The US Economy Requires Many Immigrants: Demographics and the Future

 A recent article from The Economist provides a perfect example of the adage “watch what you wish for.”  In A shortfall in immigration has become an economic problem for America, Trump’s and the Republican Party’s goal of limiting immigration at our southern border has had unintended consequences for the US economy.  Like most wealthy countries, the US has a resident population with a birth rate that does not support its current population.  In order for population growth to occur, and to some extent economic growth as well, immigrants must come and assume jobs that the growing economy will produce.  Taking from the article in The Economist:

“New immigrants accounted for nearly 70% of the growth in the American labour force in the 2010s. Over the next two decades, immigrants are likely to be the only source of growth.”

These immigrants have been contributing to the economy at both the upper and lower wage levels.  With Trumpian policies and the arrival of the COVID virus, this steady flow of new workers was significantly diminished.

“Net international migration—that is, accounting for both arrivals, whether authorised or not, and departures—added 247,000 to America’s population between July 2020 and July 2021. That was the smallest increase in the past three decades, and less than a third of the annual average during that time. The covid pandemic explained much of the drop, as America barred international visitors from dozens of countries, closed consulates around the world and froze many applications.”

“But the decline began before covid. Net immigration has trended down since 2017, Donald Trump’s first year in office. High-profile restrictions on travel from several predominately Muslim countries set the tone for his administration.”

“Giovanni Peri and Reem Zaiour of the University of California, Davis, estimate that by February America was missing roughly 1.8m working-age foreign migrants relative to its post-2010 trend…”

Interestingly, emigration has also been significant.  Migrants who come, legally or not, often return home eventually.

“Emigration has been another factor. The number of Mexicans living in America peaked 15 years ago. Many older migrants have returned home. Indeed, for all the furore about the southern border, the estimated population of unauthorised immigrants in the United States has declined during that same period, from 12.2m in 2007 to perhaps 10m in 2020.”

The net result is that jobs are going unfilled.

“Employers in the restaurant and accommodation sector, which draws a quarter of its employees from the foreign-born population, could not fill about 15% of job openings last year. In professional and business services, where the foreign-born make up a fifth of workers, doing everything from architectural sketches to tax preparation, roughly 10% of jobs went unfilled last year. That, in turn, may be contributing to higher wages, with pay rising especially quickly for low-income earners.” 

The resulting job market, where there are jobs available and rising wages, prompted another economic response: The Great Resignation.  Workers, sensing the opportunity to better themselves, have been quitting their current jobs and looking for better opportunities.  The New York Times addressed this phenomenon in the article All of Those Quitters? They’re at Work. 

“Many of last year’s job quitters are actually job swappers, according to data from the Bureau of Labor Statistics and the census, which shows a nearly one-to-one correlation between the rate of quitting and swapping. Those job switchers have tended to be in leisure, hospitality and retail. In leisure and hospitality, the rate of workers quitting rose to nearly 6 percent from 4 since the pandemic began; in retail it jumped to nearly 5 percent from 3.5. White collar employers still struggled to hire, but they saw far fewer resignations. The quitting rate in finance, for example, declined at the start of the pandemic and is now just below 2 percent, and in media and technology it stayed roughly consistent, also below 2 percent.”

Critical industries like agriculture and food processing depend on a supply of workers who will accept hard work and low wages.  Established citizens of the US have demonstrated that they will not perform those tasks at any wage.  The seeming success of The Great Resignation suggests that other low-wage occupations— leisure, hospitality and retail, for example—are being nudged in the direction of “work immigrants do.”  This can only further increase the need for more immigration if our economy is to perform like it has in the past.

The US is in the position of most wealthy countries in that its birthrate seems destined to be less than its death rate for the foreseeable future.  Population will continue to decline unless it is bolstered with immigration.  It is this unavoidable fact that has contributed to the rise of nativist parties in Europe and the US.  But these politicians complain about the situation without proposing how they would provide a vibrant economy with an ever-declining population and no immigration.  Most who try to go this route work on trying to increase the fertility rate. The Republican Party’s hero, Victor Orban of Hungary, has been trying this for years with little progress.  That country’s population has been declining for 40 years.

An obvious first step in dealing with a declining population might be to tune the economy so that the low-wage, unpleasant jobs disappear.  That will be expensive, but it would be beneficial in creating a more classless society, and it would limit the economic necessity for low-wage work and thus the need for immigrants.  In the past, the US faced immigration based on economic need.  Participants knew they were being taken advantage of yet were still benefiting from the system.  Those conditions have changed.  Those coming to the southern border are seeking refugee status claiming they can no longer exist in their previous home region.  To the extent that is true, people should be subject to humanitarian considerations, not profit and loss considerations

Unfortunately, any economic adaptations are likely to by overcome by events as climate change forces more and more people to leave their home regions to find relief.  Someone should be planning accordingly.

You can learn a little about a lot of things or you can learn a lot about a very few things. Guess which is the most fun.