The United States' labor market continues to defy expectations, with March delivering another impressive jobs report despite the Federal Reserve's aggressive interest rate hikes aimed at curbing inflation. A key factor driving this labor expansion, according to a report by Fitch Ratings released on Thursday, is the surge of foreign-born workers entering the US workforce.

"Increases in the U.S. labor force post-pandemic have been led by foreign-born workers, which represented 19% of the U.S. labor force at YE 2023, higher than 17% as of YE19," the ratings agency stated. "The foreign-born labor participation rate is 66%, more than the native-born participation rate of 62%."

These figures come as net immigration averaged 0.9% of the US population for the past two years, surpassing estimates of 0.3%. The influx of immigrant workers has played a crucial role in maintaining the economy's growth and creating more job openings, even as the Federal Reserve's actions would typically lead to a recession.

Heidi Shierholz, president of the Economic Policy Institute and a former chief economist at the Labor Department, noted the puzzle surrounding the US economy's continued strong job growth while inflation remains elevated. "The immigration numbers being higher than what we had thought - that really does pretty much solve that puzzle," she said.

The boom in immigration caught nearly everyone by surprise. In 2019, the Congressional Budget Office (CBO) estimated that net immigration would equal about 1 million in 2023. However, the actual number, according to a January update from the CBO, was more than triple that estimate at 3.3 million.

Employers across various industries have welcomed the help provided by immigrant workers. Jan Gautam, CEO of Interessant Hotels & Resort Management in Orlando, Florida, said that 85% of his company's 3,500 workers are immigrants, filling positions that American-born workers are unwilling to take. "Without employees, you are broken," Gautam said. "If you want boost the economy, it definitely needs to have more immigrants coming out to this country."

Similarly, the Flood Brothers farm in Maine's "dairy capital" of Clinton relies on foreign-born workers for half of its staff of nearly 50. "We cannot do it without them," said Jenni Tilton-Flood, a partner in the operation. "Every single thing that affects the American economy is driven by and will only be saved by accepting immigrant labor."

A study by Wendy Edelberg and Tara Watson, economists at the Brookings Institution's Hamilton Project, found that over the past two years, new immigrants have allowed the United States to generate jobs without overheating the economy and accelerating inflation. Their analysis suggests that monthly job growth could be twice as high this year - 160,000 to 200,000 - without exerting upward pressure on inflation.

While the surge in immigration has helped fuel economic growth, it also lies at the heart of a heated election-year debate over border control. Former President Donald Trump has attacked migrants in often-degrading terms and vowed to finish building a border wall and launch the "largest domestic deportation operation in American history" if elected. The outcome of the election could determine whether the influx of immigrants and their key role in propelling the economy will continue.

Critics argue that a surge in immigration can force down pay, particularly for low-income workers, including immigrants who have lived in the United States longer. The Biden administration's economic advisers acknowledged in a recent report that "immigration may place downward pressure on the wages of some low-paid workers" but noted that most studies show the impact on the wages of the U.S.-born is "small."

Edelberg also points out that an unexpected wave of immigrants can overwhelm state and local governments with burdensome costs, suggesting that a more orderly immigration system would be beneficial.

Despite the challenges, millions of job vacancies are being filled by immigrants like Mariel Marrero, a political opponent of Venezuela's authoritarian President Nicolás Maduro who fled her homeland in 2016 after receiving death threats. Since receiving authorization to work in the United States last July, Marrero has found employment and is now able to support herself and send money to her family in Venezuela. "One hundred percent - this country gives you opportunities," she said.