Economists hope a rebound in immigration helps curb inflation The number of guest workers and immigrants coming to the U.S. is slowly climbing after years of declines. Economists say that could help ease labor shortages, but some doubt it will curb inflation.

As foreign workers return, economists see help for labor shortages and inflation

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The tight labor market, which has driven everything from rising wages to rising inflation, may be changing because of immigration. NPR's Joel Rose reports.


JOEL ROSE, BYLINE: The screams of joy are back this summer at Funland, a beachside amusement park in Rehoboth Beach, Del. And so are student guest workers from around the world. Morgan Bennett is from Jamaica.

MORGAN BENNETT: There was a listing of all the different places that I could have worked and where they're located. But when the person had told me the type of job that I would have encountered, I just said yes.

ROSE: This season will be the first since the pandemic began, that international students will be a big part of the temporary labor force in Rehoboth Beach. And employers are glad to have them back.

CHRIS DARR: We saw last year we couldn't fill the positions that we had.

ROSE: Chris Darr is in charge of hiring at Funland. For decades, he says, the park has relied on students coming to the U.S. on J-1 visas. But the program was all but shut down in 2020. The numbers were up last year, though just barely. Darr says he couldn't find enough workers to keep the park open every day.

DARR: Especially at the end of the summer. Early August, we lose college students. And without the J-1 visa program, we wouldn't be able to open half of the stuff that is in the park. They are truly important to the success of our business.

ROSE: The number of guest workers and immigrants coming to the U.S. is slowly rising again after years of steep declines. Tens of thousands of international students are back at resort towns and amusement parks. The Biden administration has released more visas for foreign guest workers, and it's automatically extending work permits for others. Economists say that should help to ease labor shortages. And some argue it could help calm inflation, too.

GIOVANNI PERI: Hopefully, if this trend continues and maybe accelerates, we will see the easing of some of the shortages which are still observing clearly right now.

ROSE: Giovanni Peri is an economist at the University of California, Davis. He says the U.S. is about 2 million working-age immigrants short of where it would have been if not for the pandemic and the Trump administration's cuts. Peri says that's contributed to a tighter labor market, putting pressure on employers to raise wages and, in turn, prices.

PERI: If these shortages loosens up - so if there are more worker, this should also reduce the inflationary pressures.

ROSE: Especially, he says, in industries that depend heavily on immigrant labor, like hospitality. Susan Wood owns a restaurant in Rehoboth Beach called The Cultured Pearl.

SUSAN WOOD: We were 32 employees short last summer. It was torture. I mean, all of our staff worked six, seven days. They killed themselves. I worked 183 days straight at the front desk, and my husband worked more than that in the kitchen.

ROSE: Wood is also participating in the J-1 visa program. Without those international student workers, she says, her year-round staff worked a lot of overtime last summer, which drove her labor costs way up.

WOOD: We had to raise prices. We raised prices because of payroll but not nearly as much as we had to raise prices because of food costs.

ROSE: The costs of food and energy are still rising fast. Economists say that's contributing to inflation across the economy. And some are skeptical that a rebound in immigration will have much of an impact.

RAMESH PONNURU: I don't think it's going to do much to fix our inflation problem.

ROSE: Ramesh Ponnuru is the editor of the National Review and a fellow at the American Enterprise Institute, a conservative think tank in Washington. He argues that inflation right now is largely caused by problems in the supply chain and that simply bringing immigration back to pre-COVID levels won't solve those problems.

PONNURU: We need an immigration policy designed with our economy's interests in mind. We don't have that. And just toggling that so you have more of a dysfunctional immigration policy seems to me to be a mistake.

ROSE: Back in Rehoboth Beach, raw potato slices plunge into hot peanut oil at Thrasher's French Fries.

DEAN SHUTTLEWORTH: So we dice them. We put them in baskets.

ROSE: Dean Shuttleworth is the general manager. He's glad to have more than a dozen international students back on his payroll because it means he'll have enough staff to reopen another location across the street.

SHUTTLEWORTH: This weekend was the first time we opened our 26 Rehoboth Avenue store up in two years. Last year, we had the volume. We were extremely busy. But certainly, you're going to wait on less customers. So I'm in pretty good shape this year.

ROSE: But Shuttleworth says he's still raising prices this summer to keep up with the rising cost of potatoes and everything else.

Joel Rose, NPR News, Rehoboth Beach, Del.

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