Answer to economic enigma: Immigrants
New arrivals are fueling job growth, keeping economy from falling into a recession
MIAMI — Having fled economic and political chaos in Venezuela, Luisana Silva now loads carpets for a South Carolina rug company. She earns enough to pay rent, buy groceries, gas up her car — and send money home to her parents.
Reaching the United States was a harrowing ordeal. Silva, 25, her husband and their then-7-year-old daughter braved the jungles of Panama’s Daríen Gap, traveled the length of Mexico, crossed the Rio Grande and then turned themselves in to the U.S. Border Patrol in Brownsville, Texas. Seeking asylum, they received a work permit last year and found jobs in Rock Hill, S.C.
“My plan is to help my family that much need the money and to grow economically here,” Silva said.
Her story amounts to far more than one family’s arduous quest for a better life. The millions of jobs Silva and other new immigrant arrivals have been filling in the United States appear to solve a riddle that has confounded economists for at least a year:
How has the economy managed to prosper, adding hundreds of thousands of jobs, month after month, at a time when the Federal Reserve has aggressively raised interest rates to fight inflation — normally a recipe for a recession?
Increasingly, the answer appears to be immigrants. The influx of foreign-born adults vastly raised the supply of available workers after a U.S. labor shortage had left many companies unable to fill jobs.
The availability of immigrant workers eased the pressure on companies to sharply raise wages and to then pass on their higher labor costs via higher prices that feed inflation. Though U.S. inflation remains elevated, it has plummeted from its levels of two years ago.
“There’s been something of a mystery — how are we continuing to get such extraordinary strong job growth with inflation still continuing to come down?’’ said Heidi Shierholz, president of the Economic Policy Institute. “The immigration numbers being higher than what we had thought — that really does pretty much solve that puzzle.’’
The immigration boom was a surprise. In 2019, the Congressional Budget Office had estimated that net immigration — arrivals minus departures — would equal about 1 million in 2023. The actual number, the CBO said in a January update, was 3.3 million.
Thousands of employers desperately needed the new arrivals. The number of native-born Americans in their prime working years — ages 25 to 54 — was dropping because so many of them had aged out of that category and were nearing or entering retirement. Their numbers have shrunk by 770,000 since February 2020, just before COVID-19 slammed the economy.
Filling the gap has been a wave of immigrants. Over the past four years, the number of prime-age workers who either have a job or are looking for one has surged by 2.8 million. And nearly all those newcomers — 2.7 million, or 96% of them — were born outside the United States.
“We cannot do it without them,” said Jenni Tilton-Flood, a partner in the Flood Brothers dairy farm in Clinton, Maine.