In recent years, foreign-born workers have been playing a significant role in driving growth in the US labor force, according to Fitch Ratings. The agency reported that foreign-born workers made up 19% of the labor force in 2023, up from previous years. While this surge has been positive for labor growth, Fitch cautioned that there is a risk of oversupply as labor demand weakens.
Rising layoff announcements and a decrease in business hirings are just some of the signs that the slowdown is already underway. Despite this, government hiring has also contributed to fueling the labor market. In 2023, the government sector saw a growth rate of 2.7%, the highest in decades. This growth is expected to continue as government employment catches up with private sector employment.
While immigration has had a positive impact on economic growth in the US, analysts at firms like Goldman Sachs, JPMorgan, and Morgan Stanley have warned of potential risks such as oversupply in the labor market. Nevertheless, they expect current growth trends to continue in the near future due to contributions from foreign-born workers and government hiring.
In conclusion, while there are risks associated with increased immigration and government hiring, their contributions have significantly boosted economic growth in the US. As such, policymakers must carefully balance these factors when making decisions about immigration policy and workforce development initiatives to ensure sustainable economic growth for years to come.
