Coronavirus Economic Crisis (Pt. 2): Unemployment, Health and Singapore

Coronavirus Economic Crisis (Pt. 2): Unemployment, Health and Singapore

Are we going… YES. Recession is already here. Entire industries have come to a halt, unemployment rates are skyrocketing, countries are enforcing stricter and stricter lockdown laws, and Coronavirus cases are on the rise globally. The question isn’t anymore if we are going into recession, or when we are going into recession, the question to ask now is, how bad will it be? The following article will analyze the U.S. and global economic situation through the lens of unemployment and a coordinated health response, while explaining the unique importance of Singapore.

United States Unemployment Impact

One of the first major weekly indicators showing the overall impact of the Coronavirus has been and will continue to be the rise in unemployment benefit filings. Every Thursday, the Bureau of Labor Statistics in the United States releases the number of individuals who had filed for unemployment in the previous week, and the numbers are rapidly rising. Over the past three weeks, unemployment records have been broken. On March 12^th the BLS reported that approximately 30,000 people in the United States had filed for unemployment. One week later, on March 19^th, this number rose 33% in 7 days to 281,000. 

The previous highest U.S. weekly increase in unemployment filings was approximately 695,000 back in 1982. This was shattered as on March 26^th, as jobless claims exceeded Goldman Sachs and JP Morgan estimates, with the week’s official number being 3.25 million filings. One week later, on April 2^nd, an additional 6.87 million individuals in the U.S. filed for unemployment, and just last week, the pattern continued on April 9th as another 6.61 million individuals filed jobless claims. In just 21 days, the number of people filing for unemployment has skyrocketed from 211,000 to two consecutive weeks above 6 million, which is a 3100% increase weekly, never before seen in U.S. history. The weekly jobless claims trend can be seen in figure 1 above tracing back to 1967, and the chilling spike of the last three weeks seem to statistically mirror the grueling Mt. Everest in the face the U.S. economy’s last fifty-year history. The facts are these, in three weeks 16.8 million people have filed for unemployment, which is 10% of the current U.S. labor force. That brings the estimated overall unemployment rate to around 14.4% but due to lags in the economic data releases as official statistics, the true overall unemployment is unknown.  According to William Rodgers, former chief economist at the U.S. Department of Labor, the U.S. unemployment rate has risen from 3.5% to 17% in just three weeks. The exact figure will be unknown for a while, but the reality is this: The U.S. economy has surpassed the level of unemployment experienced at the peak of the Great Recession in less than 21 days. This is completely unprecedented. The unemployment at the height of the Great Recession was 10% in October 2009, and this took 18 – 24 months to develop.

It is important to put these numbers in perspective to truly understand the scope and desolation embedded within these numbers. Imagine in week one, every single teacher in the entire country loses their job in both public and private schools. In week two, every single person involved in any type of transport industry is laid off. No trains, no subways, no planes, no ferries, no buses, no transportation. Now you have a situation where you have no teachers in any schools and no transportation workers. To top it off in week 3, every financial institution shuts down and lays off every single worker. Local, state, and national banks countrywide close, brokers, credit agencies, investment companies, securities contractors, insurance providers, and wealth management firms all closed, everybody is told to go home. Imagine your daily life in this world where you have no teachers, no transportation, and no finances services. This is what has happened in the last 21 days. There are approximately 3.5 million teachers in America in public and private schools, the transportation industry employs around 5.2 million individuals and the financial services, and insurance industries employs approximately 6.5 million people, all totaling around 15.5 million jobs. This is still under the number of jobless claims experienced in the last three weeks, which was approximately 16.8 million jobs.  If you want to paint this picture from a global perspective, envision the entire Australian and New Zealand workforce being laid off in just 21 days, 15.6 million people without a job, and two economies decimated.

