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Immigrants could fill worker shortages in mining, software industries, experts say

A new report shows that despite the unusually high national unemployment rate, some specific industries are facing shortages of skilled workers, shortages that may reduce profits and increase prices in these industries. Experts say that higher levels of immigration could alleviate these shortages, benefiting not only the particular industries but also the overall economy.

According to Fitch Ratings, natural resources (including mining, oil and natural gas) and software firms are two economic sectors where a lack of skilled workers is becoming a problem. Heavily-unionized industries like auto manufacturing and airlines are also facing shortages to a lesser extent (given the declining bargaining power of unions in the United States). This may lead to “localized inflation pressures” due to higher wages in these particular industries, even as the overall economy remains stagnant.

Karl Smith, a blogger and economist at the School of Government at the University of North Carolina-Chapel Hill, told The American Independent the report’s conclusions “sound like a reasonable assessment of the U.S. labor market.” He says that these labor shortages could be solved by “a U.S. immigration policy that pulled in more higher-skill workers.”

But Madeleine Sumption, a policy analyst at the Migration Policy Institute, said that it’s often harder than it looks for the government to “deliberately create linkages between immigration flows and labor shortages.”

“When people see reports like the Fitch one,” Sumption said, “There’s kind of a tendency to say ‘well here are these shortages, let’s find immigrants to fill them with.’ This is an alluring idea, but it’s incredibly difficult to put into practice.”

Sumption says that simply looking at the occupation “as the unit of analysis” leaves out all of the specific skills and knowledge required for the particular job being filled. That’s why the United States has a system that lets businesses request visas for specific positions if they say that they cannot find an American citizen to do the job.

One example of very specific knowledge needed for an unfilled job is shale drilling, says the Fitch report, where workers are “not fully interchangeable” because types of shale vary so widely.

Moreover, Sumption argues, not all labor shortages can be solved by immigration: “You can say with some accuracy that this occupation has more shortages than others, but it doesn’t tell you why the shortage exists.” She gives the example of nursing: “The biggest issue with the supply of nurses isn’t the lack of people but limited training and retention problems,” meaning that trained nurses have tended to leave the labor force relatively quickly.

Smith agrees that the U.S. government “shouldn’t really get involved” in specifically targeting the number of workers needed by each industry. He says that a “points-based” immigration system that “makes it easy for educated people to come over” is a good idea because “labor markets are to a large extent flexible.” If there are jobs, he said, then immigrants will find them, so long as they are allowed to work within the United States.

A recent Gallup survey that Smith wrote about on his blog found that 19 percent of people with college degrees worldwide would like to permanently move to another country.

Smith says that more higher-skill immigration would not only solve specific worker shortages but also broaden the tax base and provide more demand for housing as well as for goods and services more generally. “There are lots of indications that over the last ten years the demand for high-skilled workers has outstripped the supply, that’s why all the wage increases have gone to high-skilled workers,” he said.

This divergence between high- and low-skilled workers in the U.S. is one of the reasons why the last decade saw dramatic increases in income inequality.

Ultimately, immigration policy solutions to the skilled-worker shortage don’t appear to have much of a chance in the current political climate. MPI’s Sumption points to Rep. Zoe Lofgren’s (D-Calif.) bill, which would make it easier for foreign-born graduates of American universities who have majored in science, technology, engineering and math (STEM) fields to obtain visas authorizing them to work in the United States. The bill, called the IDEA Act, has yet to obtain a single Republican cosponsor, making it unlikely to get very far in a Republican-controlled House.

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