Surge of foreign-born workers remake American jobs market
A surge of both legal and illegal immigration under the Biden-Harris administration is drastically changing the general makeup of the U.S. jobs market.
The major uptick in the immigrant workforce has helped ease labor shortages but, at the same time, has pushed up the jobless rate among foreign-born workers and the overall workforce.
Figures from the Congressional Budget Office (CBO) show that the U.S. has seen a net gain of more than 9 million immigrants since the end of 2020.
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About 2.6 million of those immigrants are "lawful permanent residents," which includes green-card holders and other immigrants who came through legal channels such as family or employment-based visas.
The remaining 6.5 million foreign nationals, referred to as "other foreign nationals," are made up of those who crossed the southern border without prior authorization, with the CBO expecting that population to swell to 8.7 million by the end of 2026.
The Bureau of Labor Statistics estimates that nearly 30 million foreign-born workers — both authorized and unauthorized — were employed in 2023 compared to 131.1 million native-born workers, meaning foreign born workers accounted for about 23% of the workforce.
Illegal immigration is a hot button issue heading into this year's presidential election as critics say it puts downward pressure on low-paid wages with most of those entering the country being of working age and competing for low-skilled jobs.
Precise details on the make-up of "other foreign nationals" who arrived since the post 2020 surge is difficult to obtain, although numbers from the monthly Census Bureau survey of 60,000 households and the Transactional Records Access Clearinghouse (TRAC), a database of immigration-court filings curated by Syracuse University, shed some insights.
The survey reveals an overwhelmingly Spanish-speaking cohort of migrants that are younger, less-educated and more available to work when compared to the native U.S. population.
The data shows that 78% are between the ages of 16 and 64, compared with 60% of those born in the U.S., according to the monthly census data. That amounts to more than five million people, equal to roughly 3% of the labor force.
That number is expected to swell over the coming years as it can take at least six months for unauthorized workers to obtain work permits. Furthermore, while 5% of working-age Americans are unable to work, less than 1% of the post-2020 immigrants report being unable to work.
Additionally, a cohort of people in the Deferred Action for Childhood Arrivals (DACA) program, are expected to enter the labor market too, following new measures announced by President Biden in June that will help speed up recipients qualifying more easily for long-established work visas.
Construction laborers are the most-common occupation for migrants, per the Census Bureau survey, followed by maids and house cleaners, and then cooks.
Additionally, TRAC data shows that the largest source countries for migrants assigned to court hearings since late 2020 are led by Venezuela at 14%, followed by Mexico at 13% and then Honduras at 8.5%.
Immigrants entering the labor market pay federal taxes — helping to reduce the federal deficit — as well as state taxes.
But a CBO July report shows that increases in immigration raise state and local governments’ spending — particularly on education, health care and housing — more than their revenues. For example, New York City spent $4.3 billion from July 2022 to March 2024 to accommodate immigrants and comply with existing local and state housing policies.
In addition, 25 states have policies offering in-state college tuition to unauthorized immigrant students.
In the labor market, wages for workers in the surging population start out below the wages of other people in the U.S. with similar levels of education, on average, and converge over time in CBO’s estimates.
Through 2026, the average wage growth of people in the U.S. who are not part of the surge is slightly less than it would have been without the surge because the surge slows the growth of wages of people with 12 or fewer years of education, the CBO says.
"That pattern reverses in later years as the average wage growth of people who are not part of the surge increases slightly because of higher innovation-related productivity and because the increase in the number of less-educated workers boosts the demand for more-educated people to work with them," the report states.
The CBO reports that the overall unemployment rate is mostly unaffected by the immigration surge because the initial high rate – which comes when newly arrived migrants are unable to a lack of work permits – is offset by an increase in the demand for goods and services following the surge which reduces the unemployment rate. However, recent data from the Bureau of Labor Statistics shows that the unemployment rate jumped from a low of 3.7% in November to 4.3% in July, dipping slightly to 4.2 in August.
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Meanwhile, the U.S. private sector added fewer jobs than expected in August as the labor market continued to cool off amid high interest rates, according to the ADP National Employment Report released Thursday morning.
Companies added 99,000 jobs in August – fewer than the 145,000 gain predicted by LSEG economists and the fewest number of jobs added in the report since January 2021. The report also revised July's gains downward to 111,000 after the initial report found 122,000 jobs added.
Fox Business’ Eric Revell contributed to this report.