Now, what are the longer unemployment projections for possibly the next three months and onward? In a worst-case scenario, in just the next three months, the U.S. federal reserve of St. Louis has forecasted that just the second quarter (April – June) will see 47 million layoffs. This translates to an unemployment rate of 32.1% by the end of June. During the Great Depression, unemployment peaked at 24.9% in 1933, more than three years after the original stock market crash in October of 1929. Expert forecasting suggests that: the U.S. economy will far surpass the Great Depression levels of unemployment and reach a standing rate of 32.1% in just three months. The St. Louis Fed has explicitly said that "These are very large numbers by historical standards, but this is a rather unique shock that is unlike any other experienced by the U.S. economy in the last 100 years.” These are unprecedented and frightening times, as uncertainty seems to be prevailing, but a full – rounded and full informed scope is important to remember.

Crucially these estimates did not account for the impact of the $2 trillion stimulus package recently released by the U.S. government or any future packages they may release. This means that while the stimulus package released by the United States will slightly reduce the impact of the unemployment rate and the negative impact on the economy, but it is not a magic solution. To evaluate its potential effectiveness would take another five pages. Still, I do intend in the next few weeks to analyze the U.S. stimulus package or hopefully packages, in tandem with the actions taken by other governments. But the important thing to understand at this moment in time is that it will have a positive impact, but the stimulus package will not be a cure. For companies and individuals suffering, the stimulus is designed to keep them afloat during this time of crisis until recovery starts. Acting as a bridge while they receive no income or investment. Similar to a lifeboat designed to keep you alive until you reach land or are rescued.

Global Unemployment Impact

Globally there has also been a massive impact on unemployment, “currently, more than 4 out of 5 people (81%) in the global workforce of 3.3 billion are affected by full or partial workplace closures because of COVID-19” according to the International Labor Organization. The report estimated that internationally there are 1.25 billion currently employed individuals working in sectors identified as being at high risk of “drastic and devastating” increases in layoffs and reductions in wages and working hours.[1]

Australian Treasurer Josh Frydenberg said more than 800,000 businesses have already applied for the so-called job keeper program, a program part of Australia’s stimulus packages aiding small businesses. “There’s definitely going to be an uptick in unemployment and a significant reduction in growth,” according to Frydenberg, with experts believing that unemployment could grow to 10.1%.[2] The United Kingdom, according to Oxford University, on par with the United States face the expected probability of reaching a 30% unemployment rate.[3]

In Spain, in March 833,979 lost their jobs, a record number in terms of jobless claims for the country, accounting approximately for 3.5% of the Spanish labor force in just four weeks. This is on top of their already record-high 14% unemployment rate, which is among the highest in the developed world.[4] Austria’s unemployment rate has jumped to 12%, the highest since the aftermath of World War 2. IN Germany, 470,000 companies applied for wage support in March, suggesting that a near 5^th of the German workforce will experience reduced hours.[5]

Across the other side of the world in Asia, Thailand has seen 23 million people (one – third) of its workforce, apply for government cash handouts, the program is expected only to be able to cover 9 million. In China, despite statistics releasing an unemployment number of 6.4%, raging debates have erupted on the credibility and accuracy of these numbers.[6] According to Liu Chenjie, chief economist at fund manager Upright Asset, a privet asset management firm in Hong Kong, 205 million workers have been driven into "frictional unemployment," where individuals want to work but cannot or are unable to return to work. If this were true, this would represent more than 25% of China's 775 million-strong labor force. Based on Lieu’s calculation, the Chinese services sector has been hit the hardest with 180 million jobs disappearing, mainly because of “consumers’ willingness and ability to spend.”, which has been sharply curtailed by the pandemic.[7]

From these numbers, it seems that the United States and China have been the hardest hit, but it is evident that the impacts are being felt throughout global economies. Worse times are most likely still to come as the pandemic is still in its early stages, but it is essential to ask and understand, what does the current situation mean for the long term and the recovery? When will we reach land, or be rescued and start to see a restoration of the U.S. and global economy? This heavily ways on the health response. [8]

