How much do immigrants impact the total workforce?

I recently posted an estimate that permanent (green card) immigration adds roughly 720,000 new employed persons to the workforce.  How much do they contribute to the flow of all persons entering into and exiting employment (due to death and retirement)?

To sum up: Current immigration contributes to new worker growth and to total worker growth net of retirements.  Not as dramatically as some conjecture. However, if it is important to keep the working age population growing, then new immigrants every year are very important.

First, let’s look at new entrants.  Think of streams of persons entering into the job market.

In 2025, about four million U.S. born persons will turn 18. As a lifetime cohort group, at any time in prime working age, about 80% will be employed, or about 3.2 million. Thus one can say that they will add 3.2 million to employment rolls.

On the surface, today, first time immigrant workers (720,000) are about 22% of new these U.S. born workers. but there are expected fewer U.S. born persons turning 18 in 2035, and fewer new workers – 2.9 million. If we keep immigration at the same level, in 2025 immigrant workers will be about 25% of new job holders.

If you look at the contribution of new immigrants to the total stock of workers, the contribution of new immigrants soars. U.S. born workers are retiring in hordes due to aging-out, resulting in there being an annual net decline of all U.S. born workers of about 200,000. This net loss will increase, part to aging, part to low fertility.  Thus, 730,000 new foreign born workers compensate for an overall decline of U.S. born workers.

However, consider that foreign born workers are also aging. The net change in immigrant workers (720,000 new entrants less many retiring due to aging) is most likely probably slightly or moderately positive. This will continue to be positive, as today new immigrants are more into working age than U.S. born persons.  But before too long that will not be the case as the foreign-born population ages overall.

The Census expects the total workforce to grow by about 500,000 a year – about one third of one percent a year. This increase is due in part to people expected to work later in life. For example, Census expects that the number of 65+ working will increase from 2022 to as soon as 2032 by about on average 400,000 a year. This shows that there is more than immigration and young entrants to the growth of our workforce.

 

 

Annual employment-based green cards – an overview 

Simply stated, about 140,000 green cards are reserved for employment-based applications, as opposed to about 750,000 family based green cards.  How many workers come in these ways?  That depends in part on whether those dependents accompanying the primary applicants (about 50-50) are working age.  A rough estimate is that 70% – 80% of those who get in with an employment based or a family based green card are of working age. That comes to about 650,000 – 750,000 a year.  How many actually become employed? Perhaps 600,000 – 700,000.  (if you include refugees and other green cards, these estimates of employed increase by about 70,000.)

Employment visas like most other visas have annual caps. These caps for each visa include dependents. Roughly half of these visas are issued to the primary individual seeking the visa, and half to their dependents. There is a 7% cap for each visa by country; i.e. only 40,040 x 7% = 2,828 can be awarded to any country (such as India).  Actual numbers of visas awarded in any year vary due to several factors, such as access to visas what were not issued under the cap for other purposes, such as family-based visas.

It usually takes at least 12 months, if not two years or more, between the initial date of filing an application and the award of one of these visas. Over three quarters of EB visa awardees are already residing and working in the U.S. while they file and wait.

40,040 EB1 visa: persons with extraordinary ability, tenure track in academia, corporate executive, and other reasons

40,040 EB2 visa: professionals with advanced degrees or exceptional ability. Need a job offer and cubject to wage evaluation (labor certification) by Dept, of Labor

40,040 EB3 visa skilled worked in name but basically plain ol’ highly desirable workers. .Perhaps a cook who skilled at one kind of ethnic dishes. Need a job offer and cubject to wage evaluation (labor certification) by Dept, of Labor

9,940 EB4 visa: special immigrants like religious workers.

9,940 EB5 visa: investors with at least $1 million to invest in a for-profit venture and create 10 jobs, plus other criteria.

UK’s troubled recruitment of foreign doctors

The UK has relied much more than the U.S. on foreign doctors (“foreign trained” very roughly equals “foreign born”).  About half of doctors practicing in the UK are foreign trained compared to 25% in the United States. In contrast to the U.S, the share in the UK has grown noticeably in recently.  Volatile trends in special recruitment by the National Health Service shows how much the terms of temporary immigration matter.

After World War II, the National Health Service faced harsh workforce shortages and actively recruited medical professionals from abroad, particularly from Commonwealth countries such as India and Pakistan.

A special Health and Care Worker visa was created in 2020. This provides for five years of work and after then an option to become a British citizen. In 2023, 350,000 such visas were issued (I think this includes the primary person and dependents). But the government stopped allowing workers to bring dependents, and the number in 2024 dropped to 50,000.

