An IMGW News Report
With Trump’s prospects at the polls, assuming he makes it through the current legal hurdles, the issue of immigration remains a focal point of debate, not only politically but economically.
The surge in immigration across the US-Mexico border last year, setting a new record, has stirred a complex brew of economic consequences. While Federal Reserve Chair Jerome Powell credits part of the nation’s remarkable economic growth to this influx, recent legal developments and political wrangling hint at potential shifts in immigration policy. With Congress now reigniting debates, the financial ramifications of this demographic surge deserve closer scrutiny.
At the forefront of the discussion is the staggering $7 trillion boost projected for the US economy over the next decade due to immigration. This surge in workers, particularly in the prime-age working population, promises increased output and tax revenue. However, the narrative isn’t purely rosy. While federal coffers stand to gain significantly, state and local governments face strains on resources, particularly in areas like public education and social welfare programs. Despite immigrants’ contributions to federal revenue, they can impose a net burden on local jurisdictions.
Moreover, immigrants are increasingly seen as a vital solution to labour shortages, particularly in sectors where job openings outpace available workers. Yet, this influx also exerts downward pressure on real wages, especially in sectors already characterised by lower pay. Although the Congressional Budget Office anticipates a reversal in this trend as immigrant workers gain skills, the long-term projection suggests that average real wages will remain suppressed compared to scenarios with different immigration dynamics.
In this nuanced landscape, the economic impact of immigration emerges as a multifaceted issue, defying simplistic win-loss narratives. As policymakers navigate these complexities, balancing economic imperatives with social and political considerations will be paramount in shaping the nation’s future trajectory.
Immigration: Beyond Rhetoric to Demographic Reality
Immigration has become one of the US’s most contentious political issues. Yet, there has been less public attention paid to broader immigration policy than to sensational characterizations of open borders, illegal immigrants, and negative stereotypes about immigrants’ country of origin, race, or ethnicity. Beyond these political rants, there is little discussion about what immigration means for the changing demography of the nation relevant to its future growth, especially amid a continued trajectory of lower fertility and—because of the ageing population—more deaths.
The Census Bureau’s new nationwide population projections allow for an assessment of immigration’s role for the future of the US population. More so than the previously released 2017-based projections, the new data shows generally lower future population growth due to updated assumptions of fertility, mortality, and immigration from abroad. And they make even more apparent the strong role immigration will play in contributing to the future growth or decline of the population. This is because the projections—looking at the period from 2022 to 2100 – are presented under four different immigration scenarios, ranging from zero immigration to high immigration.
As the discussion below reveals, in a future of decreasing births and increasing deaths across an already ageing population, immigration levels are crucial in leading to national growth as opposed to declining and countering what would otherwise be extreme ageing. Yet, counter to widespread claims, immigration is not primarily responsible for making the nation more racially and ethnically diverse, as the US population will become less white even under scenarios of low or zero future immigration.
Immigration will determine whether future population growth or decline occurs. The new census projections examine immigration’s impact on future national growth by assuming four scenarios over the 2022-2100 period based on different annual net immigration levels (i.e., in-migration minus out-migration to the US).
One scenario is the “main” immigration scenario—the one most consistent with recent history, apart from the immediate pre- and post-pandemic years. This assumes annual net immigration levels between 850,000 and 980,000 people.
Another is the “high” immigration scenario, which assumes a consistent annual net immigration of roughly 1.5 million people per year—a level only occasionally approached in the recent past. The “low” immigration scenario assumes a trajectory of between 350,000 and 600,000 net migrants annually, which occurred during the latter years of the Trump presidency, though still higher than during the pandemic.
Finally, there is the “zero” immigration scenario, which assumes a modest negative annual net immigration resulting from some out-migration and no in-migration. While zero immigration is not likely to occur in the future, this scenario provides a benchmark to show future population changes due primarily to the forces of fertility and mortality.
Conclusion
The discourse on immigration in the United States encompasses a spectrum of economic, social, and political considerations. On the one hand, there’s an acknowledgement of the substantial economic benefits, such as the projected $7 trillion boost to the economy over the next decade and the role immigrants play in filling labour shortages. Conversely, there are concerns about the strain immigration places on local resources and its impact on wage levels, particularly in certain sectors.
Beyond economics, immigration also intersects with demographic realities, influencing future population growth or decline. The Census Bureau’s projections underscore the pivotal role immigration plays in shaping the nation’s demographic landscape, offering scenarios that range from sustaining growth to potential decline. Moreover, these projections challenge prevailing notions about immigration’s impact on racial and ethnic diversity, highlighting its multifaceted effects.
With Trump’s prospects at the polls, assuming he makes it through the current legal hurdles, the issue of immigration remains a focal point of debate, not only politically but economically. As the nation grapples with immigration policy, finding a balance between economic imperatives, demographic trends, and social cohesion will be essential. The future trajectory of immigration will depend on how policymakers navigate these complex dynamics, shaping not only the economy but also the nation’s social fabric.