Importance of the Health Response

The reality of the matter is that the world is facing a global health crisis, which is causing an economic crisis. It is because of this reality that it is crucial to understand that to reduce the long term economic and health consequences of the COVID – 19 pandemic, a fully enabled global public health response is needed to reduce the severity of the long term financial impact. While this does not mean that in the short term, we won't experience suffering or pain across various global industries, it does mean that if the appropriate and severe short term action falls short of what is desperately needed, the extended consequences could be worse than ever imagined.What do I mean by this? It is the health response that matters for us to get out the other side of this pandemic, financially and medically. According to a new study by world-class doctors and researchers at the University of Sydney, in Sydney Australia, eighty to ninety percent of the country's population needs to strictly follow and practice social distancing.  If only seventy percent of the population follows the social distancing policies, as seen in figure 2, the curve will not flatten. Infection rates will still spike, and the virus will still keeping running rampant. Furthermore, if these policies are followed, the modeling says that the virus infections can be brought under control within a minimum of three to four months.

While this model has been specifically modeled on the Australian population using approximately 24 million software agents, let us see how this model and its predictions compare to what we have seen so far from around the world.

Epicenter: Wuhan, China: The original epicenter of the outbreak, experienced its first cases in December 2019, before identifying the outbreak and going into lockdown quarantine on January 23^rd. Having a history of social control over its citizens, China enforced its strictest policies on the citizens of Wuhan. “Apartment compounds allowed people to go in and out through one gate, each household could only send one person out once every three days to purchase groceries, and everyone's temperature is checked upon entrance.” But despite these substantial measures, numbers continued to rise, and therefore the government increased its restrictive policies. “Hubei government ordered community officials to began enforcing "the strictest, around-the-clock, closed management" of all residential complexes, banning the private use of cars, forbidding residents from leaving their apartments without permission and requiring purchasers of cold medicine to disclose their temperature, address and identification number at the pharmacy.”[9] After 77 days or 11 weeks of complete lockdown, Chinese officials lifted partial restrictions in Wuhan on April 8^th, allowing Wuhan residents to travel domestically and open some businesses. Small businesses and factories in Wuhan started opening last Thursday, March 30^th, ten weeks after the shutdown. While its infection rate has reportedly dropped to near zero, only partial restrictions have been lifted as Chinese officials stay vigilant.[10]

Interesting Mention: South Korea: South Korea and the United States reported their first case on the same day, the stark difference, South Korea was ready, the U.S. wasn't. South Korea had a battle with Middle East Respiratory Syndrome (MERS) back in 2015, which led to mass testing, tracing, and quarantining of 17,000 people, which led to the country squashing the disease in 2 months. Still, MERS only infects one additional person; therefore, its infection rate is much lower than the Coronavirus. After MERS, the government very quickly realized testing alongside hospital prevention and control measures were extremely vital in responding to pandemics. Legislation was also passed promptly in the MERS aftermath strengthening the country’s ability to respond, such as authority given to the government to collect mobile phone, credit card, and other data from those who test positive to reconstruct their recent whereabouts. As a result of these changes, South Korea is very uniquely equipped and ready for the Coronavirus having widely available testing, prevention protocols, quarantine actions, and accurate tracing methods. These measures have enabled them to implement a swift and effective response resulting in only ten thousand cases and 186 deaths and sending the country only into partial lockdown closing schools, religious gatherings, outdoor rallies, daycare centers, and some businesses.[11]

Case to watch: Singapore. Singapore reported its first case on January 24^th, 2020, one day before Australia and immediately took action. Similar to South Korea, Singapore learned many lessons from a previous pandemic, in their case, the SARS outbreak in 2002 and 2003. Within three days of its first case, Singapore had implemented thermal scanning of people arriving at Changi International Airport, and on February 1^st barred all visitors who had visited China in the past 14 days. Just 16 days later, Singapore had 75 confirmed cases and issued a “stay at home” notice, which they track on citizen’s phones. Every few hours, citizens will receive an SMS and are required to click on a link revealing their location, the government even had people knocking on doors routinely preventing people from "gaming" the system and having a friend or family click the link from home if they leave. Like South Korea, Singapore had in place protocols, wide testing availability and were well prepared for COVID – 19, they currently only have six deaths and 1400 cases and have been praised for their initial response by the World Health Organization.

