Decreased immigration is contributing to rising prices and heightened inflation as businesses struggle to find necessary staff amid labor crunch

  • Inflation hit 8.5% in March, a 41-year high due to several factors including immigration.

  • The Associated Press reported that decreased immigration is contributing to labor shortages.

  • Business owners told the AP that the lack of foreign workers increased costs for consumers.

The national labor shortage and rising inflation have been partly fueled by decreased immigration, the Associated Press reported.

Immigration rates have dropped significantly in recent years as a result of restrictions enacted by former President Donald Trump's administration and the impact of the coronavirus pandemic. According to the AP, if immigration rates remained at the same pace it was prior to Trump's tenure and the arrival of COVID-19, the US would have 2 million more immigrants than it does now.

The decrease in immigration has translated to shortages in workers across various industries, including meatpacking.

"In the short run, we are going to adjust to these shortages in the labor market through an increase in wages and in prices," Giovanni Peri, an economist at the University of California at Davis who calculated the shortfall, told the AP.

In January, Suzanne Clark, CEO of the US Chamber of Commerce, said opening the door for more immigration would help ease worker shortages.

"That is a place the government could be particularly helpful and we do believe it would be anti-inflationary," Clark said.

Insider reported last month that inflation hit a 41-year high in March at 8.5%. However, the AP noted that immigration only played a role in that. Other factors include persistent supply chain issues from the pandemic, as well as Russia's invasion of Ukraine.

Rising inflation has come in tandem with the ongoing national labor crisis, as millions of Americans have quit their jobs each month since April 2021, many citing poor working conditions and insufficient pay. The US workforce has also been hit by declining birth rates and an aging population.

"At some point we either decide to become older and smaller or we change our immigration policy," Douglas Holtz-Eakin, an economist and former Bush administration official told the AP.

In many parts of the country, businesses are raising prices for services partly because their own operation costs have gone up without immigrant workers. In Dallas, Texas, Joshua Correa told the AP he's raised prices on homes his company builds from $500,000 to $650,000.

Others, like Mike Helle, told the AP that decreasing immigration has impacted his farming business. He said US-born workers won't work those jobs even if the pay was higher, so he relies on immigrants.

"We're feeling it and, if we're feeling it at the end of the day as builders and developers, the consumer pays the price," Correa told the AP.

Read the original article on Business Insider