Immigrant Employment Patterns during the Pandemic

Immigrants are a vital part of the U.S. workforce, constituting almost one-fifth of the U.S. labor force in December 2021. While the effect of pandemic-related disruptions on overall U.S. employment has been widely discussed, their effect on immigrant employment has not received corresponding attention.

A July 2021 Pew Research Center article noted that the pandemic disproportionately raised unemployment among foreign-born workers.See Rakesh Kochhar and Jesse Bennett’s “Immigrants in U.S. experienced higher unemployment in the pandemic but have closed the gap,” Pew Research Center, July 26, 2021. The unemployment rate for foreign-born workers climbed from about 4% in the first quarter of 2019 to a peak of 15.3% by the second quarter of 2020. In comparison, the unemployment rate for U.S.-born workers rose from 4.1% to 12.4% over the same period. The article also found that employment among immigrants recovered well: The unemployment rate fell to 5.9% by the second quarter of 2021, which was just 0.1 percentage points higher than the rate for native workers.

How Badly Did COVID-19 Disrupt Immigrant Employment?

Unemployment among foreign-born workers rose disproportionately during the COVID-19 pandemic—all the way to 15%. But, as St. Louis Fed economist Subhayu Bandyopadhyay explains, that figure may not capture the full picture.

Transcript

Bandyopadhyay: There has been a lot of attention on the effects of the pandemic on the U.S. labor market. However, not enough has been done vis-a-vis immigrants, how they have been affected by the pandemic and their role in the U.S. labor market.

A notable exception is a Pew Research report which looked at the immigrant unemployment picture. And what they found is that the unemployment rates in natives and immigrants were comparable, at around 4%, pre-pandemic. But both of those numbers rose sharply after the pandemic. And immediately after the pandemic, the natives were at around 12.5% while the immigrants were much higher, above 15%.

The good news, however, is that there has been recovery on all fronts, with the Quarter 2 2021 numbers coming down all the way to around 6% for both the natives and the immigrants.

An important difference between the natives and the immigrants is, unlike the natives, of course, immigrants often have jobs which are tied to their visas. And so, in a bad situation, when they lose their jobs, they may have to go back to their home country, or they may want to go back to their home country. So, what that means is that you have an exit of people from the U.S. labor market in that situation.

One of the things that we talked about is immigrant unemployment rate. And we were worried that it was pretty high. But when you look at the factor that, actually, the people who were exiting the labor market altogether because they went back to their home nations, actually, that factor by itself tends to drive down the unemployment rate.

So, what you have is perhaps the real, in a sense, rate that would have occurred if the immigrants stayed back in the U.S. would have been even higher. So, in a way, as bad as it is, perhaps the Pew unemployment number does not fully capture the true pain of the immigrants in terms of employment loss.

Unlike native workers, who can stay in the U.S. when faced with job losses due to COVID-19 disruptions, some unemployed immigrants may return to their home nations, especially if their U.S. visas are employment-based. This tends to drive down both the number of foreign-born unemployed workers looking for jobs in the U.S. and the total foreign-born labor force. Because the immigrant unemployment rate is the proportion of the immigrant labor force that is unemployed and looking for work, the exit of some foreign-born workers must reduce the rate.Say, for example, there were 5,000 unemployed immigrant workers out of a foreign-born labor force of 50,000 workers, which translates to an immigrant unemployment rate of 10%. If 1,000 of those unemployed immigrant workers left the U.S. labor force, the rate would decline to 8.2%.

In turn, this suggests the 15.3% unemployment rate cited in the Pew report is probably lower than what the foreign-born unemployment rate would have been in the absence of any foreign-born workers leaving the U.S. Related to this point, we explore whether COVID-19-related disruptions led to substantial job losses among foreign-born workers and drove some of them to return to their home nations. We accomplish this using monthly data to compare pre- and post-pandemic immigrant employment and labor force patterns during the period from January 2018 to December 2021.Current Population Survey microdata, accessed via IPUMS CPS. See IPUMS.

This article makes two contributions. First, we consider how the pandemic has affected the share of immigrants in the U.S. population, the share of immigrant employment in total U.S. employment, and the share of foreign-born workers in the U.S. labor force. Second, we focus on how the pandemic has affected the share of immigrant employment in the top six immigrant-intensive occupational groups at the end of 2019 (i.e., those with the highest immigrant shares in employment during December 2019).

Immigration and Immigrant Employment

Immigration policy and other factors—including push factors, like poverty or political instability in immigrants’ source nations, and pull factors, like good job opportunities in the U.S.—affect immigration flows. Immigration flows, in turn, determine how the size of the foreign-born population in the U.S. evolves over time.

The figure below shows that the pandemic and associated disruptions initially sharply reduced the foreign-born share of the U.S. population, with it reaching a trough in September 2020. This implies a net decline in immigration during this period. Since then, there has been a sharp recovery, with the December 2021 share exceeding the pre-pandemic share.

At the same time, the share of employed immigrants in total U.S. employment also fell sharply, from about 18.5% in February 2020 to 17.2% in June 2020. Although total U.S. employment fell sharply as well during this period, the impact on immigrant employment was proportionally higher. The fall in immigrant employment also coincides with the decline in immigration during the pandemic. As pandemic-related disruptions eased, immigrants’ employment share recovered to about 18.7% by December 2021.

