Immigrants Keep the American Economy Afloat

Undocumented immigrants are filling needed jobs and contributing to the economy, particularly in the agricultural field. Photo by Eduardo Stanley
Undocumented immigrants are filling needed jobs and contributing to the economy, particularly in the agricultural field. Photo by Eduardo Stanley

The success of the American economy is dependent on a successful and ordered immigration system. Since the 1970s, the native-born U.S. population has not been having enough children to replace itself.19

Without the influx of immigrants, the U.S. population would have fallen in the last Census. As a result of the falling birth rate and an aging population, the United States will not have enough workers to maintain a growing economy.

With a shortage of workers, America’s safety net programs will be threatened. Social Security and Medicare will need more workers to maintain solvency.1

While there are other ways to maintain the programs (e.g., eliminating the cap on the Social Security tax), Congress has failed to act. Congress has also failed to legislate humane, fair, ordered and comprehensive immigration reform. Congress’s failure to act on immigration has created an acute risk to the American economy.

As a result of the falling birth rate and an aging population, the United States will not have enough workers to maintain a growing economy, therefore the expansion of the U.S. economy relies on immigration. Photo courtesy of David A. Litman/Shutterstock
As a result of the falling birth rate and an aging population, the United States will not have enough workers to maintain a growing economy, therefore the expansion of the U.S. economy relies on immigration. Photo courtesy of David A. Litman/Shutterstock

Biden Administration’s Economy

Under the Biden administration, the American economy (the production, distribution, trade and consumption of goods and services) has done well. The economy has recovered from the necessary shutdowns due to the Covid pandemic. Production of goods and services has bounced back. Consumption by consumers is up. Consumers have money as a result of rising wages, which have been outpacing inflation.2,3

In the post-Covid pandemic recovery, the Biden administration has successfully addressed the recovering economy’s inflation without causing a recession. As a result, the United States continues to have one of the highest GDPs per capita in the world (No. 8).

The success of the American economy can be seen with its strong employment numbers, rising wages, a low unemployment rate under 4% and increased consumer spending. All this has occurred even though the Federal Reserve Board has kept interest rates elevated in its effort to combat inflation.4,5

The U.S. economy’s strength is driven by diverse factors including its natural resources, its manufacturing ability to produce goods and its ability to provide world services, technology and finance. Even with those strengths, a looming problem for the U.S. economy is a shortage of workers due to the falling birth rate of native-born U.S. citizens.

Labor shortages are already being faced by other aging economies that have shrinking populations such as Japan, China, Germany, Spain and Italy.6,7

America’s Immigrant Labor Force

Labor shortages can be addressed in only a few ways—increase the workforce or increase worker productivity. The labor force can be increased through immigration; using overseas workers through outsourcing work, which weakens the U.S. economy; using underutilized labor pools such as people with disabilities and the formerly incarcerated; or increasing the age of retirement so older people work longer.8

The current workforce can be made more productive through the automation, training and streamlining of business and production processes.

Economists have warned for years that the combination of baby boomer retirements, low birth rates, shifting immigration policies and changing worker preferences could result in too few workers to fill job openings.

So far, the U.S. economy has been able to avoid the contraction seen by other countries by having a ready workforce available to fill an increasing number of job openings. That ready workforce has come mainly from an influx of foreign-born adults—some legal, some not.9,10,11

The main reason America has had a successful economic recovery since the Covid pandemic is due to having enough immigrant workers to fill job openings. Per a Feb. 27, 2024, article in the Washington Post:

“About 50% of the labor market’s extraordinary recent growth came from foreign-born workers between January 2023 and January 2024, according to an Economic Policy Institute analysis of federal data.

“And even before that, by the middle of 2022, the foreign-born labor force had grown so fast that it closed the labor force gap created by the pandemic, according to research from the Federal Reserve Bank of San Francisco.”12

The most recent reports from 2022 estimate there were about 46.2 million foreign-born (authorized and unauthorized) people in the United States. Lawful immigrants total about 36.5 million (78%) with 23 million naturalized citizens, 11.6 million lawful permanent residents (“green card” holders) and 1.8 million lawful temporary residents.

There is no accurate recent data from the Census Bureau on the actual number of undocumented immigrants in the United States. Best estimates are that 10 million–12 million undocumented immigrants live in the United States. Of those, about 8 million are working-age adults.13

Undocumented Immigrants Not the Problem

Undocumented immigrants are filling needed jobs and contributing to the economy. Yet, they do not have any legal immigration status. Undocumented immigrants filling needed jobs are exposed to possible exploitation from employers.

To their detriment, there are no pathways for them to gain citizenship. Although they make contributions to American society and pay taxes, undocumented immigrants are not able to get the full benefits of employment. They pay Social Security taxes but are ineligible for Social Security benefits.

