How immigration can fix labor shortages — without hurting American workforce
The U.S. economy needs to put up the “Help Wanted” sign. With job openings at near-record highs and unemployment at near-record lows, labor shortages threaten to slow growth and raise prices.
Fortunately, the Labor Department has a little-known tool that could prioritize immigration in occupations for which there are insufficient numbers of U.S. workers to fill jobs. This could be a game changer — so long as the Biden administration is willing to let data, and not interest groups, lead the way.
The Labor Department’s tool, known as the Schedule A shortage occupation list, allows the government to streamline immigration for international workers who might fill open positions. The problem is that the Schedule A list has not been touched since 1991, leaving it disconnected from the needs of today’s labor market. The Biden administration seems to agree and has solicited public input about which occupations have an insufficient number of U.S. workers.
Previous administrations have failed to do this in a transparent or evidence-based way, allowing employer lobbyists to influence changes to the list. But we believe there are objective and empirical methods to avert this problem.
In a report, we describe a new data-driven method — the Help Wanted Index — to modernize Schedule A. We look at the labor market conditions for about 400 occupations across the country by measuring 10 key economic indicators for each one. This includes metrics such as the unemployment rate; the increase in median pay over time (larger pay increases indicate shortages, since it suggests companies are looking for workers); the increase in jobs (rapid job growth indicates rising demand for workers); and the income premium (how much more workers are paid compared to workers of similar backgrounds).
Our team found 28 occupations that could be included in a modernized Schedule A, including health-care occupations, such as surgeons and nurses, as well as STEM occupations, such as physicists and electronics engineers.
For some occupations, this could be transformative. Expanding health-care occupations on Schedule A would help expand Americans’ access to quality and affordable care, which is especially critical as the U.S. population ages. The Census Bureau estimates that 21% of Americans will be 65 or older by 2030, putting an enormous burden on our already strained health-care workforce. One study published by the Mayo Clinic found that 1 in 5 doctors plan to quit their jobs because of burnout. The National Center for Health Workforce Analysis predicts a gap of more than 14,500 surgeons and about 60,000 psychologists by 2036. Updating Schedule A could help tremendously.
By the same token, modernizing Schedule A could help efforts to onshore semiconductor production in the United States, which are already running into a talent crunch. The Bureau of Labor Statistics estimates that adding electrical/ electronics engineers and architectural/engineering managers to Schedule A would cover 13% of the semiconductor industry’s workforce.
It could also boost the United States’ international competitiveness by helping retain talent in other critical and emerging technology areas. This is why the House Select Committee on China, in a report released Tuesday, urged the Biden administration to update the shortage occupation list.
The purpose here isn’t to undercut tight labor markets. Instead, it is to allocate our fixed pot of immigration slots toward the markets in which immigrants are most needed and least likely to adversely affect native-born workers.
If the government adopts a data-driven method to regularly track shortages, the implications could extend far beyond immigration. Workforce training and education programs have long struggled to identify which occupations to target. A revamped Schedule A could be an excellent tool to help focus these programs, and Congress would benefit from an indicator to inform how to best invest in skills development.
A data-driven index could also identify labor shortages that are unlikely to persist, despite loud protests from employers. Many employer associations — such as those in the restaurant and construction industries — have been extremely outspoken about labor shortages, yet these occupations are noticeably absent from our list. This indicates that employer testimony is at best unreliable and at worst intentionally misleading.
For example, servers might have high rates of switching jobs within their occupation (the “transition rate”), but they have seen pay cuts and relatively high unemployment in recent years. Construction workers — from laborers to skilled craftspersons such as welders, pipe layers and electricians — also score high on job transitions but face high unemployment and are paid less than similar workers in other occupations. In these occupations, employers should try raising wages and improving working conditions before turning to the federal government for help.
The U.S. labor market is booming, which is a great thing. To ensure this momentum translates into higher economic growth and not higher prices, we should embrace an allhands-on-deck approach from a talent perspective. The Schedule A list can be an effective tool for steering immigrants toward high-demand occupations while maintaining the health of the labor market; we just need to use it alongside objective data.
Lindsay Milliken and Jeremy Neufeld are fellows at the Institute for Progress. Greg Wright is a professor of economics at University of California-Merced and a nonresident fellow at the Brookings Institution.