          Here is the interesting part about Singapore. Friday, April 3^rd, prime minister Lee Hsien long announced new stricter lockdowns lasting until May 7^th, closing schools for the first time and most non-essential businesses including gyms, museums, and workplaces while grocery stores, clinics, and banking services will stay open. Lee stated that “Looking at the trend, I am worried that unless we take further steps, things will gradually get worse or another big cluster may push things over the edge.” This has all been done in fear of a second wave, making Singapore as a country and a case study a very imminent leading indicator for the course that COVID – 19 takes in other countries.[12] If a country such as Singapore, whose initial response was among the best if not the best in the world can prevent a second wave with its preventive measures, this is excellent news for the rest of the world. It means that COVID -19 can be managed effectively once brought under control, but if a second wave breaks out, this could potentially be indicating even bigger disaster for the rest of the world. The last devastating global pandemic was the Spanish flu back in 1918, which, although was born in a time under very different circumstances, arrived in three different waves as the virus mutated, killing between twenty and fifty million people globally. Therefore, if Singapore experiences a second wave, this would mean that even if countries currently facing war like numbers such as Italy, Spain, the United States, and the United Kingdom, were to bring COVID – 19 under control in the following months, they could still be potentially vulnerable to a second or third wave, threatening to bring even more devastation.[13]

From a health perspective, the lesson is this, citizens and nations need to abide by strict social distancing laws for a minimum of three months and then reassess the situation before lifting restrictions. If these precautions are not taken and enforced, the devastation we have already seen in terms of infection and mortality rates will exponentially grow, spiraling the virus even further out of control. This will require more extended shutdown periods to contain the virus, meaning that instead of having a painful 3 to 4 months of total lockdown, opening the economy to early could completely reset the clock and erase the progress already made. Ultimately this could result in a six to twelve or in a worst-case scenario eighteen-month ongoing battle with the virus with constant opening and closing of the economy. This type of situation will result in health and economic devastation not only never experienced before in modern history but well beyond our wildest imagination. If this becomes a reality, the COVID – 19 recession will be much worse than the Great Depression, and generations will feel the effects for years to come. Moving forward, what do we do, and what do we look for to avoid devastation?

Takeaways for the Future:

Enforcing social distancing and lockdown laws, it's a crucial step in fighting COVID – 19 and reducing the medical and economic impacts. In terms of unemployment, the next three to five months will see significant increases in numbers in the U.S. and globally, but dependent on the health response, those numbers will hopefully slowly start to stabilize. For a best-case scenario, watch the development of Singapore. If Singapore fails, countries facing a crisis such as the U.S. and Italy, currently in their "first wave," need to be extremely vigilant and could see a fierce battle in the next twelve to eighteen months. As second and third waves could possibly be highly threatening, not only to unemployment and economic figures but to the survival rates of the globe’s 7.7 billion individuals. If Singapore can control and contain what fears to be a possible second wave of the virus in the next two to three months, this will be an incredibly positive sign for the rest of the world. This will mean that future waves can be averted, and the virus can be controlled in three to five months if the appropriate measures are enforced and followed.

Finishing on a positive note, it is understood that we are facing exceptionally challenging times as individuals, families, friends, countries, and economies. It is important to remember that the world has incredible doctors, brave nurses, intelligent researchers, courageous leaders, and, most importantly, strong and resilient individuals. I believe that we can, and we will make it to brighter days. The power of humanity and our ability to stand strong in the face of adversity, which has been underestimated many times before, will win. While we might not always see the light ahead, we will come together, fight together, and emerge on the other side of this global challenge united and stronger than ever before. 

