The recent surge in immigration has contributed to a significant increase in the labor force, leading to a boost in job market activity and some unexpected trends in economic data. With an estimated 3.3 million net immigrants expected this year, a steep rise from pre-pandemic levels, both legal migration and border apprehensions have played a role in shaping this influx. While immigration remains a hotly debated topic, the rise in population due to this surge is driving strong hiring trends in the economy.
Economists believe that the influx of immigrants into the labor market is helping sustain robust job growth without causing the economy to overheat. Analysis from the Brookings Institution suggests that the economy could add between 160,000 to 200,000 jobs per month this year without significant risks of wage increases and inflation. The uncertainty surrounding immigration flows has led to varying estimates of the level of employment needed to maintain this delicate balance, with projections ranging from 125,000 to 265,000 new jobs required each month.
Additionally, the increase in immigration may shed light on a puzzling discrepancy between two key employment indicators: the establishment survey and the household survey. While the former has shown substantial job gains in recent months, the latter has indicated a decline in employment. This disparity has confounded analysts, but the delayed inclusion of recent immigration surges in household survey data could explain this discrepancy. As companies report immediate hiring of various workers, including immigrants, the establishment survey captures these gains more accurately, while the household survey relies on Census estimates that may lag behind the current trend.
