Policies on Low-Skilled Immigration Hold Economic Fallout

Government policy around low-skilled and undocumented labor include economic reverberations that affect the U.S. economy from both business and consumer points of view. Sectors reliant on increasingly elusive low-skilled labor– including agriculture, construction, health care, food preparation and others– could result in higher costs for production and higher prices for consumption.

“The enormous demand for low-skilled workers” is one particularly strong element at the crux of the situation, according to The New York Times. At the same time, retiring baby boomers eroding the labor supply compounds the situation. This in an economy where more than half the occupations expected to undergo the most rapid growth in the decade from 2014 to 2024– personal care and home health aides, food preparation pros, janitors and other similar occupations– require no specialized schooling at all.

Additionally, Fortune warns a shortage of migrant farm workers could foretell of rising vegetable prices soon as California crops rot before they’re harvested. So far, two counties in the Golden State report losses of more than $13 million due to the worker shortage. And while weather extremes– drought and flooding– play a more dramatic role on rotting crops, additional losses due to a labor shortage is a bitter pill for farmers who’ve faced a fall of net farm income of 50 percent since 2013.

“The vast majority of California’s farm workers are foreign born, with many coming from Mexico,” Fortune reports. The rub here is that the Pew Research Center reports the rate of departure from the U.S. is higher than the rate of entry into the U.S. among Mexicans.

To make work in their fields a more attractive offer, some farmers are doubling down on efforts to lure the critical labor pool to their enterprises. Salaries above minimum wage, paid time off, and 401(k) plans are all included in contemporary compensation packages offered by farmers in an effort to stem the tide of lost labor.

Ongoing battles around U.S. immigration policies are blamed for the shortages in agricultural and other low-skilled labor. At the crux of the policies is the belief, according to NYT, “that immigrant laborers take the jobs and depress the wages of Americans competing with them in the work force.”

The missing factors in the operating assumption play out on multiple levels, including:

Low-skilled immigrants also consumer American-made goods and services.

Cheap labor raises economic output and also reduces prices.

Children of immigrants tend to possess a substantially stronger skill set than their parents.

Children of immigrants contribute to state coffers at higher rates than their parents or their native-born peers.

“What is critical to understand,” the report reads, is that “less-skilled immigration does not just knock less-educated Americans out of their jobs. It often leads to the creation of new jobs– at  better wages– for natives, too.” Importantly, “it can help many Americans move up the income ladder.  And by stimulating investment and reallocating work, it increases productivity.”

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