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[1] (HRM Asia, 2020)

[2] (Bloomberg, 2020)

[3] (Bloomberg, 2020)

[4] (The Local Es, 2020)

[5] (Japan Times, 2020)

[6] (Japan Times, 2020)

[7] (South Morning China Post, 2020)

[8] (St. Louis Federal Reserve, 2020)

[9] (NPR, 2020)

[10] (Bloomberg, 2020)

[11] (Science Magazine, 2020)

[12] (ABC News, 2020)

[13] (Forbes, 2020)

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US Economic Growth vs. Immigration: Who Will Fix the US Labor Shortage?

As unemployment rates hit historic lows, the United States is currently in the midst of a severe skilled labor shortage. Coming on the backend of the longest continuous job creation in US history, the United States is facing its biggest shortage of workers in more than 20 years. The latest figures have seen the unemployment rate rise up from a record low of 3.8% to 4.0%. Various American industries and companies, particularity in the information technology, transportation, agriculture, construction and manufacturing sectors, are suffering from a range of shortages. Back in January 2017 The Associated General Contractors of America (AGCA) conducted a survey where 73% of businesses said they had a difficult time finding qualified workers and 55% identified worker shortages as bigger concerns than federal regulations and low infrastructure development. The U.S. bank did another study in 2018 in which 61% of small businesses said, “they were experiencing extreme to moderate difficulty in finding quality skilled workers in order to expand their businesses.” 

Erin Clemens, Vice President of Beach Nut Nutrition, one of the leading brands in baby foods in the US, said that, “There is definitely a [skilled labor] shortage in the Mohawk Valley [New York]…we’re exhausting the labor pool. The population is not growing. Unemployment is low.”

Apparently the transportation industry is also experiencing major consequences as it reported a shortfall of 51,000 truck drivers in 2018. Trucks account for approximately 70% of goods and services transportation across the United States. In order to keep their drivers some companies are having to firmly increase wages with Us Xpress, based in Tennessee, announcing $50,000 bonuses and four weeks holiday for certain driver teams. In an industry where the median annual income for a truck driver is US$43,000 and a typical driver is on the road more than 300 days of the year, this is unheard of. According to chief economist, Mark Zandi, at Moody’s Analytics, “Business’ number one problem is finding qualified workers. At the current pace of job growth, if sustained, this problem is set to get much worse… these labor shortages will only intensify across all industries and company sizes.

Now some may argue that the labor participation rate is currently at a slump and that one of the answers to the skilled labor shortage may be to reach outside the skilled labor pool and attempt to address labor and skill shortages internally. In doing so, there are four major domestic areas in which an economy could look in order to increase its labor shortage, as represented in the diagram below.

Currently there are various issues with attempting to solve the skilled labor shortage by reaching into these other talent pools.

Ø  Retired/ Older Workers - One first places employers turn to when looking for more employment are retired and older workers, but unfortunately for the United states, they face the reality of an aging population whose workforce is already at capacity. Currently in the United States 4.4% of individuals 85 or older are still working, which is the highest number on US record. The proportion of workers over the age of 55 in the workforce has also been at a historic high, after in 2016 it was reported that 22.4% of the workforce was over 55, while projections see it rising to 25% by 2024. As the oldest baby boomers already started retiring in 2011, a significant amount of workers from that era are above or around the age of retirement and while these figures show a lot of them are still working they represent the fact that the potential for an increase in retired workers entering the labor force, is most likely very near capacity.

Ø  Under Age / Part – Time Workers – The teen unemployment rate saw its lowest mark since 1969 at 13.3%, mid last year. Over the past three years Starbucks, according to Starbucks Senior Vice President John Kelly, has hired 50,000 workers between the age of 16 and 24 who weren’t in school or working. Even lawmakers are trying to expand the labor force as Minnesota state representatives are trying to change the law disallowing teens from working construction sites as there are such a limited number of workers available in the current labor market. In addition, the underemployment rate, measuring the amount of part – time workers seeking full time work was at 7.8% in June 2018. This was the lowest rate recorded since before the GFC in 2008, thus identifying severely strained pool of part – time workers.

