FIXING IMMIGRATION LAWS CAN STABILISE INFLATION

Jon Purizhansky ( Joblio.co ) says that for months now, consumers in the US have been experiencing an uptick in the prices of groceries and other commodities across the country. In May, the US government reported that inflation had jumped to a record 8.6% – the highest it has been since 1981, with the United States Department of Labor ascribing the rise in CPI to price increases for fuel, food, and housing.

Following the government’s inflation report, stock prices fell terribly as investors speculated on the Federal Reserve’s next move, which might involve hiking interest rates more sharply than expected. Already, the US Central Bank had begun tightening monetary policy in March and is expected to announce another half-point increase in its benchmark rate next week.

While the entire country struggles to grapple with the crippling effects of inflation on the economy – blaming the Russian-Ukraine conflict for the disruptions and market upsets that have no apparent end in sight, Joblio believes that the solution to the problem lies in fixing the outdated immigration laws that currently make it difficult for qualified migrants to join the US labor force.

According to the leading global recruitment company, the world is currently in a tricky situation where the only way forward is for countries to rely on each other’s strengths to even out their weaknesses. Developed countries are mostly filled with aged citizens who spent their youth building generational wealth and have no interest in working, whereas underdeveloped countries are struggling to keep their population under control – mostly filled with young vibrant individuals without jobs.

The economics around the problem is quite simple: lack of labor affects production volume, which in turn reduces supply, causing scarcity and driving up prices. Although countries such as Canada and other European nations have understood that labor shortages will kill their economy and have adjusted their immigration policies to fast-track the admission of qualified migrants into their labor force, the US continues to operate its archaic immigration laws that have turned the country’s borders into inverted funnels.

The situation is so absurd that while most advanced nations simply require a signed contract with a localized employer to grant you a work Visa, recent government data projects that the U.S. Citizenship and Immigration Services (USCIS) will reject up to 82% of the H-1B registrations for high-skilled foreign nationals submitted in the most recent H-1B lottery.

In the US, H-1B visas represent the only practical way for high-skilled foreign nationals, including international students, to work long-term. However, the annual limit of 85,000 (65,000 plus a 20,000 exemption for advanced degree holders from U.S. universities) caused the USCIS to reject more than 70% of the over 300,000 H-1B registrations for FY 2022.

A recent report by the National Foundation for American Policy (NFAP) revealed that the number of international students from India studying at Canadian colleges and universities increased by 182% between 2016 and 2019, while the enrollment of Indian students in master’s level science and engineering programs at U.S. universities fell almost 40% within the same period.

In a global economy where every other country is trying its possible best to attract the best talents and skilled labor, the US is rejecting hundreds of thousands of high-skilled professionals every year, by operating a faulty immigration policy predicated on flawed economic reasoning. The lump of labor fallacy being championed by Congress posits that job opportunities are fixed, meaning letting more people into the labor market would deprive American citizens of jobs.

However, in a recent study of the situation, economists Giovanni Peri, Kevin Shih, Chad Sparber and Angie Marek Zeitlin (focusing on the computer and technology sector) discovered that the annual limits which deny entry to H-1B visa holders have actually harmed job growth for U.S.-born professionals. Rather than helping America’s cities or their U.S.-born workers, the practice of denying H-1B visas has caused the tech sectors hundreds of thousands of jobs and billions in missed wages.

As stock prices fall and the cost of commodities continues to rise, only a thorough reform of the current immigration policy will allow the much-needed help to find its way into the country. Once employers are allowed to attract foreign labor with work visas like it’s done all over the world, the labor force will be invigorated, production volumes will rise, and supply will match demand, driving down prices and ultimately reversing the trend of inflation that seems to be turning into an American identity.

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