Evidence Mounts That Reducing Immigration Harms America’s Economy
Donald Trump’s immigration policies were harmful to America’s long-term economic future. That becomes clearer as one compares the Trump administration’s actions to the projected increase in the number of immigrants under recently introduced immigration legislation. The U.S. Citizenship Act, developed by the Biden administration, would aid long-term economic growth by increasing the number of legal immigrants by 28%. In contrast, Trump administration policies would have cut legal immigration in half. The immigration policy path America chooses in the long-term will make a significant impact on economic growth and future labor force growth, of which immigrants are a vital part.
Economic growth or growth in Gross Domestic Product (GDP) is necessary for a country’s inhabitants to improve their standard of living. “GDP growth [economic growth] is made up of growth in the workforce plus growth in labor productivity,” according to Robert S. Kaplan, president and CEO of the Federal Reserve Bank of Dallas. “Unless slower workforce growth is offset by improved productivity growth, U.S. GDP growth will slow.”
The Trump administration’s immigration policies harmed long-term economic growth by reducing labor force growth and potential productivity growth through restrictive policies.
High-skilled foreign nationals are important to productivity growth. Yet the Trump administration increased the denial rates of H-1B petitions, causing many long-time H-1B visa holders to leave the United States. The administration also blocked the entry of H-1B visa holders and published regulations that employers believed would make it nearly impossible for many foreign-born scientists and engineers to work in the United States.
“When we aggregate at the national level, inflows of foreign STEM [science, technology, engineering and math] workers explain between 30% and 50% of the aggregate productivity growth that took place in the United States between 1990 and 2010,” according to economists Giovanni Peri (UC, Davis), Kevin Shih (RPI) and Chad Sparber (Colgate University). Research by economist Britta Glennon found rather than saving jobs, H-1B restrictions “have the unintended consequence of encouraging firms to offshore jobs abroad.”
While the Biden-supported U.S. Citizenship Act may have a difficult time becoming law, it serves as a marker for changes to legal immigration by increasing both family and employment-based immigration. The bill would have a positive impact on labor force growth by raising immigration by 28% a year after a transition period.
“Increasing legal immigration by 28% a year would increase the average annual labor force growth in the United States by 23% over current U.S. projections, which would help economic growth and address a slower-growing U.S. workforce,” according to an analysis by the National Foundation for American Policy (NFAP). “The average annual labor force growth could be even more than 23% compared to a scenario of no immigration increases because the Bureau of Labor Statistics currently projects the U.S. labor force will grow by 800,000 a year, and that baseline growth may be lower after 2029 without the increase in immigration contained in the bill.”
“In contrast,” the analysis continues, “if the United States continued the Trump administration’s policies that administratively reduced legal immigration by approximately 49%, average annual labor force growth would be approximately 59% lower than compared to a policy of no immigration reductions, according to an NFAP analysis. Under policies that reduced legal immigration by half, in 40 years the United States would have only about 6 million more people in the labor force than it has today. Admitting fewer immigrants results in lower economic growth because labor force growth is an important element of economic growth and immigrants play a major part in both current and future labor force growth.”
A recent National Foundation for American Policy study by Madeline Zavodny, an economics professor at the University of North Florida, shows the positive impact of immigration.
“Analysis of U.S. Census Bureau data finds international migration was the only source of population growth in rural areas as a whole during most of the 2010s,” writes Zavodny. “International migration is strongly related to employment growth in both rural and metro counties. Each additional international migrant is associated with an additional 1.2 jobs in rural counties over 2010 to 2018. The estimate for rural areas suggests that international migration adds to total employment well beyond the jobs filled by international migrants. International migrants may have a larger impact on employment because of the jobs they fill. International migrants may work in jobs that otherwise would go unfilled by local residents and thereby enable businesses to expand.”
Due to declines in fertility, immigration keeps the United States from experiencing negative population growth, according to the U.S. Census Bureau.
New economic research finds that negative or falling population growth may yield harmful economic outcomes beyond slowing labor force growth. Fewer available minds may mean fewer solutions to our problems. What if the breakthrough advances in mRNA made by Katalin Karikó, an Hungarian-born immigrant to America, never happened or occurred years later because Karikó was never born? How would that have affected the development of vaccines and other potential solutions to medical problems?
In a recent paper, “The End of Economic Growth? Unintended Consequences of a Declining Population,” Charles I. Jones, a professor of economics at the Stanford Graduate School of Business, writes, “What happens to economic growth if population growth is negative? We show below—first in models with exogenous [external] population growth and then later in a model with endogenous (internal) fertility—that negative population growth can be particularly harmful.” He asks: “How do idea-based growth models behave when population declines?”
In sum, with fewer people, “knowledge and living standards stagnate.” Jones writes, “If knowledge were to depreciate at a constant exogenous [external] rate, it is easy to show in the simple models at the start of this paper that this would lead to declining living standards in the presence of negative population growth, an even more dire outcome.”
“We refer to this as the Empty Planet result,” writes Jones. “Economic growth stagnates as the stock of knowledge and living standards settle down to constant values.”
Immigration can prevent population decline in the United States and allow America to grow—if U.S. elected officials choose the right policies. “Among great powers, the coming population decline uniquely advantages the United States,” according to Darrell Bricker and John Ibbitson, authors of the book Empty Planet, the title to which Charles Jones referred. “For centuries, America has welcomed new arrivals, first from across the Atlantic, then the Pacific as well, and today from across the Rio Grande. Millions have happily plunged into the melting pot—America’s version of multiculturism—enriching both its economy and culture. Immigrants made the twentieth century the American century, and continued immigration will define the twenty-first as American as well.
“Unless. The suspicious, nativist, America First groundswell of recent years threatens to choke off the immigration tap that made America great by walling up the border between the United States and everywhere else. Under President Donald Trump, the federal government not only cracked down on illegal immigrants, it reduced legal admissions for skilled workers, a suicidal policy for the U.S. economy. If this change is permanent, if Americans out of senseless fear reject their immigrant tradition, turning their backs on the world, then the United States too will decline, in numbers and power and influence and wealth. This is the choice that every American must make: to support and open, inclusive, welcoming society, or to shut the door and wither in isolation.” It is a significant choice.