Ø  Restricted Demographic – In certain critical cases the employers turn to largely overlooked labor pools, specifically those with criminal records. Surprisingly, some employers have reached such an extreme that according to the Financial times, “Labor shortages in the US Midwest are prompting employers to hire prisoners, ex – convicts and former drug addicts as they relax recruitment standards to fill vacancies.” This gives insight to the idea that employers are leaving no stone unturned in their search for workers, as their desperation levels are reaching an all time high.

Ø  Unskilled Workers – One of the options employers have is to attempt to retrain and educate unskilled workers in order to fill skill and labor gaps. This is already happening as General Electric Aviation’s staffing specialist, Betsy Enderle, said the situation is “very dire” and the company is more aggressively recruiting in high schools and lowering skill standards for jobs as there simply aren’t enough candidates with the right skills applying for the positions needed. Some companies are even trying to train students in the earlier high school years while attempting to put them in the workforce by their senior year, but the other issue with education and retraining is the time factor. One example of this, is the US’ current dire need of STEM related degrees and qualifications as June 2017 reported the US economy having 600,000 unfilled technology jobs. The time taken to educate, and train unskilled domestic workers will take money and time the US doesn’t have, as labor markets grow tighter and economic growth is being compromised.

One of the biggest issues with the current state of the labor market is that it is constraining economic growth. This year has already seen consumers starting to suffer from increases in food prices, longer wait times for products, and uncompleted services. The Federal Reserve released a report on January 17^th, 2018 stating that, “Most Districts cited on-going labor market tightness and challenges finding qualified workers across skills and sectors, which, in some instances, was described as constraining growth.” According to the Federal reserve in particular, increased labor costs which have been associated with attracting workers have been restraining growth in a number of its districts, especially in manufacturing, construction and transportation.

In addition to these problems, the current overall US labor market is shrinking as the population of eligible working age individuals is diminishing. Over the past 10 years the World bank reports that the percentage of working age individuals within the United States has decreased 1.2%, standing at approximately 65.74% of the population in 2017, which is its lowest rate since 1998. With a decreasing working population and increasing demand for goods and services, trouble is brewing for the future growth of the United States.

If there was any room left in the labor market domestically there would not be huge wage growth pressures in the United States as those outside the labor force, in the categories listed earlier, would see the given opportunities, and quickly enter. As stated by Jeffry Snider of Global Investment Firm Alhambra Partners, “there would be a clear rush of those not in the labor force to join it. Those millions right now outside the official numbers would be moving back into them if they were given a legitimate shot at fruitful employment.” Thus, with more readily people available employers would have options to hire more incoming workers, but this is not the case. Earlier in 2018, Bloomberg reported that the United States has seen the highest rise in wages in a decade, as  average hourly earnings rose 2.9% in the United States between January 2018 and January 2017.  Various CEOs have acted in alignment with these trends as they have made numerous wage related investments:

A further danger associated with high wage pressures is high risk of inflation which will significantly increase the prices of goods and services, subsequently costs of production, and evidently have a constrained negative effect on economic growth. Therefore, given the reports and related statistics, the United States is in the midst of a severe skilled labor shortage and increasing the labor participation rate, looking at domestic labor pools, will most likely not solve this issue. For solutions, immigration, may be part of the American answer.

What many people don’t realize is that many of America’s most successful individuals are not only foreign but originate form emerging economies and developing nations. For instance, Madeline Albright, the first woman to become US secretary of State in 1996, was from Czechoslovakia, which today is known as the Czech republic and only received developed status well after her appointment in 2006. Jan Koum, the co-founder and former CEO of WhatsApp, who started off as a cleaner in a grocery store is from the Soviet Union Ukraine. Patrick Soon – Shoing, the co – discoverer of Abraxane, one of the world’s top – performing drugs treating breast, pancreatic and lung cancer, and Elon Musk, currently the world’s 6^th most powerful entrepreneur, founder and CEO of PayPal, SpaceX and Telsa, are both from South Africa. Furthermore, PepsiCo’s current CEO, Indra Nooyi, is from India, while even American sports heroes like Dikembe Mutombo and Freddy Adu are from the Democratic Republic of Congo and Ghana. And the list can go on…. The point being that immigrants, particularly from emerging economies, can massively benefit the United States, and as mentioned, have significantly done so in the past.

