Is Immigration Reform the Answer to Unfilled U.S. Jobs?

The labor participation rate is dropping, and businesses want immigrants to fill some of the gap.

Jan 12, 2014 at 10:46AM

The issue of immigration reform is back on the agenda for 2014, with President Barack Obama recently characterizing the bill passed last summer by the U.S. Senate as a measure that would "boost our economy" and bring in "high-skilled workers." Business leaders agree, and the U.S. Chamber of Commerce wants to see reform address the ability to import workers to fill "both low-skilled and high-skilled jobs."

With unemployment still as high as 7%, does the U.S. really need to introduce more immigrant labor? It's a complicated question, particularly for a country where growth was so strongly dependent upon immigration for so many years -- and, to a lesser degree, still is.

An integral part of the labor force
There is little doubt that immigrant labor was instrumental in the evolution of the United States, and it is hard to imagine the industrial revolution without the waves of immigrants supplying labor for the new factories. The immigrant population is still very much part of the U.S. landscape, increasing its numbers from 25 million in 1996 to 40 million by 2011, according to the Federal Reserve Bank of Dallas.

Migrants make up 16% of the work force, and over 50% of the labor force growth. This is no small matter, since the U.S. labor force participation rate has been falling over the past decade and has accelerated since the financial crisis. As jobs go unfilled as people drop out of the labor force, economic growth is stunted. At the end of October 2013, there were 3.9 million job openings, higher than the 3.6 million reported one year earlier.

Employers want more access to foreign workers
With so many jobs staying vacant, employers have been clamoring for immigration reform that will make it easier to bring foreign-born workers into the country. Manufacturers, for instance, claim they cannot find employees to fill 600,000 new jobs, citing lack of qualifications.

The technology industry has been very vocal in its desire to import workers from other countries. Last year, the industry lobbied to have language favorable to such companies inserted into the immigration bill -- and succeeded. Still, lobbyists for tech giants like Microsoft and Oracle want to see restrictions on when employers can hire a temporary foreign worker to replace a laid-off U.S. worker removed -- a concept that seems ill-conceived at best.

We need a balanced perspective
What's the answer? Obviously, immigrants will -- and should -- continue to be an important part of the labor force. A study by the Pew Research Center notes that an astounding 93% of the work force expansion over the next 36 years will be made up of new immigrants and their second-generation offspring. With this country's declining labor force participation rate, that's huge.

But what of the millions of Americans still seeking work? With employers wanting to import high-skilled and low-skilled labor, that leaves mid-wage jobs as the best opportunity -- yet that job sector has been decimated since the financial crisis. As for low-skilled jobs, lax immigration controls have resulted in an expanding undocumented worker population with primarily low job skills, an issue that immigration reform may be able to mitigate.

High-skilled jobs generally pay the most, and are often the most desired by employers. Foreign-born workers in this category contribute the most to the U.S. economy, and this is where the tech industry wishes to see changes made. This point of view is not new in high-tech. In 2007, Microsoft CEO Bill Gates told Congress that reforms needed to be made in order for his and similar companies to hire foreign-born employees to fill positions that unqualified Americans could not.

But Americans can become qualified, and it seems that tech has a ready-made population to dip into: the youngest of U.S. workers, aged 16 to 24 years, currently experiencing an unemployment rate of more than 16%. In the six years since Gates made that speech, it seems the moneyed tech sector could have been using its influence to groom a whole new generation of high-skilled workers, many of whom could right now be filling these crucial positions that still exist.

Immigrant labor is vital to the American work force and economy, and an immigration policy that addresses those needs, as well as the well-being of both domestic and foreign workers, is essential. But so is preparing the U.S. work force for the future, even though most employers seem loath to spend money on worker education and training. When it comes to developing and utilizing a well-qualified domestic labor force, however, it certainly sounds like it would be money well spent.

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Fool contributor Amanda Alix has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft and Oracle. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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