The share of immigrants in the U.S. labor force was about 18.5% at the beginning of the COVID-19 recession in February 2020. Although the recession ended in April 2020, immigrants’ share in the labor force reached a trough of about 17.6% in June 2020 but then recovered to 18.7% in December 2021. The temporary declines in the shares of immigrants in the U.S. population, immigrant employment and the immigrant labor force all point to the fact that COVID-19 posed a heavy but temporary burden on both actual and potential immigrants during this period.

What Affected Immigrant Employment during the Pandemic?

St. Louis Fed economist Subhayu Bandyopadhyay unpacks the factors that drive immigration flows and explains why COVID-19 disruptions caused the portion of immigrants in the employed workforce to fall sharply.

Transcript

Bandyopadhyay: Immigrants are a very important part of the U.S. labor force, at around a fifth of U.S. employment. And the pandemic clearly had major effects on the U.S. labor market.

What we see is that immigrants respond to two factors, the push and the pull factors. Push factors are when in their source nations, there's civil strife or poverty, they would tend to be pushed out of those nations to seek opportunities elsewhere. Pull factors would be the economic prosperity of the United States.

However, these push and pull factors were disrupted because of the pandemic with severe border restrictions during this period, and also just the loss of jobs, which lowers economic opportunities. The immigrant employment share actually was fairly high at around 18.5% pre-pandemic, and we are talking February 2020. But there's a very sharp drop right around the time that the pandemic recession hit the United States. The number came down all the way to around 17%.

Now, you may think 1.5%; but first of all, remember that it's a very large, large economy. Second point is that while immigrant employment was falling, the national employment was also falling. So, the ratio, the denominator was falling, too. So, to make the ratio fall, immigrant employment actually had to fall much sharper.

The good news, however, is that there has been recovery on all fronts and the post-pandemic period is looking really good.

Studying immigrant employment in the United States is very important, because immigrants provide very valuable skills. So, when you think of the Silicon Valley, for example, immigrants play a very large part in it. On the other end of the spectrum, you have farm workers in California helping a lot to keep U.S. food prices low. And U.S. growth in the future depends on how we deal with immigrants and immigration policy.

The Top 6 Occupational Groups Ranked by Immigrant Employment Shares

Pandemic-related disruptions had disparate effects on immigrant employment shares across occupational groups, as some were hurt much more than others. The next figure shows that the share of foreign-born workers in the farming, fisheries and forestry occupational group fell precipitously from almost half to about one-third by July 2020. Although seasonal factors can be important in the farming sector, the July 2020 number is the lowest among all the July numbers for the period from 2018 through 2021.

However, another top occupational group, building and grounds cleaning and maintenance, exhibits almost a flat line in the recessionary period and a modest dip shortly after the recession. Although further data and analysis are needed to be sure, it is possible that border disruptions reduced the availability of migrant labor in the farming, fisheries and forestry occupational group, contributing to the sharp decline in the foreign-born employment share during the recessionary period.

Recovery in immigrant shares has been uneven among the different occupational groups, with the top three groups showing markedly higher shares in December 2021 compared with their respective pandemic-era lows.

How Did COVID-19 Impact Immigrant Workers in Different Occupations?

The toll of pandemic-related disruptions hurt some occupational groups much more than others. St. Louis Fed Research Associate Praew Grittayaphong explains how six immigrant-intensive job groups were affected unevenly.

Transcript

Grittayaphong: As you’ll see from the data, COVID-19-related disruptions had uneven effects on immigrant share, or immigrant employment, across different occupational groups. Specifically, if we look at the top six immigrant-intensive occupational groups, we can see that some groups were hurt more than others.

For example, if you look at farming, fisheries and forestry, we can see that the share of foreign-born workers fell from almost one-half all the way down to one-third by July 2020, even if we take some seasonal effects into account.

On the other hand, the building and grounds maintenance group exhibited almost a flat line during the recession. And they only had a slight dip shortly after.

Fast-forward to December 2021, and we have seen a very robust recovery in these groups. And at least the top three immigrant-intensive occupational groups show markedly higher shares of foreign-born workers compared to their respective pandemic-era lows.

Conclusion

The COVID-19 pandemic temporarily disrupted immigration and immigrant employment patterns in the U.S. During the worst of the pandemic in the early part of 2020, immigrants suffered a disproportionate loss in employment. Both lower immigrant employment in the U.S. and pandemic-related disruptions that resulted in fewer potential immigrants to the U.S. probably contributed to this outcome. However, immigrant employment has strongly recovered, and in recent months, the U.S. labor market seems to be returning to pre-pandemic patterns of immigrant employment.

Endnotes

1. See Rakesh Kochhar and Jesse Bennett’s “Immigrants in U.S. experienced higher unemployment in the pandemic but have closed the gap,” Pew Research Center, July 26, 2021.
2. Say, for example, there were 5,000 unemployed immigrant workers out of a foreign-born labor force of 50,000 workers, which translates to an immigrant unemployment rate of 10%. If 1,000 of those unemployed immigrant workers left the U.S. labor force, the rate would decline to 8.2%.
3. Current Population Survey microdata, accessed via IPUMS CPS. See IPUMS.