Millenial Thomas H. Weil makes the case for continuing to welcome immigrants to the United States.
One of the promises candidate Trump made during his campaign was to crack down on illegal immigration. Acting on his promises, President Trump voiced his support for a bill authored by Senators Tom Cotton (R-AR) and David Perdue (R-GA) – the Reforming American Immigration for Strong Employment or RAISE Act – designed to alter and reduce legal immigration. The Cotton and Perdue proposal seeks to reduce by half the number of people admitted each year and who are authorized to live and work in the United States, as well as change the immigration system in place since 1965, by placing more emphasis on prospective immigrants perceived skills.
In 1965, President Johnson and Congress reformed immigration policy whereby visas were issued on the basis of national origin. Prior to that year, people from the north and west of Europe were given preferential review and entry compared to the rest of the world. Since then, the nature of immigration has been more wholly representative of the diverse nature of the people around the world who wish to migrate to America, and these immigrants are frequently well educated, more focused on their faith, and more invested in social justice than native-born Americans.
Large-scale social engineering can, as well, have unintended consequences.
What may be the Economic Effects of the Proposed Immigration Changes?
There are at least three possible, negative effects.
1. As the baby-boom generation continues to reach retirement age, roughly 12,000 people turn 65 years of age every day and will continue to do so until 2030, increasing the population that age or older from roughly 40 million in 2010 to nearly 72.7 million in 2030 to 93.7 million in 2050. Meanwhile, the percentage of the population between 18-64 years (not all of whom work) will fall from 62.8% in 2010 to 57.3% in 2030, where it will stabilize through 2050, assuming continued immigration.
An aging US population poses substantial economic challenges: higher health care costs, especially for chronic care and medications; more retirement spending; increased and changing social service needs. Since both Social Security and Medicare are not investment programs but rather paid from current receipts, on those who are working, there will be, as we see, fewer working Americans to pay for these programs that help support so many.
Thus, from a macroeconomic perspective, a continued influx of immigrants is needed to maintain the engines of prosperity. Without continued immigration, the working-age population (where one takes out those who are in college, and other training programs), may fall from 183 million in 2035 to 165 million, which will depress current tax receipts that support our retirees. For every $1,000 this group pays in each year, there will be $18 billion less in tax receipts. This ignores the potential economic consequences – which are indirect relative to the tax structure – of removing the estimated 11 million illegal immigrants currently in the US, as well.
2. Immigrants broaden the scope and skills sets available to the US economy, both at what might be the upper levels, including in engineering and life and physical sciences, which are essential to a modern, robust, and technologically-advanced economy, especially one that wishes to maintain an edge in exporting commodities and goods. Immigration is also essential to the lower end of the economy, such as farming, fishing, and forestry; cleaning and maintenance, construction; food preparation and service, and the transportation sector.
The National Academies of Science, Engineering and Medicine, recently published a report, “The Economic and Fiscal Consequences of Immigration,” which emphasizes the economic value of immigration, compared to the looming senior crisis in Japan and Western Europe, which have low birth rates and substantially more restrictive immigration policies than the US, as: “The inflow of labor supply has helped the United States avoid the problems facing other economies that have stagnated as a result of unfavorable demographics, particularly the effects of an aging workforce and reduced consumption by older residents.”
3. By many indicators, immigrants tend to be more entrepreneurial than native-born residents. Immigrants account for 15% of the US workforce but 25% of all start-up firms; 35-40% of new firms have at least one immigrant entrepreneur, and, of those firms that survive, firms started by immigrants grow faster with respect to employment, payroll, and a number of locations. Since young (<6 years old) firms foster greater job creation than larger, more established firms, new ventures create more new jobs. We need to foster this job-creating spirit.
For all these reasons, 1,470 esteemed American economists, including George Schultz, Glenn Hubbard and Jim Miller, former members of Republican administrations, and Alice Rivlin, Austan Goolsee, and Laura Tyson, from Democratic administration, and at least 6 Nobel Prize winners in economics, sent an open letter to President Trump and the majority and minority leaders of the House and Senate in April 2017 that focused on the need to “modernize our immigration system in a way that maximizes the opportunity immigration can bring….” They noted their “universal agreement” of the “broad economic benefit that immigrants to this country bring…” and, that with “the proper and necessary safeguards in place, immigration represents an opportunity rather than a threat to our economy and to American workers.”
Additional Benefits from Changes in our Immigration Laws?
But the 1,470 economists also went one step further, and concluded their letter by noting that immigration reforms should “reaffirm” and “continue” what is a “rich history of welcoming immigrants to the United States.”
In fact, most Americans continue to believe that welcoming immigrants to America “is essential to who we are as a nation.” Emma Lazarus’s poem, “The New Colossus,” written in 1883 to raise money for the pedestal of Statue Of Liberty, continues to animate Give me your tired, your poor, Your huddled masses, yearning to breathe free, The wretched refuse of your teeming shore, Send these, the homeless, tempest-tost to me, I lift my lamp beside the golden door,” continues to inspire what Lincoln, on the eve of a Civil War, called the “better angels of our nature.” We should act both on our compassion and our self-interest to remain a nation that welcomes immigrants to become vital members of our community and our polity.
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