Today, the NHS is experiencing a shortage of health care professionals. The job vacancy rate which used to be about 2 jobs unfilled for every 100 jobs. That jumped to over 4 jobs per 100 after the pandemic.

From a 2024 report. This profile has been pretty much unchanged for at least 10 years, although sone sources say that immigration of health professionals has very recently picked up.

In 2021, 51% of junior doctors and 41% of senior doctors (called consultants) were non-white. This compares with 20% of the English working-age population. Much of this is driven by international recruitment. But even among UK-trained doctors, 37% of junior doctors and 24% of consultants were non-white.

By far the largest non-White group is Asian, making up 33% of junior doctors and 32% of consultants in 2021. The share of non-white senior doctors also increased, from 39% in 2012 to 45% in 2021.

India has been the world’s largest source of immigrant physicians.

Farm workers and the new administration

“On Jan. 7, the pre-dawn quiet of Kern County was shattered by a series of Customs and Border Protection raids billed as “targeted criminal enforcement.” The day after the first Kern County sweep, one citrus operation reported that 25% of its workers did not show up. By the following day, that number had climbed to 75%.” (from here).

The California produce farm community has sought for years for federal legislation that normalizes the status of unauthorized workers. Unless there is a comprehensive immigration reform package, there is no chance such legislation will pass.  Over the past 15 years these firms have relied less and less on unauthorized workers. However, If the Trump administration goes after these workers, and also make it more difficult for farms to use legally temporary workers (H-2A visas), there will be a serious labor supply problem. More food will be imported. If Trump imposes major tariffs on Mexico and other Latin American countries, food, primarily produces and nuts, will become more expensive. Half of vegetables, fruits and nuts are imported, roughly doubling in market share in 15 years.

California has been the leading farm state since 1949. A major role of farming in the state are fresh produce. Mexican born workers dominate the farm workforce, which includes about 420,000 full time equivalent workers at any time. Mexicans have an average of eight years education and average 42 years old. Half of them are unauthorized.   The unauthorized Mexican workforce in the United States, including California farms, began to a decline after the financial crisis. In the last 15 years, farms throughout the United States including California have relied more and more on temporary H-2A workers workers. (Here is my overview of this program, posted in 2013.) With decreasing dependence on unauthorized workers, farms–particularly the very large ones– drove up the H-2A workforce from about 75,000 in 2010 to 400,000 today.

H2A guest workers are mostly Mexican men in their 30s who work about six months a year. They cost employers $25 to $30 an hour which includes housing and transportation as well as wages. (Weekly income to the workers is about $800.) This is more expensive than other farm workers but, H-2A workers are more productive due to there being tied to employers as opposed to being freelancing, going from one farm to another period.  This is an important aspect of large-scale temporary visa worker on forums. They favor large farms which are relatively more adept at driving productivity improvements.

California farmers usually report trouble in finding workers. The relatively very old, 42 years, of the established Mexican workforce reflects not only the absolute decline in authorized Mexican workers but also the lack of interest of their children and others to work in the fields.

There are several ways to reduce dependence on foreign-born workers for produce food for the American table.  A key one is to match vegetables and fruits, plus nuts, with mechanization.  Another way, of course, is to simply import food.A great deal of produce sold in the United States now comes from Mexico such as avocados and blueberries from Peru and South American countries. Since 2016 the majority of blueberries consumed by Americans are imported. There more Mexican produce workers in Mexico for the export market to the United States then produce workers in California.

Beyond the workforce issues of California farmers there is also the acute dependence by small dairy farmers throughout the country on unauthorized workers. That is for another posting.

 

(Sources of content mainly prior posts and an April 2024 report by Philip Martin of UC Davis, who has studied California farming for years).

Job growth and immigrant share 2022 – 2024

Adam Tooze refers to these figures below as “the coming labor market shock.”

If the Trump administration stops or, more likely, cuts back drastically on the inflow of working age immigrants, the impact on workforce supply will be significant. That is because the U.S. born workforce is declining, and a healthy economy needs to fill a net increase of at least two million jobs a year. If he removes hundreds of housands of immigrant workers, there may be an acute worker shortage in some industries.

By combining data from different sources, I estimate that:

In 2022, 4.8 million jobs were created, largely due to a rebound from the pandemic.  In 2023, 3 million jobs were created. In 2024, 2.2 million jobs were created. (All of these net increases.) for the three years: 10 million jobs.

In these three years, 6 million, or 60% of these jobs were filled by recent immigrants.  Half of these by asylum applicants and Parole or Temporary Protected Status persons.  About one million were those with legal non-humanitarian temporary visas such as H-1B. About 1.5 million were unlawful entry or visa overstays.

