Biden immigration executive order labor markets and supply chains

President Joe Biden‘s new executive order tightening asylum limits at the U.S.-Mexico border could have the double-edged economic effect of tightening labor markets, while also easing supply chain bottlenecks between the two countries, economists and trade analysts say.

The measure will temporarily bar undocumented immigrants who enter the U.S. at the Southern border from obtaining asylum, save for in certain cases, and make it easier for Border Patrol agents to deport these people quickly.

“The simple truth is there is a worldwide migrant crisis,” Biden said at the White House on Tuesday. “If the United States doesn’t secure our border, there’s no limit to the number of people that may try to come here.”

The asylum restrictions are triggered when the average daily number of migrant encounters exceeds 2,500 over the course of a week. They would be lifted two weeks after the government determined that the daily average of migrant encounters had fallen below 1,500 for seven consecutive days.

Currently, the average number of encounters with migrants is roughly 4,000 per day, Department of Homeland Security officials told NBC News.

As a result, a senior administration official told reporters the temporary ban will be “in effect immediately.”

The temporary shutdown would not block trade or travel, however. And it would still allow immigrants who enter the United States legally to apply for and receive asylum.

“For those who say the steps I’ve taken are too strict, I say to you, be patient,” Biden said in his Tuesday remarks, a nod to the ire the new asylum restrictions have already drawn from progressives.

But economists and industry representatives say the action has potential impacts on the U.S. labor market, trade, supply chains and inflation.

“This is a modest move as far as immigration changes go, so I think it would have only a small effect on job growth and economic expansion,” said Ernie Tedeschi, economics director at Yale University’s Budget Lab. Tedeschi formerly served as chief economist at the White House Council of Economic Advisors.

The order is also designed to serve as Biden’s political response to public anger over a wave of undocumented immigrants. This frustration has become a voter liability ahead of Biden’s likely November rematch against former President Donald Trump.

But border policy also impacts the way that businesses trade, hire workers and price consumer goods — all of which bears on the health of the U.S. economy.

So far, experts say the short-term economic impacts will be relatively small-scale. Specifically, the new asylum limits could put a gentle dent in U.S. labor market growth. But they might also help unclog supply chain bottlenecks at the border and streamline trade with Mexico.

If the border temporarily stops accepting new asylum seekers under Biden’s executive order, the immigration slowdown could mildly dent the strong U.S. labor market, which has already showed signs of softening.

“I’d expect [job] numbers to cool a tiny bit,” Tedeschi said. “I’d also expect many immeasurable effects: say, a business finding it a bit harder to find the workers they need to open a new location.”

Since 2019, immigration has added 2 million workers to the U.S. labor supply, according to an April analysis by Tedeschi. Without immigrants, Tedeschi estimated that the size of the U.S. labor supply would have shrunk by 1.2 million during that period.

“A steady influx of immigrants is critical to ensuring the U.S. labor force can continue to grow,” said Brookings Institution economist Tara Watson.

Immigrants also helped supercharge the U.S.’ post-pandemic economic recovery, which has outpaced developed nations around the world, despite its many hiccups.

Tedeschi approximated that immigrants accounted for one-fifth of the pandemic growth in U.S. gross domestic product.