Manufacturing Sector Relies on Foreign-Born Labor to Fill Skill Gaps

Strategic Insights -

The manufacturing sector faces significant labor shortages and retention issues, forcing employers to seek solutions in the growing pool of foreign-born workers. In Q3 2024, 20.6% of manufacturing plants operated below their full capacity due to labor shortages. As a result, employers have turned to foreign-born workers, who now make up 19.2% of the U.S. labor force, with many foreign-born employees filling frontline roles and high-skilled positions such as engineering and technical roles. Foreign-born workers are participating in the U.S. labor force at higher rates than native-born counterparts, with a respective 66.5% vs. 61.7% in 2024.

Key Takeaways:

  • In Q3 2024, 20.6% of manufacturing plants failed to produce at their full capacity due to labor shortages, citing insufficient supply of labor or skills constraints.
  • Foreign-born workers now make up 19.2% of the U.S. labor force, with many filling frontline and high-skilled positions.
  • Foreign-born workers are participating in the U.S. labor force at higher rates than native-born counterparts, with a respective 66.5% vs. 61.7% in 2024.
  • Transportation equipment ranks behind food manufacturing among foreign-born labor, with its share increasing steadily from 11% in 2020 to 13% in 2024.
  • Machinery manufacturing grew modestly from 5% to 6%, driven by advances in AI automation and smart factory technologies.
  • Food manufacturing continues to lead with the highest percentage of foreign-born workers at 17% in 2024, underscoring the essential role immigrants play in sustaining production.
  • Primary metals and fabricated metal products dropped from 8% to 7%, while computers and electronic products and chemicals remained steady near 11% and 10%, respectively.
  • Employers are using employee referral networks, partnerships with community organizations, and job fairs to attract and retain foreign-born talent.
  • Retention is a significant challenge in manufacturing, with turnover rates near 19.2% and average replacement costs ranging from $10,000 to $40,000.
  • Compensation remains a key factor in recruitment and retention, with foreign-born workers earning a median weekly wage of $1,001, compared to $1,190 for native-born workers.

Statistics:

  • In Q3 2024, 20.6% of manufacturing plants failed to produce at their full capacity due to labor shortages.
  • Foreign-born workers now make up 19.2% of the U.S. labor force, with many filling frontline and high-skilled positions.
  • 41.3% of foreign-born workers hold bachelor's degrees or higher, filling technical and engineering positions.
  • Foreign-born workers participate in the U.S. labor force at higher rates than native-born counterparts, with a respective 66.5% vs. 61.7% in 2024.
  • Transportation equipment ranks behind food manufacturing among foreign-born labor, with its share increasing steadily from 11% in 2020 to 13% in 2024.
  • 66.5% of foreign-born workers participate in the labor force, compared to 61.7% of native-born workers.
  • 41.3% of foreign-born workers hold bachelor's degrees or higher.
  • The average replacement cost for a skilled front-line worker is between $10,000 and $40,000.

Sources:

  • Manufacturers Alliance/MAPI: Examining the Influence on Industrial Labor Markets
  • Bureau of Labor Statistics: Foreign-Born Share of U.S. Labor Force from 2019-2024
  • Bureau of Labor Statistics: Percentage of Employed Foreign-Born Workers in Top 6 Manufacturing Subsectors 2020-2024
  • IZA World of Labor: Employee Referral Networks
  • National Immigration Forum: Employer Engagement Section
  • Migration Policy Institute: Immigrant-Focused Hiring Events
  • Bureau of Labor Statistics: Median Weekly Earnings by Nativity