Labor Market Challenges and Foreign-Born Labor Force: The Case for Expanded Immigration

By at 22 May, 2023, 3:06 pm

by Raymond J. Keating –

In a recent post, SBE Council focused on challenges in the labor market, including the current tight labor market, trends in the labor force and the population, and projections for coming years.

A key remedy to current and future labor force shortfalls must be expanded immigration, that is, reforms that welcome individuals who are willing to work, which includes, by the way, starting up and building businesses.

Along these lines, consider a few key points from the new U.S. Bureau of Labor Statistics’ “Foreign-Born Workers: Labor Force Characteristics — 2022” report:

• “In 2022, the labor force participation rate of the foreign born increased to 65.9 percent. The rate for foreign-born men changed little at 77.4 percent, while the rate for foreign-born women increased to 55.0 percent. The labor force participation rate of the native born changed little at 61.5 percent. The rate for native-born men was little changed at 66.0 percent, while the rate for native-born women increased to 57.2 percent.”

• A similar breakdown prevailed regarding the employment-population ratio: “In 2022, the employment population ratio of the foreign born increased to 63.6 percent. The rates for foreign-born men and women increased to 74.9 percent and 53.0 percent, respectively. The employment population ratio of the native born rose to 59.2 percent. The population ratios for native-born men and women increased to 63.5 percent and 55.1 percent, respectively.”

• Part of the differential between the foreign-born and native-born labor force participation rates has to do with age. As reported, “By age, the proportion of the foreign-born labor force made up of 25- to 54-year-olds (71.1 percent) was higher than for the native-born labor force (62.2 percent). Labor force participation is typically highest among persons in that age bracket.”

• Toss in the fact that entrepreneurship rates run higher among immigrants and their children versus the overall population, and the economics case for expanded immigration becomes even clearer.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest book is The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist.


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