In this “60 Minutes” interview, Fed Chair Powell discusses the critical role that immigration played in the stabilization of the labor market during the economic recovery. He explains that the return of several million workers, who had previously left the labor force for various reasons related to the COVID-19 pandemic, did not happen as expected in 2022. This led to a shortage of workers, which impacted the labor supply. However, in 2023, there was a rise in labor force participation among prime-age workers and a resumption of immigration to pre-pandemic levels.
Chair Powell emphasizes the importance of immigration in providing a much-needed boost to the labor market, as immigrants tend to work at a rate that is at or above non-immigrants, and they tend to be in the workforce at a slightly higher level due to their younger age. He also acknowledges that immigration policy is not within the Fed’s jurisdiction but highlights the positive impact that immigration has historically had on the US economy. Ultimately, the return of immigration to pre-pandemic levels significantly contributed to the stabilization of the labor market and helped address the shortage of workers.
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What are the important factors that caused the labor market to stabilize one was just the return of workers several million people were just gone from the labor force for whatever reason many of them didn’t want to go back to their old jobs because of covid or because they
Just didn’t want to be they had moved on with their lives so so there was a desperate shortage of workers and what happened is we expected people to come right back into the workforce in 2022 they mostly didn’t and then and then we we thought well maybe that’s not going
To happen and then it happened in 2023 we had a combination of rising labor force participation in Prim age workers and we also had with that we had a resumption of immigration so there was really no immigration net in or very little during the pandemic but in 2023
We saw immigration move back up to levels that would have been normal before the pandemic and those two things together made a real difference in labor Supply so it’s really a supply story uh that that’s the main thing I would point to why was immigration important because immigrants come in and they they
Tend to work at a rate that is at or above that for for non-immigrants or immigrants who come to the country tend to be in the workforce at a slightly higher level than Americans do but that’s largely because of the age difference they tend to skew younger why
Is immigration so important to the economy first of all immigration policy is some is not the fed’s job we don’t set immigration policy we don’t comment on it I will say over time though the US economy has benefited from immigration and and frankly just in the last year a
A big part of the story of the labor market coming back into better balance is immigration returning to levels that were more typical of the pre-pandemic era the country needed the workers it did
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Video “Fed Chair on immigration’s role in economic recovery” was uploaded on 02/05/2024 to Youtube Channel 60 Minutes