Immigration into America has slowed down tremendously, which may hurt the labor market and economic growth as the country tries to bounce back from the coronavirus pandemic, according to a new note from J.P. Morgan.
"Population slowdown threatens trend growth," the Nov. 12 note stated, highlighting the fact that due to more aging boomers retiring from the workforce and 3 million fewer immigrants in the country, trend labor force growth is going to be limited at only 0.1% per year and risks hurting overall GDP growth.
The news wasn't surprising to many watching the labor market, who fault the previous administration's policies on top of the pandemic's impact on mobility for the bleak outlook.
“Immigration is crucial to growing the labor force and for economic growth, particularly in the medium and long term," Stuart Anderson, executive director of the National Foundation for American Policy, told Yahoo Finance.
Anderson added that the Trump administration's policies greatly limited legal migration and the pandemic worsened the numbers overall, contributing to a shortage of available workers. "If similar policies were to resume in 2025, expect additional long-term damage to U.S. economic growth and the American labor market," Anderson warned.
J.P. Morgan researchers noted that the Census Bureau estimated that the working age population (ages 16 to 64) peaked in 2019, and has been "falling for almost two years," as seen in the graphic below.
The estimates now put the working age population in 2021 at 2.5 million below expectations.
The "vast majority" in the shortfall of these workers was a result of a decline in immigration to the U.S., the researchers added, "beginning during the Trump administration and continuing through the COVID pandemic."
Projecting from the Census Bureau's data, the researchers estimated that the international migration slowdown into the U.S. has resulted in 3 million immigrants "missing" from America, "a large majority of whom would have been of working age."
'Ample reasons for pessimism' around labor force
The drop is also paired with the fact that an extra 1.7 million Americans said they have retired (though some are now creeping back into the workforce, as previously reported by Yahoo Money).
J.P. Morgan contended that these retirees "might easily be drawn back by a tight labor market" and that the pandemic just brought the inevitable to the forefront.
Meanwhile, recent weekly jobless claims revealed a new pandemic-era low, signaling a tight labor market.