Guest Blog Post, Manu Smadja, CEO of MPOWER Financing
This past June, the U.S. reached a tipping point: the number of open jobs surpassed the number of people looking for work. According to the Bureau of Labor Statistics Job Openings and Labor Turnover report, there were 10.1 million job openings, the highest level since record-keeping began in 2000, but only 8.7 million individuals looking for work. You’ve likely noticed “Help Wanted” signs posted around your neighborhood stores or your LinkedIn feed filled with notifications about new job openings.
Some of this labor shortage can be attributed to shifting demands and expectations from U.S. workers around wages, career trajectory, personal safety, or work-from-home flexibility in a post-pandemic world. Yet that’s only part of the story, as a broader demographic shift combined with unproductive immigration policies are also to blame.
The recent release of the U.S. 2020 Census reveals what economists have been projecting for years: Birth rates have declined to their lowest in generations while Baby Boomers retire in droves, creating gaps in the skilled job market that won’t be easy to fill.
The labor shortage is especially acute for skilled labor in the Technology, Financial Services, and Health sectors. The unemployment rate for college graduates over the age of 25 is at 2.5% as of September 2021, roughly half what it was just a year ago. Unfilled STEM (Science, Technology, Engineering and Math) positions are growing with 233,000 job postings for open jobs in the category in September 2021, according to CompTIA. In addition, COVID-19 has tested the limits of our healthcare infrastructure, and we can expect the demand for doctors, nurses and other skilled healthcare workers to increase as the population continues to age.
Meanwhile, the US’s less-than-productive attitude towards immigration is causing our labor force to lose out on millions of high-skilled laborers. The previous administration actively limited H1-B visas and other visa programs focused on bringing highly skilled workers to the U.S.; the number of H1-B visa approvals was nearly halved between 2016 and 2017, from 348,162 to 197,129 according to USCIS data. This was aggravated by countless measures from suspending DACA, to creating unnecessary travel bans, and vilifying immigration overall. While the new administration has worked to reverse some of these unproductive measures, it’s likely not enough.
What some call a labor shortage is in reality an immigration shortfall.
The U.S. may be losing its edge when it comes to attracting immigrant talent. A report published by the New American Economy, a bipartisan research and advocacy organization, found that there were more than seven job postings for computer-related roles for every unemployed computer or math worker in the U.S. in 2020. Where did that talent go? Perhaps they never made it to the U.S.
Indeed, a recent article by the Cato Institute, a right-leaning think tank, states that over 9 million qualified immigrants, most of them overseas, are patiently waiting through a backlog of legal permanent residence applications to be processed. This is talent the U.S. needs not only to backfill outstanding jobs, but to thrive.
Anti-immigrant rhetoric and uncertainty in immigration policies are causing overseas talent to look to “friendlier” nations. Countries like Germany, Canada, Singapore, and New Zealand will gladly accept tech talent with open arms, actively promoting their immigration-friendly policies in the hopes of attracting the best workers. For example, the Canadian government has made enhancements to the country’s visa programs in order to meet its target of attracting 1.2 million new residents by 2023. These enhancements include allowing new immigrants to start working in as little as four weeks and expediting pathways to permanent residency. U.S. tech giants, like Google, Microsoft, and Intel are taking notice and creating hubs in Canada to take advantage of the growing talent flowing into the country.
Attracting foreign talent and making the path to immigration more seamless are vital to the U.S.’ continued growth and innovation. We must provide pathways for skilled immigrants to come to the U.S., while also enabling immigrants already on U.S. soil, such as DACA recipients who are by definition college-educated (or on their way to becoming so), to fully participate in the job market.
We’re certainly not alone with this viewpoint. the U.S. Chamber of Commerce has been desperately calling on congress to lift the cap on H1-B visas. “We are talking to everyone that we can talk to on Capitol Hill … [and] we’re working with the Department of Homeland Security [and] the Department of Labor,” explained Jon Baselice, vice president of immigration policy at the U.S. Chamber of Commerce. Meanwhile, tech firms such as Google, Microsoft, Adobe, and Twitter, to name just a few, have had so much success with DACA employees, that they have filed court briefs asking that the program be continued.
Currently, the U.S. is a leader in tech, but the growing talent shortage could have us falling behind very quickly. A recent Korn Ferry study that examined global talent shortages found that the U.S. could lose out on $162 billion in revenue annually by 2030 if we can’t fill this gap. The study also found that India could become the next tech leader with a surplus of more than a million highly skilled tech workers by the same timeframe – a talent pool the U.S. could undoubtedly tap into if we can remain competitive and provide a viable place for immigrant talent to lay down roots.
It is time we make immigrants feel welcome. Our economic future depends on it.
Manu Smadja is the CEO of MPOWER Financing, a leading FinTech company that provides loans to international students in the United States and Canada to enable them to complete their education. This opinion piece originally appeared in Nasdaq.