Immigration has been a main driver for the Industrial Revolution in the US since the late 19th century and as it stretched into the next hundred years. The Chinese, German, Mexican, Irish and other foreign migrants who have sought either protection or opportunity in the land of the free became the backbone of progress that catapulted the US among the most influential and advanced world leaders.
Fast forward into the 21st century, at a time when immigrants are no longer war refugees nor non-literate manual laborers but are skilled individuals seeking high-paying, technical and professional jobs, could the same success 200 hundred years ago be duplicated when the needs of the old days remain more or less constant?
The New Wave of Modern Immigrants
A study from the National Academies of Sciences, Engineering, and Medicine which focused on “The Economic and Fiscal Consequences of Immigration” revealed that the average educational attainment of immigrants has increased since 1970.
It was found that Mexican immigrants’ educational attainment score by the average has increased by 3.8 points; 1.8 for Latin American immigrants outside Mexico; and 3.4 for their Chinese counterparts.
Given the massive changes that technology and globalization have injected into the world’s progressively interlinking workforce network within the past 40 years, it is no surprise that the numbers would soar. The problem, however, seems to lie in the country’s lack of preparation for such change.
In a Bloomberg article, author Conor Sen expresses this plainly:
“This ‘up-skilling’ of the immigrant labor force is contributing to the country’s labor and housing woes. Historically, immigrants provided much of the muscle for building the nation’s infrastructure. In the 1820s and 1830s, canals were built by Irish and German immigrants. Chinese immigrants were instrumental in building the First Transcontinental Railroad in the 1860s. The late 20th century Sun Belt boom, including the 1996 Summer Olympics in Atlanta, could not have been built without Mexican construction workers.”
The new generation of immigrants is no longer taking part in the supply production. Instead, they are contributing to the demand as the majority of the native born Americans. This creates a tension in the system, as the stakeholders struggle to find a patch for a rapidly disintegrating model.
This new immigration trend not only raises the demands but also raises home prices. The already scarce supply makes the situation even worse. Now, the US Housing market is faced with a dilemma that foretells a radical future.
What happens when what worked no longer serves?
A Shift in Perspective
When the old tools cease to deliver, it’s probably time to point our focus on other feasible solutions. Technologyis one promising potential. But integrating it into a system that has run the fuel of the old days is entirely another matter. Maybe the future directs us that way, but now, the question remains a matter of transition, of adapting a solution that gradually greases the friction.
“Not that there’s anything wrong with that,” adds Sen. “But we should be prepared for the shift, as long as new American immigrants are more likely to be buying suburban houses than building them.”
Justin McHood is America's Mortgage Commentator and has been providing expert mortgage analysis for over 10 years.