In the past ten or so years, the number of U.S. born persons of working age has been shrinking by about 300,000 a year. Thus the only way that job growth was a large as it was, was at least half due to immigration and the rest due to Americans returning to work after an involuntary or voluntary absence.

 

 

Do immigrant workers create, complement, or displace?

In a modern economy, the dynamics between immigrant and native born workers is so complex that it cannot be reduced to an all-inclusive, simple sum without eliminating 90% of meaningful insight.  Thus, to say that overall immigrants add jobs, do not affect native workers, or compete with native workers is to engage in vast simplification.

Cauimi and Peri came perilously close to vast simplification in a study they released in early 2024. Giovanni Peri is a star academic researcher on immigration who has for some time argued that immigration overall is neutral or positive in its effect on native born workers.

They explain their findings through the concept of complementarity: Immigrants and U.S.-born workers often have different skills and specializations that complement each other rather than compete directly. This complementarity boosts productivity and, in turn, wages for U.S.-born workers. Since 2000, there has been an increase in college-educated immigrants, which has further enhanced the complementary effect, especially benefiting less educated U.S.-born workers.

Pretty much all academic research into the economic impact of immigrants on American workers relies on correlation analysis that deals with association, not cause. Further, these analysis address employment and wages, but not productivity, the investment decision, job switching, career switching, or domestic migration. Nor do they deal with the secondary effects. These analyses cannot capture the possibility that immigrants concentrate on geographic locales and occupations where they perceive substantial growth requiring new workers.

An example of immigrant impact which has a very rich story that is lost in statistical analysis typically done is the independent motel industry. About 60% of all hotels in the US are owned by Indian Americans, and this group may own at least 80% of all motels in small towns.   I addressed this phenomenon here.   At the core of this story is the evolution of a business model crafted by Indian immigrants that facilitated the voluntary purchase/sale of motels and hotels from native owners, and which preserved the viability of thousands of motels in the country.

How the AMA influences physician immigration

In 1970,10% of practicing physicians were graduates of foreign medical schools (IMGs). In 1985, 22% of practicing physicians were. In 2019, some 230,000 active physicians graduated from international medical schools, accounting for 25% of the total active physician workforce.

Who controls the flow of MDs from abroad? The AMA effectively influences the flow of foreign-born doctors (very roughly = graduates of IMGs. Over 80% of IMGs are non-U.S. citizens).  In contrast, foreign born workers are a quarter of computer science workers but their employers have far less influence over the overseas supply of computer science workers.

Let’s say that the AMA wants to increase the supply of MDs by 10%. How would it make that happen?

Easing International Medical Graduates integration:  The Educational Commission for Foreign Medical Graduates (ECFMG) could streamline its certification process for IMGs, making it easier for qualified foreign-trained doctors to practice in the U.S.. This could quickly boost the physician workforce, given as IMGs already constitute about 25% of the U.S. physician workforce. The AMA and ECFMG are separate organizations.  But the AMA’s influence as a leading voice in American medicine ensures that its perspectives are considered in shaping ECFMG.

Increase Medical School Enrollment: The AMA could advocate for expanding enrollment in existing medical schools and support the establishment of new medical schools. This would directly increase the number of U.S. medical graduates entering the workforce.

Support for Residency Programs: Lobbying Congress to increase funding for residency programs would be crucial. The AMA has already urged Congress to remove caps on Medicare-funded residency slots. Expanding residency positions is essential, as it’s a bottleneck in physician training.

State-Level Initiatives: Advocating for more states to follow Tennessee’s example of lowering barriers for IMGs could significantly expand the talent pool.

Policy and Regulatory Changes: The medical community could push for the passage of bills like the Resident Physician Shortage Reduction Act, which aims to increase Medicare-supported residency positions.

Promoting the use of telehealth could help extend the reach of existing physicians, effectively increasing the supply of medical services.

 

In sum, the AMA has far more concentrated and effective influence over the flow of physician immigration then does Silicon Valley over computer science, and manufacturers over engineering immigrants.

The Tech Bro Battle and MAGA: H-1B visas

The H-1B program is a critical source of computer science talent and a major resource for the STEM field.

There are in the U.S. about 35 million STEM workers (the number varies a lot by definitions) of which about 2.5 million are computer science workers. Before the pandemic scrambled the entire legal immigration system, there were at any given time about 600,000 active H-1B visas (about 85-100K issued every year, for multiple years). 90% of H-1B visas are for STEM work, and two thirds in computer science.   Overall, there are about 7 million foreign born STEM workers; about one out of twelve of these workers are here on a H-1B visa.

For an informed debate about the H-1B program, go to this posting of two years ago.

Here is the fascinating story of how the H-iB program was one of the enablers of the tech industry in India, through knowledge transfer by H-1B visa holders.

