What immigration trends mean for U.S. population and economic growth

While the white-hot political battle over immigration policy rages on, new arrivals from troubled spots far from North America have been entering the country. They couldn’t have come at a better time.

Even as the American economy has slowed, labor shortages still abound in sectors like hospitality, lodging and social assistance. As hundreds of thousands of refugees, notably from Ukraine, have come into the country in the last two years, they’ve filled openings at restaurants, hotels, retail stores and nursing homes. Others with university degrees and stronger English have found better-paying jobs, in accounting, nursing and other fields.

It’s good for business, too. Companies that hire refugees have found them to be loyal, and consumers tend to look favorably upon products and brands that make a positive impact on refugees, according to a survey by New York University and the Tent Partnership for Refugees.

Not everyone sees it all as a win-win. Some have long argued that immigrants and temporary foreign workers take jobs from Americans and drive down wages for everybody, but there’s little evidence of any such effects.

In fact, the effects from large-scale immigration are positive, research by economics professor Giovanni Peri at UC Davis and others suggests. Foreign-born labor adds to demand for services, and holds down costs of farm products, child-care and other goods, Peri has said.

Hello, readers. I’m Don Lee, an economics writer at the L.A. Times. On the occasion of the Fourth of July celebration this week, let’s consider the economic relevance of immigration, an enduring part of our nation’s history.

The big economic picture

The recent influx of refugees has come hand in hand with a strong rebound in immigration, which slowed sharply in 2020 and 2021, thanks to the pandemic and Trump administration policies.

According to the latest data from the Census Bureau, the nation gained, on net, more than 1 million immigrants between July 2021 and July 2022. That was up from a decades-low net immigration of 373,000 in the prior 12-month period.

From 2000 to 2020, net immigration to the U.S. averaged 865,000 a year, but the number was beginning to trend somewhat lower before the pandemic.

The world’s largest economies, including Germany, Japan and South Korea, are vying to attract more immigrant workers. They have good reason: As people age and die, they aren’t being replaced due to declining birthrates. That means a shrinking labor force, which means fewer hands and minds to produce, pay taxes and support the bulging numbers of retirees.

The U.S., by comparison, has for many years enjoyed stronger population and labor force growth compared to most other advanced economies, in large part due to steady inflows of international migrants, most of whom come to work and tend to be younger. But between July 2020 and July 2021, the first full year of the pandemic, U.S. population growth fell to a historic low of 0.16%.

Stronger immigration since then led to faster growth in the nation’s population, or 0.38% between 2021 and 2022. “It’s a welcome uptick,” said demographer William Frey of the Brookings Institution, but that may not be enough.

“Our immigration system doesn’t respond as well to labor force needs as it might,” he said.

California’s conundrum

California’s overall population has been shrinking since 2020, the result of fewer births, rising deaths partly from the pandemic and more and more people leaving the state. That’s made immigration even more vital.

The state remains a gateway to immigration. California’s overall foreign-born population of some 10.5 million accounts for about 27% of its population. But the longer-term outlook is more challenging. In the last 10 years, the population of immigrants rose by 5%, or about 500,000, according to the Public Policy Institute of California. That’s less than half the number in the first decade of this century.

On top of that, in story after story the L.A. Times has documented the exodus of Californians leaving for Nevada, Texas, Tennessee and even all the way to Florida.

Many are moving because of the state’s high living costs. Who can afford to buy a house in the Bay Area where the median price was $1.3 million in May?

Economically speaking, what’s particularly worrisome about the large outflow of Californians is that a lot more folks leaving the state today are college graduates with good incomes. Plus, the rise of remote work has made it possible for more people to take their jobs to cheaper, quieter cities in states like Indiana, which has been all too happy to entice them with cash and other incentives.

California has long attracted talent from overseas, including wealthy investors and entrepreneurs. But a large segment of immigrants to California are less educated and skilled — and nowadays they may be needed more than ever.

“Our local workforce boards throughout the state are finding the immigrant workforce to be willing to take the direct service and direct care jobs — that have experienced worker shortages since the pandemic,” said Michael Bernick, a San Francisco attorney and former director of the state’s Employment Development Department.

The latest from the campaign trail

—What’s behind President Biden’s low approval rating? As the saying goes, it’s the economy, stupid. Despite the resilient labor market, only 35% to 42% of the public approve of his handling of the economy, based on several polls conducted in the last month. Consumers aren’t happy with high inflation and the Federal Reserve’s aggressive interest rate hikes to curb it.

—And there’s probably more grim news ahead for Biden on the economic front: Minutes released this week from the Fed’s most recent meeting indicate that officials expect additional rate hikes this year. Fed staff, meanwhile, believe a recession is still likely.

—It’s been a hot summer so far for Florida Gov. Ron DeSantis. In recent weeks he’s made no headway in closing the wide gap with former President Trump. Latest polls show that DeSantis trails the front-runner by almost 30 points.

—For politicians running for office, there’s nothing like walking in a parade on Fourth of July. And that’s what Mike Pence did in Iowa, and DeSantis in New Hampshire, where other candidates also took the occasion to engage directly with the public. But not Trump. His 2024 campaign spokesman, Steven Cheung, insisted to the New York Times that Trump’s rally in South Carolina last Saturday counted as part of Independence Day weekend.

The latest from Washington

—Biden has warned of the dangers of artificial intelligence. And members of Congress, notably Democrats, are calling for new rules for AI. So what is Big Tech’s response? Of course it wants to help — and is already opening up its wallet to lobby, Times writer Owen Tucker-Smith reported.

—The Biden administration was expected Friday to announce new military aid to Ukraine, providing, among other things, cluster munitions. The controversial weapons are banned by some countries because they can endanger civilians. The bombs have long been sought by Ukraine, the AP reported.

— The Food and Drug Administration on Thursday gave full approval of Leqembi — a drug that’s been shown to modestly slow the cognitive decline caused by Alzheimer’s. The endorsement, after a study that FDA officials said verified the drug’s safety and effectiveness, clears the way for Medicare to begin covering the treatment for patients suffering from the disease.

The latest from California

—Gov. Gavin Newsom took his feud with DeSantis to Washington. In a letter Thursday to U.S. Atty. Gen. Merrick Garland, Newsom and state Atty. Gen. Rob Bonta joined Texas in calling for a federal investigation into Florida’s transport of migrants, Times writer Mackenzie Mays reported. The California governor has threatened DeSantis with kidnapping charges.

—The famously liberal San Francisco-based 9th Circuit Court of Appeals came under sharp criticism from the court’s conservative judges over a ruling that suggests homeless people have a right to sleep in public. The scathing comments Wednesday reflect a new divide in the 9th Circuit after Trump appointed 10 judges and Biden seven, Times writer Kevin Rector reported.

—Vice President Kamala Harris was in Southern California this week stumping for “Bidenomics.” At a restaurant in Santa Monica, Harris touted various Biden and Obama-era policies that have helped small businesses, especially minority firms and others in underserved communities, Times writer Emerson Drewes reported.

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