WASHINGTON – A softening U.S. labor market among immigrant workers is emerging as a notable trend,according to the federal Reserve‘s latest Beige Book report released September 25,2024. The report, a summary of current economic conditions across the twelve Federal Reserve districts, indicates employers are increasingly reporting challenges in finding and retaining immigrant labor, particularly in sectors like construction, hospitality, and agriculture. this shift signals potential headwinds for economic growth and could exacerbate existing labor shortages.
The decline in immigrant workforce participation, observed between august 1 and September 18, 2024, is attributed to a combination of factors including increased border enforcement, shifts in immigration policies, and economic conditions in immigrants’ countries of origin. Businesses in several districts noted a decrease in the number of applications from foreign-born workers, while others reported that previously reliable sources of immigrant labor have dried up. This development is particularly concerning given the ongoing tightness in the overall labor market and the reliance of many industries on immigrant workers to fill critical roles.
The beige Book detailed specific observations from various districts. In the Philadelphia district, contacts reported a noticeable decline in the availability of immigrant workers in the construction industry. Similarly, businesses in the Atlanta district cited difficulties finding sufficient labor for agricultural jobs. The San Francisco district noted that some firms were delaying expansion plans due to labor constraints linked to immigration challenges.
Economists are closely monitoring this trend, as a sustained decline in immigrant labor could put upward pressure on wages, contributing to inflationary pressures. It could also slow down economic growth, particularly in sectors heavily reliant on immigrant workers. The Federal Reserve will likely consider these developments as it assesses the overall health of the labor market and formulates monetary policy decisions in the coming months. The next Federal Open Market committee meeting is scheduled for November 5-6, 2024.
