Immigration Is Behind the Strong U.S. Economy

We’d be a poorer, weaker country without it. Too bad Biden couldn’t make that point at the debate

By Jason Furman. He is a professor at Harvard and was chairman of the White House Council of Economic Advisers, 2013-17. Excerpts:

"The employment level for native-born workers is indeed below its pre-pandemic level, while foreign-born workers have accounted for all employment gains."

"The U.S. population is aging, and millions of baby boomers retire each year. We can expect that absent immigration, we would have a decreasing working-age population and shrinking employment for decades to come—especially considering the low fertility rate. This is already happening in Japan and will soon happen in many European countries.

Meantime, millions of jobs have been added for foreign-born workers since 2019. The majority of these immigrants were in the U.S. prior to Covid, but another roughly 10 million have arrived since then, according to the Congressional Budget Office. These newly arrived immigrants are the main reason the U.S. economy has defied pessimistic forecasts, with 200,000 jobs added a month, real growth in gross domestic product at 3% in the past year, and an inflation rate that has fallen dramatically in the past few years. The biggest factor behind this strong economic performance is immigration.

But aren’t immigrants taking jobs from native-born workers? The answer is no, as a simple statistic—the employment rate for native-born workers 25 to 54—demonstrates. These workers are in what economists call their “prime age.” Data from the Bureau of Labor Statistics show that in 2019, before the pandemic, the employment rate for prime-age workers was 82%. Today, that rate is even higher, at 83%. Focusing on this age group is an effective way to control for demographic shifts. Even if the employment rate goes up for every age group, it can still go down overall if the share of older workers, whose employment rates are lower, grows. And that’s what is happening with the native population.

Immigrants aren’t merely workers competing for a fixed number of jobs. They’re also consumers who generate demand and the need for more jobs. Historically, when the U.S. economy faces structural changes as a result of variations in the labor supply—whether through a surge in immigrants, women entering the workforce or other demographic changes—supply and demand increase roughly in tandem, raising or lowering the economy’s potential growth rate without triggering changes to the unemployment rate or inflation."