The Impact (and Growing Scarcity) of Foreign-Born Workers
Throughout American history, immigration has waxed and waned repeatedly, impacting how foreign-born workers contribute to the U.S. workforce.
Although the number of immigrants arriving each year varies, in recent decades, immigration to the U.S. has typically been strong. As a result, there has been a corresponding rise in the share of foreign-born workers in the U.S. workforce.
Evolving Trends in Immigration
In the 21st century, a variety of factors have led to this robust immigration to the U.S. Higher levels of immigration have substantially increased the percentage of U.S. workers who are foreign-born. In fact, this share rose from 11.4% in January 1998 to 19.1% in December 2024, a dramatic rise in just 27 years.
Although the role of foreign-born people in U.S. employment has clearly been growing over time, it’s worth noting that this growth has been uneven, largely due to shifting economic and/or social conditions in both the U.S. and in origin countries.
For example, the foreign-born share of U.S. employment rose rapidly in the early 2000s, only to reverse and stall (and even decline slightly) during the Great Recession in 2007-2009. However, the share resumed rising with economic recovery in the 2010s — until it again fell sharply in the initial phase of the pandemic.
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This brief lull was followed by an immigration boom. As a result, the share of U.S. workers who are foreign-born increased from 16.2% in June 2020 to 19.1% in December 2024.
Although foreign-born people have become an increasingly important source of labor in general, their representation varies substantially by occupational group. More than one-third of all workers were foreign-born (on average) in three major occupational groups in 2024:
- Building/grounds cleaning/maintenance: 39.7%.
- Farming/fishing/forestry: 39.5%.
- Construction/extraction: 35.6%.
Foreign-born workers also accounted for at least one-fifth of employment in seven additional groups — computer/ mathematical, food preparation/serving, production, health care support, transportation/ material moving, personal care/service, and life/physical/social science — that collectively span a wide range of skill sets.
On the other end of the spectrum, the share of foreign-born workers is comparatively low in careers such as protective service; legal; community and social service; and educational instruction and library occupations.
However, even in these groups, foreign-born workers accounted for at least 1 in 12 workers, on average, in 2024.
Why It Matters
What does the growing role of foreign-born people in U.S. employment mean, and what should we expect going forward? Uncertain economic conditions around the world and changes in U.S. immigration policy make this question difficult to answer in the short term. However, looking decades into the future, it is clear that foreign-born labor will be essential to U.S. labor supply growth.
Due to the long-term trend of population aging, growth in the number of people ages 25 to 54 — commonly referred to as “prime working age” — in the U.S. has slowed considerably in the 21st century.
Because prime-working-age people are an especially prominent group in the workforce, this slowdown has also dampened labor supply growth and contributed to an ongoing labor shortage.
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As fertility rates fall, the number of native-born Americans reaching prime working age is becoming increasingly insufficient to replace the flow of older Americans leaving the workforce. As such, immigration levels will play a dominant role in determining future prime-working age population growth (and, by extension, growth in the overall labor supply). In fact, the prime-working-age population is projected to decline rapidly after the mid-2030s in a no-immigration scenario.
Although conditions have improved since the wildly overheated conditions of the pandemic-era labor market, the U.S. continues to face a persistent labor shortage.
As a result, attracting and retaining talent remains a fundamental challenge for HR professionals across a wide range of industries. Any long-term solution to this shortage must be multifaceted, including providing robust reskilling/upskilling programs, adopting labor-saving technology, and tapping underutilized talent pools.
As crucial as these tools are, however, immigration remains the most readily available method for quickly increasing labor supply. For this reason, foreign-born workers are poised to play a critical and growing role in the U.S. workforce for decades to come.
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