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Less immigrant labour in US contributing to price hikes

AP – Just 10 miles from the Rio Grande, Mike Helle’s farm is so short of immigrant workers that he’s replaced 450 acres of labour-intensive leafy greens with crops that can be harvested by machinery.

In Houston, Al Flores increased the price of his barbecue restaurant’s brisket plate because the cost of the cut doubled due to meatpacking plants’ inability to fully staff immigrant-heavy production lines. In the Dallas area, Joshua Correa raised prices on the homes his company builds by USD150,000 to cover increased costs stemming partly from a lack of immigrant labour.

After immigration to the United States (US) tapered off during the Trump administration – then ground to a near complete halt for 18 months during the coronavirus pandemic – the country is waking up to a labour shortage partly fuelled by that slowdown.

The US has, by some estimates, two million fewer immigrants than it would have if the pace had stayed the same, helping power a desperate scramble for workers in many sectors, from meatpacking to homebuilding, that is also contributing to supply shortages and price increases.

“These two million missing immigrants are part of the reason we have a labour shortage,” said economist at the University of California at Davis Giovanni Peri who calculated the shortfall. “In the short run, we are going to adjust to these shortages in the labour market through an increase in wages and in prices.”

The labour issues are among several contributors to the highest inflation in 40 years in the US – from supply chains mangled by the pandemic to a surge in energy and commodity prices following Russia’s invasion of Ukraine.

Homebuilder Joshua Correa along with his son Josh Correa point out details to cabinet subcontractor Winston Grosvenor in Plano, Texas. PHOTO: AP

Researcher Steve Camarota at the Center for Immigration Studies, which advocates for less immigration, believes a spike in illegal immigration under US President Joe Biden will make up whatever shortfall lingers from the pandemic. He also contends wage increases in low-paying sectors like agriculture are minor contributors to inflation.

“I don’t think wages going up is bad for the poor, and I think mathematically it is not possible to drive down inflation by limiting wages at the bottom,” Camarota told The Associated Press.

Immigration is rapidly returning to its pre-pandemic levels, researchers say, but the US would need a significant acceleration to make up its deficit. Given a sharp decline in births in the US over the past two decades, some economists forecast the overall pool of potential workers will start shrinking by 2025.

The immigrant worker shortage comes as the US political system is showing less of an appetite for increasing immigration. Democrats – who control all branches of the federal government and more recently have been the party more friendly to immigration – haven’t tried to advance major legislation permitting more new residents to the country. A recent Gallup poll showed worries about illegal immigration at a two-decade high. With a tough election for their party looming in November, Democrats are increasingly divided about the Biden administration’s attempt to end pandemic-related restrictions on seeking asylum.

“At some point we either decide to become older and smaller or we change our immigration policy,” said Douglas Holtz-Eakin, an economist and former official in President George W Bush’s administration who is president of the centre-right American Action Forum. He acknowledged a change in immigration policy is unlikely: “The bases of both parties are so locked in.”