Op-Ed: Want to expand the economy and add jobs? Increase immigration
April’s disappointing job numbers suggest the economy is not yet on a path to full recovery. Yet politicians in both parties are ignoring the one obvious improvement they could make to expand the economy rather than fighting over who gets a larger piece of the existing pie.
President Biden has proposed a huge transfer of wealth by raising taxes among the highest earners to pay for new social programs for families and the elderly and added benefits for workers, in addition to investments in higher education, alternative energy and traditional and high-tech infrastructure.
But even some Democrats have qualms about the price tag of his proposals — $2 trillion for the American Jobs Plan and $1.8 trillion for the American Families Plan — and Senate Minority Leader Mitch McConnell has said that the proposals in their current form are unlikely to get a single Republican vote. Meanwhile, immigration reform — which has the greatest potential to add jobs to the economy and taxpayers to the treasury — remains stuck in the political quagmire that has trapped it for the last 20 years.
Preliminary results from the 2020 census show that over the last decade, the U.S. has experienced the second-lowest population growth in its history — and this was before the COVID-19 epidemic could register any discernible effect. This slowdown is almost surely the result of the immigration policies of the last several years, with the Trump administration reducing legal immigration in virtually all categories and with illegal border crossings down to a 40-year low through most of the last decade, until the recent spike in migrant families and unaccompanied children.
What these trends portend is a future that will make the U.S. look more like Europe in terms of GDP and job growth, with the standard of living stagnant or even declining.
Biden has it right in promoting big increases in legal immigration through the U.S. Citizenship Act, but he seems to be missing the ball by de-prioritizing immigration reform on his legislative agenda until he passes his larger economic proposals. The Obama administration did the same thing in its first two years, when Democrats controlled both houses of Congress, thus losing the window of opportunity, which closed once Republicans gained back the House.
The Biden administration shouldn’t make the same mistake. Immigration reform should be front and center in the administration’s economic plan, not least because the effects of expanding legal immigration will not only produce temporary benefits but will lead to long-term growth.
According to a study by the National Foundation for American Policy, the Biden immigration’s proposal would increase national labor force participation 23% annually over current projections. It would also mean a one-time increase not included in these projections by relieving the huge backlog of some 11 million people in family- and employment-based categories. Baseline growth in the labor force is projected to be about 800,000 people annually over the next decade, but the Biden immigration plan would increase that number to about 985,000, according to the NFAP study.
More immigration improves the economy in two ways: Immigrants expand the labor force and contribute to greater productivity. New immigrants to the U.S., on average, are younger than the native-born population and are more likely to be in the active labor force; 78% of immigrant males are in the labor force, compared with 67% of native-born males.
The “dependency ratio” in the U.S. is a growing concern, as a study by the National Immigration Forum shows. In 1965, there were 6.4 working-age adults for every adult of retirement age; today that ratio is 3.5 to 1. Worse, just to keep the current dependency ratio, the U.S. would need to add 370,000 immigrants annually to the current rate of about a million new immigrants a year.
But it isn’t just the raw numbers of working-age immigrants that are important. Immigrants disproportionately contribute to productivity gains through the innovations they create. Immigrants made up some 16% of inventors but were responsible for 22% of total patents from 1976 to 2012, according to a study by Stanford University economists.
The study also showed that immigrants were responsible for about 25% of the economic value created through innovation in public companies during that same period. Another study shows that immigrants start about one quarter of all new businesses in the U.S., a figure that rises to about 40% in heavily immigrant states like California and New York.
But one group that cannot be forgotten in any reform is the Dreamers, who came here as children but still lack full legal status. They are already in the labor force or in school, but without a permanent solution to their plight, they face the prospect of deportation.
The Dream Act could create 1.4 million jobs and add $329 billion to the economy, according to the Partnership for a New American Economy and the Center for American Progress. The Biden administration should make immigration reform the centerpiece of its plans to boost the economy.
Linda Chavez is a senior fellow at the National Immigration Forum and served in the Reagan White House.
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