Employers do not get full benefits by utilizing undocumented immigrants in the workforce. Due to the risk of detention and/or deportation at any time, unauthorized immigrants might not always be able to work.

Having access to immigrant workers (both legal and unauthorized) to fill job openings saved the American economy after the Covid-related shutdowns. A major problem of maintaining America’s current immigrant-dependent economy is that the American immigration system is in chaos and in need of reform.

Effective, comprehensive immigration legislation is needed for America to receive the full benefit of its immigrant workforce.

Comprehensive Immigration Reform

Comprehensive reform would have to include a sensible, just and affordable “path to citizenship” for an estimated 12 million undocumented workers already in the country. Also, the almost 600,000 DACA recipients need a pathway to citizenship.14

Comprehensive reform would have to address the backlog of people on waiting lists to be allowed in the country. It would need to address the refugees and asylees at the southern border trying to leave dangerous home situations.

Comprehensive reform would also have to address the needs of employers to have access to workers, and at the same time not allow exploitation of workers.

The current immigration system has been built on the foundation of racism beginning in 1882 with the Chinese Exclusion Act. Since then, there have been several racist alterations to the system.15

Some immigration experts have written that due to the historical and systemic racism on which the current immigration system is based, the immigration system is incapable of being reformed, but rather needs to be abolished and transformed into a new more equitable system.16

Immigration is a divisive subject. For more than 25 years, Congress has become more divisive. Congress has been unable to come to any compromise on immigration and many other important issues.

Congress has been unable to pass any significant immigration legislation since Reagan’s 1986 Immigration Reform and Control Act. That bill granted “amnesty” to almost three million undocumented immigrants.

The bill was ultimately deemed a failure. The failure of the bill to have any impact on illegal immigration was that the sanctions on employers, which might have stemmed further unauthorized immigration, were removed from the bill for passage.

Until Congress is able to end its partisan divisions, there will be no comprehensive immigration reform of the chaotic, racist and unfair system.

The backlog of people lawfully waiting to come to the United States to work or to join families will continue to grow. The frustration of waiting will continue to grow, and people will continue to leave dangerous home situations to seek a better life in the United States by any means necessary.

Without Congressional action to fairly and comprehensively address immigration, the U.S. economy will continue to be at risk of collapse due to the lack of a steady and reliable source of labor.

Footnotes

  1. https://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p111.html
  2. https://www.axios.com/2024/02/05/wages-outpacing-inflation#
  3. https://www.bea.gov/data/gdp/gross-domestic-product
  4. https://apnews.com/article/stock-markets-inflation-cdeea722367b960f1a87b0b3d287fedd
  5. https://www.wsj.com/economy/central-banking/economy-forecast-lower-recession-chances-1f24174b
  6. https://www.imf.org/en/Publications/fandd/issues/2020/03/shrinkanomics-policy-lessons-from-japan-on-population-aging-schneider
  7. https://www.weforum.org/agenda/2020/02/what-are-japan-and-singapore-doing-about-ageing-population/
  8. https://www.wsj.com/economy/jobs/labor-supply-economy-jobs-charts-3285a5b7 
  9. https://www.pbs.org/newshour/economy/how-migrant-workers-have-contributed-to-strong-u-s-job-growth
  10. https://www.marketplace.org/2024/03/15/recent-immigrants-have-filled-labor-gaps-boosted-job-creation-experts-say/
  11. https://www.nytimes.com/live/2024/04/05/business/jobs-report-march-economy 
  12. https://www.washingtonpost.com/business/2024/02/27/economy-immigration-border-biden/ 
  13. https://www.pewresearch.org/wp-content/uploads/2023/11/SR_23.11.16_unauthorized-immigrants_2.png?w=586
  14. https://www.fwd.us/news/daca-anniversary/#
  15. https://www.archives.gov/milestone-documents/chinese-exclusion-act#:~:text= 
  16. “Humanizing Immigration: How To Transform Our Racist and Unjust System,” by Bill Ong Hing, Beacon. October 2023. 272 pp. ISBN 9780807008027 
  17. https://www.migrationpolicy.org/sites/default/files/publications/CIR-1790Timeline.pdf Major U.S. immigration laws from 1790 to 2013.
  18. https://en.wikipedia.org/wiki/List_of_United_States_immigration_laws List of immigration laws from 1790 to 2022.
  19. https://www.macrotrends.net/global-metrics/countries/USA/united-states/fertility-rate

Author

  • Jim Mendez

    Jim Mendez came to Fresno in 1977 for his medical residency training at what was then called the Valley Medical Center. He stayed to practice medicine and raise a family. He is now a retired physician and a community activist.

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