramatically in recent years due to restrictions imposed by the administration of former President Donald Trump and the impact of the coronavirus pandemic. According to the AP, if immigration rates remained at the same rate as before Trump’s tenure and the arrival of COVID-19, the United States would have 2 million more immigrants than today.

Declining immigration has resulted in a shortage of workers in various industries, including meat packing.

“In the short term, we are going to adapt to these shortages in the labor market by increasing wages and prices,” Giovanni Peri, an economist at the University of California, Davis who calculated the shortage, told the AP. to win.

In January, Suzanne Clark, CEO of the US Chamber of Commerce, said opening the door to more immigration would help ease labor shortages.

“It’s a place where the government could be particularly helpful and we think it would be anti-inflationary,” Clark said.

Insider reported last month that inflation hit a 41-year high in March at 8.5%. However, the AP noted that immigration only played a part in this. Other factors include ongoing supply chain issues due to the pandemic, as well as Russia’s invasion of Ukraine.

Rising inflation has been accompanied by the ongoing national labor crisis, as millions of Americans have quit their jobs every month since April 2021, many citing poor working conditions and insufficient pay. The American workforce has also been affected by declining birth rate and an aging population.

“At some point, we either decide to get older and smaller or we change our immigration policy,” Douglas Holtz-Eakin, an economist and former Bush administration official, told the AP.

In many parts of the country, businesses are raising prices for services in part because their own operating costs have risen without immigrant workers. In Dallas, Texas, Joshua Correa told the AP he had raised the prices of homes built by his company from $500,000 to $650,000.

Others, like Mike Helle, told the AP that declining immigration has impacted his farming business. He said American-born workers wouldn’t do those jobs even if the pay was higher, so he’s relying on immigrants.

“We feel it, and if we ultimately feel it as builders and developers, the consumer pays the price,” Correa told the AP.