The Impact of a Recession on Migrant Workers in the US
STORY INLINE POST
All economic indicators suggest the US economy will enter a recession in 2023 and immigration trends will change. The US attracts all types of foreign workers from all over the world: unskilled and skilled, undocumented and those granted legal authorization to work. Based on historical data, a US recession impacts all forms of immigration in unanticipated ways.
Contrary to popular belief, shortly after the US enters a recession, there is net-zero immigration in the US from the US–Mexican border. This means the population of undocumented immigrants in the US falls and the rate of undocumented immigrants entering through the border does not replace the loss, creating a net-zero balance. The US-Mexico border is the world’s most frequently crossed land border. Most foreign workers crossing this border are undocumented and unskilled and they immigrate from all over the world. The reason for net-zero immigration is simple: if there is no employment awaiting these immigrants in the US, there is no motive for these immigrants to make the dangerous border crossing. In other words, illegal immigration occurs only when US employers have employment to offer immigrant workers.
The 2007-2008 global financial crisis was the most serious financial crisis since the Great Depression. After the release of the worst economic data in 2009, for the following two years, from 2010 to 2012, the US experienced net-zero immigration from the US–Mexico border. In the political dialogue concerning illegal immigration, politicians inaccurately accuse illegal immigrants of immigrating for motives other than employment. Net-zero immigration during a recession, however, proves the contrary. Also, if we understand most immigrants come to the US because there are US employers offering jobs, despite their illegal status, why do US politicians choose not to put more responsibility on US employers to ensure they are only hiring legal immigrants? In the 1980s, former President Ronald Regan tried to take this approach but faced resistance from his own Republican Party members because they did not want US employers to face penalties for employing undocumented workers, which could see the party lose the support of the business community.
Professional foreign workers in the US legally through employment-based visas face other challenges during a recession. Foreign professional workers tend to be more vulnerable because companies looking to save on costs during a recession will lay off employees who require additional funding to finance their visas n. Employment-based visas must be sponsored by a US employer, so once an employee’s position is terminated, they have a 60-day grace period to find another employer within the US or they must leave the country.
The H-1B visa is the most popular and frequently used visa for professionals. The US issues 85,000 H-1B visas each fiscal year and the number of applicants is always three to five times more than the number of visas available. Immigration then operates a lottery to determine which candidates can apply for the 85,000 visas, making it a highly competitive process. To put this in perspective, in 2022, there were 487,927 registrants for the 85,000 slots in the H-1B lottery, meaning 82 percent of registrants were not selected. During a recession, however, almost any professional foreign worker with a job offer will likely secure an H-1B visa as few US companies are hiring and fewer people apply for the H-1B. For example, for at least two H-1B cycles after the financial crisis, the US did not need to perform an H-1B lottery because the number of applicants did not exceed the 85,000 visas available.
Those foreign workers who can retain their employment during a recession may consider speaking with their employers about applying for their US residency status (“green card”). As there is less immigration during a recession, government agencies responsible for processing immigration applications process cases significantly faster, which can make the process less stressful for workers.
Mexican professionals navigating a recession in the US should never forget the TN visa, which was created after the signing of the North American Free Trade Agreement (NAFTA) to provide temporary employment. The TN NAFTA visa is an additional and alternative professional visa available to Mexican citizens whose profession falls within one of 63 occupational categories. Unlike the H-1B visa, TN visas are not subject to a quota or lottery.
Finally, for those whose positions have been terminated and they cannot find employment but have always desired to start their own company, now may be the time. Many of the most famous entrepreneurs started their businesses during a recession. The E-2 nonimmigrant visa is available to Mexican investors and businessmen when they make a substantial investment in a startup or US company and they wish to direct the company.
The recession we are entering will reduce or create opportunities in the market depending on one’s position. Past recessions have shown us a pattern we can expect to see this year.