Two American experts said that the US government should combat rampant inflation with all its capabilities, and that one solution lies in opening the door to immigration for foreign workers, if policy makers acknowledge that, because only bringing in foreign workers "is sufficient to fill the shortage in the labor markets."

Gordon Hanson, a professor of urban politics at Harvard Kennedy School, and his colleague Matthew Slaughter, a professor of international business at Dartmouth College, point out that the rapid decline in immigration rates has made it difficult for American labor markets to function efficiently.

In their joint article published in Foreign Affairs, the two experts said that the sharp increase in inflation rates has caught the attention of economic policy makers around the world.

More comprehensive solutions

Aside from the disagreement over who is to blame for the increase, it is widely accepted that central bankers will have to rein in inflation now.

However, just as the new Corona epidemic revealed new weaknesses in the labor market, it highlighted the need for more comprehensive solutions in economic policies to solve supply bottlenecks and labor shortages, according to the article.

And consumer prices in the United States rose - on an annual basis - at a rate of 7.7% in October, and for the ninth consecutive month, above 7%.

The authors attributed this to the continued high demand for commodities and the faltering supply.

All eyes are on the US Federal Reserve (the central bank of the United States) to cool demand by raising interest rates.

However, monetary policy - according to the article - has always been slow to deal with the changes that occur in high inflation rates and low interest rates, which makes the task of the Federal Reserve more difficult to influence the decisions of 122.4 million families, 164.5 million workers, and 35.1 million companies within United State.


Expanding migration

Another thing US policymakers can do to fight inflation is to expand immigration into the country for both skilled and less skilled workers to boost the supply capacity of the US economy, according to Hanson and Slaughter in their article.

The two academics believe that allowing more immigrants to enter the United States would help meet the current excess demand for labor, which over time will limit the escalation of wages and prices.

In October, 10.3 million jobs were created in the United States, 4.3 million more than the total number of unemployed Americans.

In their article, the two university professors believe that expanding in the short term the issuance of visas that allow employers to hire skilled foreign workers in specialized professions, and those that allow non-agricultural foreign workers to perform seasonal work, will help employers overcome this acute shortage of labor. .

In the long run, doing so would also help calm inflation.

Reasons for slow immigration rates

The authors attributed one of the factors behind the slowdown in immigration rates to the great recession that began in 2007, before it was followed by a slow recovery, which prevented foreign workers from coming to the United States.

However, US immigration policy, in turn, made it more difficult for immigrants to enter the country.

Before the COVID-19 pandemic, Washington cracked down on undocumented immigration but kept issuing temporary work visas steady.

The Foreign Affairs article concludes that expanding visa programs will immediately alleviate the labor shortage, which increases the cost of producing goods and providing services, which companies then pass on to consumers.