How immigration contributes to the labor shortage

Some economic experts say what makes the U.S. thrive are the small farms and small businesses utilizing immigrants as employees.
Posted at 3:03 PM, Jan 22, 2023

There is a huge labor shortage affecting our economy and small businesses. One of the problems, according to the U.S. Census, is the lack of an estimated 2 million workers due to a slowdown in immigration.

"There's a shortage in many industries, and as Americans, we are feeling it," said Carlos Gomez, the president and CEO of the Hispanic Chamber of Commerce Kansas City. "Stores not being opened as much, restaurants not being full as far as filling half capacity and limited hours, but we're also feeling it at the cash register with prices going up."

Kansas City is known as a growing and thriving immigrant community, with people from all over the world moving to the area to start a better life for themselves and their families.

"My family came to the States in 1984 from Mexico," said Enrique Gutierrez, who owns Teocali Mexican Restaurant in Kansas City. "We got all our paperwork lined up, and it took a while for us to come here legally. But we came here for a better source of life."

"I'm actually a DACA recipient," said Alexis Contreras, who owns Don Antonio's, a market and restaurant. "This is the United States of America; it's made by immigrants. It's one of the key factors, and it impacts a lot. We're not here to take jobs. We're here just for opportunity."

Some economic experts said what makes this country thrive are the small farms and small businesses utilizing immigrants as employees.

"I've seen a lot of business close up specifically because of the lack of labor in Kansas City," Gomez said. "Small businesses are not lacking because of a lack of business, they're hurting because they don't have enough people working to maintain a level that is profitable."

"It's been a struggle; we used to have 35 employees both part-time and full-time," Gutierrez said. "We are currently down to 16 employees."

Fewer Immigrants In U.S., Worker Shortage Driving Prices Up

Fewer Immigrants In U.S., Worker Shortage Driving Prices Up

The Census Bureau released new data showing the pandemic worsened a years-old trend, now resulting in the lowest immigration rate in decades.


Over the past three years, the country has been hurt by a labor shortage, with businesses struggling to find employees to fill vacant jobs.

The immigration debate has been reignited because of a surge at the U.S.-Mexico border. In March 2020, president trump invoked title 42, a law enacted during the pandemic to prevent the spread of COVID that has kept migrants and would-be asylum seekers out of the country.

The action sparked a shortfall of immigrants that's worsening a widespread labor shortage with more than 10 million jobs remaining unfilled, particularly in low-paying industries like hospitality, agriculture, and construction.

According to the U.S. Chamber of Commerce, there are 10 million job openings but only around 6 million unemployed workers. And because of the slowdown in immigration, the U.S. Census Bureau said there's an estimated loss of 2 million immigrant workers. That is why businesses are needing to adjust to the lack of employees.

"What I have noticed is that there's a lot more restaurants out there and a lot more industries hiring these people so the demand in pay has gone up through the roof," Gutierrez said. "It's been hard to adapt to the same life that you had before, like having both floors in my restaurant open. Now, you must minimize the amount of people that you have just to work. I just incentivize them as much as I can to give them the hours that they want to work, and the hourly wages are a little more than what the base pay is."

"We need both sides of the aisle to say what is our plan, because we knew this labor shortage was coming," Gomez said. "We have a problem. And the plan has to be a national plan. Our solution is not going to be solved on a local level."

Now, some solutions are coming into play to try to close this labor gap. The American Farm Bureau Federation, along with 350 other agricultural groups, called on the Senate to pass an agricultural reform bill already passed by the House to address the farm labor crisis to add more H-2A visas.

There's also been discussion in Congress about creating a pathway to citizenship for Dreamers in exchange for $25 billion to strengthen border security, but there's no information on whether that will happen.

But experts say immigration reform needs to happen to address this issue.

"Our country and our economy rely on jobs only immigrants are going to do and that's a reality," Gomez said. "Let's find a way so these folks can legally participate in the American system and the American dream. Because they're here to contribute they're not here to take away."

But there's more than just closing that labor shortage gap when it comes to immigration, and that's the power of spending they have.

Some small businesses are feeling the weight of a lack of immigrant consumers. For Contreras, a good amount of his business comes from immigrant workers.

"We have seen that drop little by little as far as people coming in," Contreras said. "The waves are not as good; we still get two or three waves at lunchtime but not as big. At least 70 people in line and we built an outdoor patio to compensate for the capacity. We had 75 people coming in waves. Now, give or take, it's about 35-45 people, so you definitely see it."

According to U.S. Chamber of Commerce, in 2019, immigrants wield $1.3 trillion in spending power.

"Every year, more states are allowing undocumented to get driver's license. There's now 13 or 14 states," Gomez said. "Every year, more states are passing those laws, but the majority of the 50 states, somebody undocumented can't get insurance. Imagine if we have comprehensive reform, the car insurance industry would get a huge bump and that's just one industry."

As of right now, the country will have to wait and see what type of federal action will happen when it comes to immigration reform that makes economic sense. But experts say immigrants pay more than $90 billion in taxes every year and take on the many jobs that are currently vacant and contribute around a trillion dollars in spending.

It's just figuring out which avenues to take to get this done.