Problems with the program today: First, a huge demand by American employers has created a situation ripe with gaming and uncertainty.  Second, the fact that about one third of visas are awarded for jobs paying less than $100,000 suggests that many positions could reasonably be filled by Americans.

Importantly, the administration of the program is divided among Homeland Security (U.S. Citizenship and Immigration Services, or USCIS), the Labor Department (for wage standards), and the Department of State. No agency, no special review unit, is tasked with assessing the performance of the H-1B program with respect to meeting labor demands efficiently, effectively, and fairly.

Immigration politics is heavily client-oriented, largely out of view and with without extensive public debate.  When it bursts into the open, all kinds of contradictions appear. Tweet by Musk on 11/24/23:  “We should greatly increase legal immigration of anyone who is hardworking, honest and loves America. Every such person is an asset to the country. But massive illegal immigration of people we know nothing about is insane.”

 

 

The battle between tech bros and MAGA: the lust for global STEM talent

 

Britta Glennon in 2020 (updated Sept 2024) wrote a paper which succinctly states the demand for foreign talent from Silicon Valley, and how Silicon Valley eventually has its way. From the abstract:

“Highly-skilled workers are not only a crucial and relatively scarce inputs into firms’ productive and innovative processes, but are also a critical resource determining competitive advantage….Firms respond to restrictions on H-1B immigration by increasing foreign affiliate employment at the intensive and extensive margins, particularly in China, India, and Canada….The most globalized multi-national corporations are the most likely to respond to [skilled worker immigration] restrictions by offshoring….these firms hire 0.9 employees abroad for every visa rejection. More broadly, the paper provides evidence of a push factor for internationalizing knowledge activity.”

I have posted on the extreme dependence of American firms on foreign-born AI talent: The United States has a large lead over all other countries in top-tier AI research, with nearly 60% of top-tier researchers working for American universities and companies. The US lead is built on attracting international talent, with more than two-thirds of the top-tier AI researchers working in the United States having received undergraduate degrees in other countries.

 

 

 

 

Lant Pritchett and rotational migration

Lant Pritchett challenges us to think radically about the global allocation of workers over the next 100 years. He wants us to think about huge numbers of temporary workers. This idea now is completely off the table in the United States. But it’s an idea whose time may be coming.

He is currently Visiting Professor at the London School of Economics in the School of Public Policy and the co-founder and Research Director of Labor Mobility Partnerships. He is a long-time advocate for easing the barriers to global mobility.

I’ve addressed the imbalance between rich and emerging country workforce demographics. Part of the picture is the rise in formal education in the emerging countries, which allows their workers to be more productive.

Among industrialized countries, production of goods and services and the financing of retirement has during the 20th century required much more working age persons as a ratio of older persons.

Rich, industrialized countries will experience shrinking labor forces and increasing elderly populations, while poorer regions, particularly in Africa and South Asia, will see substantial growth in their labor force-aged populations. ​

Pritchett sees these demographic differences as creating a massive opportunity for “age arbitrage,” where young workers from labor-abundant countries can move to labor-scarce, ageing societies through expanded legal pathways, including rotational labor mobility. ​ by 2050, there could be 130 to 300 million people working in rich countries on a rotational basis, depending on various assumptions about labor force participation and migration policies. ​

He argues that with the right legal and administrative arrangements, rotational labor mobility can be implemented in a safe, orderly, and rights-respecting way, benefiting all parties involved. ​

Per Pritchett, a “well-regulated and orderly system for rotational labor force mobility” threads the three-fold political needle facing rich societies by acknowledging three questions about who can legally reside and work in their country:

(1) Who is the “future of us”—who is to be allowed to live and work in our country on a direct expected pathway to citizenship and hence participate in the shaping of the future of “our” society and culture and politics,

(2) Who will we admit as “movers of distress”—how will our country act with respect to refugees, asylum seekers, and those fleeing intolerable conditions (a category which will expand with climate change), and

(3) Who will we allow to legally reside and work in our country on a fixed term basis, and under what terms and conditions (including restrictions on occupations, sectors, regions), in order to help us meet our labor force needs?

One aspect of very large temporary worker flows is who captures the retirement contributions of these workers, the host country or the sending country?

Some facts: From 2020 to 2050 the population 65+ in Italy will grow by 5.4 million (39%) but the population 15-64 will fall by 12.4 million (33%). The projected ratio of the labor force to those 65+ will fall to less than one worker for every person 65+. This is an extreme case of demographic change. In the United States, the demographics are relatively young due to immigration. The ratio between the 15-64 cohort and 65 + shows this trend: 1950, 7.75; 2000, 5.17; 2022, 3.82; 2050, 2.8.