Immigration and the Supply Chain

Prior to 2020, mask mandates, social distancing, and stay-at-home orders were unfamiliar terms to most, but since the outbreak of the COVID-19 pandemic, society has come to learn and adapt to the so-called ‘new normal.’ While in many ways the ‘new normal’ is one of remote work and vaccine mandates, it is also one of seemingly pervasive staff shortages, order delays, and general supply chain disruptions. The economy is now experiencing a situation in which millions of jobs are going unfilled, due in part to what is being called the “Great Resignation,” but one overlooked factor in this situation is immigration.

The Bureau of Labor Statistics estimated that there were approximately 10.6 million job vacancies in the United States at the end of November 2021, a dramatic increase from the 6.8 million job vacancies in November 2020 and the 6 million job vacancies in December 2019. As the number of job vacancies climbs, filling those vacancies has become increasingly challenging for employers. Compared to the average rate over the past 20 years, the U.S. Chamber of Commerce now estimates that there are only half as many available workers for each open job, and the labor force participation rate remains 1.5 percentage points lower than in February 2020, equivalent to a labor force reduced by more than 2.2 million individuals.

Many of these job openings are in occupations essential for the supply chain of goods on store shelves and online orders. For example, the American Trucking Associations estimates that the truck driving industry is roughly 80,000 drivers short of meeting current freight demand, and manufacturers are struggling to fill the nearly 500,000 job openings they currently offer. Pre-pandemic farmworker shortages only continue to worsen as crops across the U.S. go unharvested without sufficient labor. Not only are job vacancies contributing to major supply chain issues that are slowing economic recovery efforts—coupled with high demand, these shortages are contributing to rising consumer prices.

Notably, these are occupations and industries that have had higher percentages of immigrants in their workforce in recent years. Immigrants make up 73% of farmworkers and nearly 20% of the workforce in both the manufacturing and transportation industries, yet during the pandemic, foreign-born populations experienced even higher unemployment compared to U.S.-born populations.

Although a lot of media and political attention has been focused on the southern border and the increased encounters there, employers attempting to address job shortages by hiring foreign workers through proper, legal channels are facing unprecedented backlogs and delays at U.S. Citizenship and Immigration Services (USCIS) and U.S. consular visa offices overseas. Of note, a recent Department of Homeland Security (DHS) Inspector General report noted that paper reliant procedures resulted in a 50% reduction in case completion from March to June 2020 at USCIS compared to the same timeframe in 2019.

Furthermore, entry requirements, travel bans, and quarantine regulations have exacerbated the administrative delays. Both then-President Donald Trump and President Joe Biden issued bans on entry based on countries of origin at various times throughout the pandemic, and in June 2020, Trump suspended entry for many employment-based visa holders completely. While the proclamation was only in effect for approximately six months, the processing delays and talk of steep fee increases continue under the current administration with significant repercussions on legal employment-based immigration. The Cato Institute has noted that legal immigration to the U.S., as denoted by both immigrant and nonimmigrant visas issued at consulates overseas, has declined dramatically since 2017 and has not yet recovered to pre-pandemic levels.

In May 2021, the DHS and Department of Labor (DOL) partially responded to these challenges by making an additional 22,000 H-2B temporary nonagricultural guest worker visas available for fiscal year 2021, reserved specifically for employers who were likely to suffer irreparable harm without the additional employees. By mid-August, the raised cap had been met, and in December 2021 DHS and DOL made the unprecedented announcement that yet another 20,000 H-2B nonagricultural visas would be released in the first half of FY2022.

While these actions are significant, some of the visas sought by employers are still unavailable due to the narrow scope of the current low-skilled employment-based visa options. For example, dairy farms that require year-round labor do not qualify for the H-2A guest worker program simply because the program is limited to seasonal work.

As a result of these restrictions and shortages, industry experts continue to advocate for improved migratory programs that can fully meet their needs. Leaders in the truck driving industry have met with transportation and labor officials to advocate for lowering immigration barriers for essential drivers. The American Farm Bureau Federation continues to urge Congress to act on immigration and implement a new and more flexible guest worker program, and the National Association for Manufacturers has repeatedly emphasized its support for more comprehensive and bipartisan immigration reform.

These labor shortages are not only endemic to the United States. In the U.K. the truck driver shortage continues at crisis level, and crops rot in fields without sufficient labor. In Canada, 82% of surveyed manufacturers reported labor shortages, with some describing the situation as the worst shortage they have ever experienced. The situation faced by the U.S. is therefore not unique, and its response does not have to be either.

In September 2021, the U.K. government took coordinated action to ease supply chain pressures by offering both domestic training and thousands of new visas for essential drivers. Canadians also recognized the role of immigration on their labor supply, and in October 2021, Ontario began asking the federal government to double skilled immigration and to remove regulatory barriers that hamper immigrant workforce integration. The Canadian Manufacturers & Exporters association has also suggested that the government “double its target for economic class immigrants by 2030” to address manufacturing labor shortages, and Canada has already increased its allotment for new permanent residents by 10,000 for 2022.

With over 90% of state and local chambers of commerce having reported that worker shortages are holding back their economies and employers are struggling to fill open jobs, the U.S. must include immigration in its ongoing workforce and supply chain response, just as other developed nations have.