Migrants Cooled Overheated Labor Market, Slowed Wage Growth: Fed Analysis

U.S. Border Patrol agents, front, speak with migrants seeking asylum, mainly from Colombia, China and Ecuador, in a makeshift, mountainous campsite after crossing the border between Mexico and the United States, Friday, Feb. 2, 2024, near Jacumba, Calif. About 200 migrants huddled under blankets and plastic bags under pounding rain and wind Friday night, as Border Patrol agents tried to work out transportation to area facilities. (AP Photo/Gregory Bull)

The increase of migrant workers during the last two years cooled an overheated labor market and slowed wage growth across industries and states, according to an analysis of government statistics.

“The influx of immigrant workers appears to have helped alleviate the severe staffing shortages in certain industries that were pervasive during the pandemic’s volatile period,” Elior Cohen, an economist with the Federal Reserve Bank of Kansas City, wrote in the organization’s Economic Bulletin. It serves Colorado, Kansas, western Missouri, Nebraska, northern New Mexico, Oklahoma and Wyoming.

As pandemic guidelines ended and businesses reopened, immigration increased.