Immigration Decline Signals Trouble for America’s Economy

And our global competitive edge

Michael Greiner
Jan 16 · 6 min read
Photo by Sarah Brown on Unsplash

Much to the delight of the president’s supporters, recent data shows a dramatic drop in immigration. After doing its level best to make the United States unattractive as a destination for migrants, the White House appears to have achieved its goal. A recent analysis of census data by William Frey, chief demographer at the Brookings Institution, shows that in 2018, immigration dropped by more than 70 percent from the year before.

Typically, such declines in immigration occur when the economy is in trouble. The last time we saw such a low level was during the 2008 recession. This fact should be unsurprising. If people are fleeing their country to find a better life, why would they come to the United States where jobs are scarce? The ebb and flow of immigration largely corresponds with the rise and fall of our unemployment rate: when unemployment is high, immigration is low.

This fact seems to fly in the face of much of the criticism of immigration we have seen. Immigration opponents argue that immigrants are outsiders who come here and take our jobs. If that were true, then higher immigration should lead to a higher unemployment rate. The reverse is true. A lower unemployment rate means that everyone’s working and more jobs are available. That is the kind of economy immigrants want to move into. If opportunities are scarce, such as during a recession when unemployment is high, word gets around and immigrants figure they may as well stay at home.

The reality is that much of how immigration is popularly understood is incorrect. The United States needs immigration. Without it, our long-term prospects are in trouble. As the Harvard Business Review pointed out, “immigration is at the heart of American competitiveness.”

Consider the following. A truism about developed countries is that we have declining birthrates. This reality could be due to a number of factors. As people become richer, they have fewer children. Or there’s the fact that women have more options available to them than simply rearing children. Or it could be the increased availability of birth control. Likely, it is some combination of these factors, along with others, that cause this trend. At any rate, the correlation is absolute.

At the same time as the birthrate is declining, better medical care means that people tend to live longer in developed countries. Without a policy intervention, this development will ultimately lead to a demographic crisis: a population weighted with a large proportion of older people.

Here’s the problem. Older people have a need for higher priced medical care than younger people. Similarly, older people work less than younger people. As a result, we need healthy younger people to work to pay for the costs of taking care of older people.

An inescapable reality about aging is that our bodies break down. As we get older, we have less energy to work the way we did when we were younger, and our health care needs become more expensive. I can personally vouch for this fact. When I was in my twenties, thirties, and even forties, a sixty- to seventy-hour workweek was the norm. While I worked full time, I raised children, went to law school, prepared to run a marathon, and learned to fly, all at the same time. I always enjoyed good health, often going years without missing a day of work or school.

But now at fifty-one, I’m still relatively young. My left eye now bleeds regularly. My lower back and neck experience chronic pain. I have far less energy than I once had, and enjoy a somewhat more than occasional nap. Just the thought of those long work hours exhausts me. And I still have decades left before I will likely retire. If that’s how I feel now, just imagine how I’ll feel when I’m seventy or eighty.

My dreams and ambition have decreased commensurately. Where I once dreamed of working in the White House and changing the world — and I worked aggressively toward those goals — I’m now satisfied with some good writing, a good class taught, and a pleasant evening at home with my wife and grandson. Where I once loved to travel with barely more than the clothes on my back, more recently I was happy when an offer to teach in China this summer fell through. How things have changed. The point is that as I get older, I will contribute less and less to society as a whole.

At the same time, the expenses society needs to support me will go up. Even if I generate work income until my death, I will certainly have higher medical bills. These costs will increase geometrically with each year I age. Many of the maladies that ultimately kill most Americans, such as cancer and heart disease, are largely the result of our body aging. What’s more is that these illnesses take a long time to kill us, resulting in long-term high costs of care.

So an older population means more people who are less able to contribute to society, less ambitious to create the next technological wonder, all while being more expensive to care for. At the same time, we have fewer young people with ambition and energy working hard to increase our economic output and pay the medical bills of older folks.

This is not just a theoretical problem. I remember back in the early 1990s when I was working on Capitol Hill attending a hearing where one economic expert after another detailed how Japan was about to eclipse the United States economically. Upon hearing all this testimony, one of the members of Congress blurted out, “I felt pretty good when I was on my way to work this morning.”

Subsequent to that hearing, the United States proceeded to experience explosive growth as a result of the technologies we invented related to the internet. At the same time, Japan settled into an economic funk from which it has still not recovered.

What happened? In the United States, the immigration rate actually hit its post-Wold War I peak in the early- to mid-1990s. In Japan, on the other hand, a history of hostility to immigrants combined with a declining birthrate led to a declining population with a higher proportion of older people and fewer and fewer young people to support those folks. The consequence: Japan’s economy only grew by 0.788 percent in 2018, and it has not seen more than 2 percent growth since 2010. By contrast, a healthy growth rate is considered 3 percent, and Japan enjoyed a 6.785 percent growth rate in 1988.

Avoiding Japan’s fate requires us to increase the number of young, ambitious people in our society. There are only two ways to do this: allow more immigration or increase the birth rate.

Immigration helps with this problem in two ways. First, the migrants tend to be young, ambitious people. If they were not, they would have stayed in their home country. Secondly, immigrants tend to have a higher birth rate than native-born Americans. This makes it economically feasible for the native-born to have fewer children while still living in a society with enough young people to support them in their old age.

The other option — increasing the birth rate — is expensive. France has been successful in increasing its declining birth rate with an aggressive policy response: free childcare, generous family leave, cultural support for working mothers and non-traditional families, and other pro-child policies. Where France faced Japan’s demographic crisis in the 1990s, it is now Europe’s most fecund country.

Unfortunately for the United States, our White House seems disinclined to pursue either policy option. It is demonizing immigrants, imprisoning immigrant children and reducing the flow of refugees to its lowest level ever. These policies have had the effect of reducing immigration at a time of low unemployment, just when we would typically expect to see higher immigration.

Similarly, the administration has made reducing the federal safety net a priority, with cuts to housing, food stamps, and healthcare. In that environment, ambitious plans for universal free childcare and generous family leave seem like a pipe dream.

The option they seem to be pursuing, the Japanese approach, will be a loser in the long-term. It will succeed in keeping our population white, just as it has succeeded in keeping Japan’s population racially monolithic. But it will also reduce our population growth and hurt our long-term economic prospects, just as it has in Japan.

As a result, we have a clear choice. We can increase our pro-child safety net and increase immigration, or head down a long path of economic decline. I believe in America’s value to the world, so I certainly hope we choose the former.

Michael Greiner

Written by

Mike is an Assistant Professor of Management for Legal and Ethical Studies at Oakland U. Mike combines his scholarship with practical experience in politics.

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