Unprecedented Labor Shortage Increases Need for Immigration Reforms

With an unprecedented 10.5 million open jobs, the US economy is facing its largest shortage of workers ever. The best immediate solution is immigration reform to increase access to legal workers.

A recent slow-down of legal immigration and work travel to the US has contributed to this labor crisis. While the American economy has historically enjoyed a competitive advantage from importing workers from around the world, more recently it issued 1.2 million fewer visas to work-eligible foreigners from March 2020 through July 2021 compared to March 2018 through July 2019.

In large part this deficit in legal immigrants and temporary workers resulted from the pandemic and COVID-related executive orders from both President Trump and President Biden that have limited legal immigration and travel.

In addition, government inefficiencies, a lack of resources devoted to processing immigration cases, and the failure of the Biden Administration to reopen US consulates, of which 60% remain fully or partially closed, resulted in the waste of 400,000 visa and refugee cap slots allotted for FY 2021.

According to a recent CATO report, the federal government failed to process 350,000 visas and 51,000 refugee cap slots that were allocated by Congress for the FY 2021. Included in these numbers were 62,000 wasted employment green cards and 42,716 wasted H2-B temporary visas.

Democratic lawmakers have included a measure to “recapture” the visa slots that have been wasted by the federal government over the last 30 years in the Build Back Better Act. This provision would certainly help alleviate labor shortages and boost the economy if Biden’s Department of State would fully reopen US Consulates and if lawmakers would devote adequate resources towards improving the efficiency of visa processing so that the recaptured visas can actually be utilized.  

Another solution that could help alleviate the labor crisis would be to create a conditional method for some of the 11 million+ unauthorized immigrants living in the US to earn work permits. Doing so would allow them to work for legitimate employers that pay employment taxes while simultaneously filling some of the millions of open jobs that Americans are unavailable for or are unwilling to do.

In the latest draft of their budget bill, Democratic lawmakers have included provisions to allow for around 7 million unauthorized immigrants who have been living in the US since 2010 to obtain five-year work permits. A recent FWD.us analysis estimates this specific provision would expand the US economy by $17 billion per year and increase federal, state and local tax revenues by $10 billion per year.

The current historic labor shortage negatively impacts the economy in a number of ways, including increasing the costs of goods and services. The aforementioned immigration reforms are good solutions to supply the US economy with the legal workers it needs. Lawmakers should pass them as soon as possible.


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