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A seemingly surprising factor in inflation? Immigration


Washington remains at a standstill on immigration reform as migrants continue to make their way to the southern border. Meanwhile, inflation remains stubbornly high in the U.S., and there's a tight labor market. There is a notion that loosening restrictions on immigration is one way to help fight inflation. Daniel Costa is director of immigration law and policy research for the Economic Policy Institute, and he joins us now. Welcome.

DANIEL COSTA: Hi. Thanks for having me.

ESTRIN: Thanks for being here. Can you first explain for us the connection between immigration and higher prices at the grocery store or the shopping mall?

COSTA: Well, the connection that most people have been talking about is the fact that there has been fewer immigrants coming into the United States and therefore into our labor market. And Chairman Powell of the Federal Reserve just the other day pointed to immigration as one of the reasons that fewer people are entering the job market. You know, immigrants are a very important and essential part of the U.S. labor market. They make up more than 17% of the labor force. So there's a whole number of related issues. But that's sort of the main point.

ESTRIN: Talk about Title 42 in all of this. We're hearing a lot about Title 42, which, of course, the Trump administration put in place during the pandemic. It allows the U.S. to turn back migrants for public health reasons. That is just one factor in reducing immigration to the U.S. What about increasing immigration? How do you see that happening? How much more immigration to the U.S. is needed to make any impact on inflation?

COSTA: The issue is that there's been a real slowdown in the number of immigrant workers coming into the U.S., both in terms of people with green cards or lawful permanent residents as well as with temporary visas. However, a lot of that was caused by the slowdowns in processing and massive backlogs at federal immigration agencies, which was caused by the pandemic. A lot of that is already getting back up to speed. It's not all across the board yet. There's still a lot of delays and backlogs. And a lot of that was caused by COVID, but also by mismanagement and anti-immigrant policies of the Trump administration. But there is some good news. In fact, some new census data was just released that shows that net migration is actually back up to pre-pandemic levels. So look. We're behind in terms of immigration levels because of the pandemic, but the picture is certainly not as dire as it looked even just a short while ago.

ESTRIN: So, Daniel, given all of this and given that inflation is better but is still high and given that this whole immigration issue is partisan, what do you think is the most realistic economic path forward?

COSTA: Well, I mean, you know, the issue with inflation has been a lot more about supply chain and other related policy issues. You know, there's no denying that we're in a hot job market right now. But whether or not there's an actual labor shortage is a whole other issue that I think is up for debate. I'm a little skeptical of that just because the labor force participation rate is not back to where it was even before the pandemic. And that's sort of an indictment of employers who are not improving wages and working conditions enough to entice workers to take the jobs on offer. And that's particularly troubling, given the fact that corporations are seeing historically higher record profit margins, if they're not willing to share some of that with workers in order to entice them for work. So I think whenever you hear the term labor shortage and when you hear employers say I can't find enough workers to hire, you have to add to the end of that sentence - at the wage that I'm willing to pay.

ESTRIN: Theoretically, if tomorrow the U.S. ended Title 42, could that help the economy?

COSTA: I think ending Title 42 would be the right thing to do morally and legally. And the United States should fulfill its humanitarian obligations and let more people in and let them be processed the way the way we're supposed to. However, it would not be a quick fix for the economy. And mostly that's because of the way employment authorization works for asylum-seekers. It realistically is going to take a year or more before they can get a work permit and start working.

ESTRIN: Daniel Costa of the Economic Policy Institute, thank you so much.

COSTA: Thanks very much for having me. Transcript provided by NPR, Copyright NPR.

Daniel Estrin is NPR's international correspondent in Jerusalem.