Business Insider reports that between 1997 and 2013 the top three countries granted the most H – 1B visas (work visas for immigrants) were India, China, and South Korea. Brookings Institute senior analyst Neil Ruiz states that one of the reasons for the majority of H – 1B visas going to Indian applicants is because, “India has a competitive advantage in the global IT industry,” and therefore many places such as Silicon Valley have taken serious advantage of their skillsets, due to the lack there of in the domestic market. The American skilled labor shortage is particularly serious amongst the absence of STEM (Science, Engineering, Technology, and mathematics) field qualified workers. So much so, that even amongst the current ambiguity in American immigration policy, in July 2017 the United States government provided STEM related F1 – student visas in America an extra 6-month extension on their work authorization ability. This now provides foreign students in the United States studying in STEM fields with the opportunity to work a possible total of three years on their student visa before having to apply for a H - 1B work visa. This is an additional 24 months or two years longer than any other type of F1 – Student visa work authorization period. Economists from the National Bureau of Economic Research (NBER), ranked as the 2^nd best economic instution in the world, conducted a survey and found that, “immigration increases both labor participation and average wages for U.S. workers, but only when there is a difference in skill sets between U.S. and foreign workers.” As it may be, the current scenario is most likely a reflection of this disparity amongst skillsets and various labor shortages and thus immigration potentially holds various benefits for the U.S. economy.

America’s current policies are hindering the possible benefits which immigration could bring. H – 1B Visa applicants over the past two years have been led through strenuous amounts of red tape, paperwork and “extra evidence requests”. Even highly qualified individuals such as Frida Yu, who is from China and had earned law degrees in China and at Oxford, worked in Hong Kong as a lawyer at a top international firm, received an M.B.A from Stanford and landed a job at a start – up in Silicon Valley, working on promising new technology to improve the use of data, was denied a H – 1B working visa and at time of notice, was given 17 days to leave the country. The United States government even recently released a report proposing the intended removal of the International Entrepreneur Rule. This is a current policy, which was a late Obama program, aimed at luring the world’s most successful, elite, and intelligent entrepreneurs to America. It is a merit-based program which only 0.00004% of the world’s population is eligible for, while also having the potential to create 300,000 jobs for U.S. workers.

Other countries have implemented successful skilled and merit based – immigration policies, such as Australia. Australia has a unique program which targets immigrants with certain qualifications and experiences, aimed at filling skill gaps within the Australian labor market. Currently skill stream migrants account for approximately 70% of Australia’s total migrant intake and are dominantly from emerging economies. The top seven origins of Australian permanent migrants are from India, China, United Kingdom, Philippines, Pakistan, Vietnam, and South Africa. In April 2018, joint research conducted by the Australian Treasury and Department of Home Affairs cited that the International Monetary Fund estimates that Australia’s migration program will add up to 1% of annual GDP growth from 2020 to 2050, particularly because it limits various economic impacts, including those of an ageing population.

Thus, in conclusion, the United States is facing a severe labor shortage, which will most likely not be fully solved through increases in the labor participation rate and by reaching into domestic talent pools. While immigrants have already played a notably impactful and beneficial role to the United States, skillsets and talent pools in emerging economies can aid America in addressing its tight labor market. While current policies in the United States are not supporting the ideology of skilled immigration, given the kickoff of the US Presidential Campaign in the next 18 months, it is likely to see a renewed perspective on immigration from the United States based upon the presented scenario and projective consequences. If officials do not alter regulations and change their views on immigration, the U.S. economy could face detrimental constraints on economic growth in the near future.