One of the largest ongoing holes in the global supply chain is the severe labor shortage, spawned first by the delta, and now the omicron Covid variant. This has manifested across a span of occupations, especially in service industries and agriculture. If no one is there to pick the crops, of whatever, then how will they be harvested and reach the trucks to take to the supermarkets? And if no one steps forward to do the job (Americans don't want to pick fruit, for example) then expect soaring prices of fruits and veggies - and you can't complain.
To be sure the new omicron variant has triggered travel bans and tighter restrictions on new arrivals in dozens of countries, slamming the brakes on a reopening that had been gathering pace as vaccination coverage increased and economic growth accelerated. That has resulted in a pause on a widespread effort by many advanced economies to entice foreign workers to their shores. But still, at some point, the labor blockage must end if the global economy and markets are to survive. Then when omicron retreats, where will the workers come from? And what will we do in the meantime to deal with the worker shortfall?
As reported in The Denver Post yesterday, the Biden administration will make an additional 20,000 H-2B seasonal guest-worker visas available to employers ahead of the winter hiring season. This according to the Department of Homeland Security. These visas are being made available in addition to 33,000 visas already set aside for seasonal employers, such as landscapers, hotels and ski resorts, for the winter hiring season. They will be available to employers looking to bring on temporary workers on or before March 31.
The move marks the first time the DHS is offering the additional visas for the winter season, and they are desperately needed. Indeed they still may not be enough. The expected rebound in migration from several Asian countries - which provides the majority of the world's foreign workers - is far below pre-pandemic levels. This means we will need to take in migrants from what too many (e.g. the Right) regard as "less desirable" nations. But take them in we must if the labor shortage is to be solved.
In the U.S. currently we are looking at nearly 3 million jobs in the service industry and farm agriculture which will likely never be filled by Americans. The service industry 'hole' has been ongoing for nearly four months now - one reason our local Burger King and barber shop has had to go to restricted hours. Meanwhile, certain veggies and fruits (like corn, oranges, applies, grapes etc.) are in short supply because no one can be found to harvest them. You can take away all the unemployment benefits you want but it is doubtful it will drive people to work for $8.50/ hr. at the BK, or $10 an hour at Safeway. Or even $12 an hour harvesting onions or soybeans. Hell, the state of Maryland can't even find enough crabbers, e.g
What to do?
Americans have been appalled at the scenes that erupted this past summer on the Texas border - with migrants from Haiti and even Ecuador and Cuba trying to enter the U.S. The ever ready- to- exploit Repukes have used the scenes to gin up fear of migrants and this is reflected in the polls, with Biden taking a big hit for it.
At the same time, even some dumb left pundits are blaming Biden for the 'remain in Mexico' policy (started by Trump) failing to take notice that Biden's hands have been tied by the federal courts. The last ruling compliments of the notorious 5th Circuit in New Orleans, to assert that the Biden administration is bound by the regressive (and unlawful) Trump policy.
The end result? More gridlock as regards immigration policy and very little - including appropriate visas- to ease the U.S. labor shortage. This means even if the omicron scourge were to end by the new year severe labor shortages would remains in critical supply areas, and no end to inflation
But one solution, which came up (p. A6) in a WSJ piece from Dec. 10th, has to do with a new Canadian policy to create jobs, keep supplies moving and drive economic recovery. What is it? According to the article:
"Canada plans to admit a record 401,000 new permanent residents this year, about 60,000 more than pre-pandemic intake and expects to raise that further over the next two years."
This, at last, is a sane policy. And let me note here Canada has a population of just about 38 million or nearly nine times less than the U.S. Thus, if the U.S. were to try a policy of comparable magnitude that would mean allowing in nearly3.7 million migrants to work and getting them permanent resident status.
Sadly, despite the fact that such an intake would remove nearly all the service - agriculture labor shortfalls it will never happen. Our nation is too riven by fear and the poison of culture war politics to examine the situation and respond logically and objectively.
So even if and when the latest Covid crisis ends, it seems Americans will be more content with labor shortages, higher inflation - and even their favorite restaurants cutting menu choices- than allowing more workers in as permanent residents.
Meanwhile, the Census Bureau bemoaned the nation's weakest annual population growth since its founding. The U.S. as a whole gained fewer than 393,000 people, a growth rate of about 0.1%. Predictably, right on time, the econometricians began fretting over who will do the work to provide support for Social Security, Medicare and other social insurance programs.
William Frey, a senior fellow at the Brookings Institution’s metropolitan policy program said: “It tells us that this pandemic has had a huge impact on us in all kinds of ways, and now demography.”
Once there’s a handle on the pandemic, the U.S. may eventually see a decrease in deaths, but population growth likely won’t bounce back to what it has been in years past because of fewer births.
"That will increase the need for immigration by younger workers whose taxes can support programs such as Social Security,", according to Frey.
But let's be clear the massive worker hesitation to return to (mainly) service jobs means a rethinking (beyond issuing H-2B seasonal visas) may have to be done. That means the only practical solution may well be to imitate Canada and issue permanent resident visas or documents.
Interestingly, Germany may also have to consider allowing more foreign workers, as one reads in the WSJ ('Aging Germany is short on workers', p. A10) and note:
"Economists forecast that Germany’s workforce could peak as soon as 2023 and then shrink by up to five million people by the end of the decade. While the pandemic has exacerbated the trend, it is the impending retirement of the baby boomers that is fueling the labor crunch, economists say."
As I've noted in previous posts (on productivity) the problem is not too few people in the world (which also implies too few workers) but rather redistributing existing workers from labor-rich nations to labor-poor ones, like the U.S. and Germany.