Moody’s Mark Zandi: Strict immigration policies won’t mean more jobs for US workers
Economist Mark Zandi argues stricter immigration policies do not boost native-born jobs. Native-born unemployment is now exceeding foreign-born worker rates. Labor force participation has fallen while employers shed jobs. A shrinking labor supply, driven by retirements and lower immigration, is a concern. Businesses may reduce capacity and raise prices due to worker shortages.
Mark Zandi, chief economist at Moody’s Analytics, contends that stringent immigration policies do not guarantee enhanced job prospects for American workers. In recent social media posts, Zandi contends that both foreign-born and native-born workers have witnessed rising job participation rates, now surpassing the rates seen among foreign-born workers, thereby debunking the notion that tighter immigration would boost wages and employment for US citizens.
"Job markets are suffering— and not just for foreign-born workers. Native-born workers are facing difficulties as well," Zandi wrote, emphasizing that proponents of stricter immigration policies had anticipated immigrants to create more jobs and raise wages for natives.
Zandi referenced Bureau of Labor Statistics data indicating that the 12-month moving average of unemployment rates has seen native-born unemployment surpass that of foreign-born workers in 2026. In July, labor force participation plummeted to 61.4%, while employers laid off 23,000 jobs as the unemployment rate plummeted to 4.1%.
Additionally, the foreign-born labor force has also shrunk by approximately 500,000 workers within the past year, sparking concerns over a dwindling labor supply. "Despite appearances, while employment and labor force participation are dismal for both groups, unemployment among native-born workers is on the rise and has now overtaken foreign-born workers," Zandi stated.
According to economist Laura Ullrich, who discussed the matter on Benzinga, the decline in job growth could be attributed to a dwindling labor supply, rather than diminished demand. Her projections forecast a potential reduction of 5.9 million workers in the U.S. labor force between 2025 and 2032, primarily due to Baby Boomer retirements and diminished immigration.
Notably, foreign-born workers, often younger with higher participation rates, play a crucial role in maintaining labor supply. Zandi suggested that businesses grappling with the loss of immigrant workers cannot merely compensate by offering higher wages, as there may not be sufficient native-born workers to replace them. Consequently, firms may resort to reducing capacity, including shortening hours, curtailing dining room operations, limiting menus, or extending lead times.
As a result, the market adjusts through price changes, with businesses increasing prices until demand decreases sufficiently to align with the dwindling supply.
Zandi concluded that the assumption that tougher immigration policies and fewer immigrant workers would lead to substantial pay increases for native-born workers has not yet materialized. This likely stems from the observation that firms losing immigrant workers realize that simply raising wages may not attract enough native-born workers.
Instead, these businesses are operating at reduced capacity, characterized by shorter hours, closed dining rooms, thinner menus, and extended lead times. This scenario represents a stagflationary supply shock: higher prices, reduced output, and no tangible benefits for native-born workers.
Written by urgent.news from Times of India's reporting — not their text. Machine-written — it may contain errors, so check the original before relying on it.
