Building A More Dynamic Economy: The Benefits of Immigration
The United States is home to more immigrants than any other country in the world, with more than 44 million people — nearly 14 percent of our population — born abroad. The strength and vibrancy of the American economy cannot be separated from our long history of welcoming people from around the world.
Immigrants make significant contributions to our society and culture, but they also serve as engines for economic growth and innovation, creating new economic opportunities for the American people.
House Democrats believe that there is an urgent need for comprehensive, commonsense reform that recognizes the cultural and economic contributions of those who seek to make a home here.
Immigrants foster a dynamic, vibrant, and entrepreneurial economy
The entrepreneurialism immigrants bring is especially critical. Business dynamism has declined over the last several decades, with about two-thirds of the decline in the startup rate due to the slowdown in labor supply growth.
In fact, first-generation immigrants create 25 percent of all new businesses in the U.S., with the share rising to as much as 40 percent in some states.
Immigrants grow the economic pie and brighten our long-term fiscal outlook
By increasing the number of immigrants welcomed to the U.S. each year, we can strengthen our economy. According to Moody’s Analytics, doubling the number of immigrants we take in each year — to 2 million, roughly the number that came to the U.S. during the early 2000s — would boost our GDP growth rate from an annual average of 2.0 percent to 2.3 percent through 2030.
The Congressional Budget Office (CBO) estimated that enacting comprehensive immigration reform, like the bipartisan legislation approved by the Senate in the 113th Congress, would have boosted real GDP by 5.4 percent and reduced the deficit by nearly $900 billion over the following 20 years. That amounts to nearly $5,000 of deficit reduction per new legal immigrant per year by the second decade.
Immigrants and their native-born descendants also contribute billions of dollars to government coffers each year, with unauthorized immigrants alone paying more than $9 billion in federal payroll taxes and nearly $12 billion in state and local taxes annually.
At the same time, foreign-born individuals have a more positive net fiscal contribution than their native-born counterparts and receive less support from government programs.
Increasing the number of immigrants would also substantially improve the financing outlook for Medicare and Social Security, two of the biggest drivers of our long-term budget challenge. Between 2000 and 2011, unauthorized immigrants contributed a $35 billion net surplus to the Medicare Hospital Insurance Trust Fund, extending Trust Fund solvency by one year.
By the same token, significantly restricting immigration, as some Republicans propose, would worsen the Social Security trust funds’ unfunded liability by $1.5 trillion over 75 years.
Immigrants rejuvenate an aging workforce
Immigrants help address one of the most pressing economic challenges facing our country: an aging population. Working-age population growth is projected to slow to just 0.3 percent per year over the next decade — a full percentage point below the average pace between 1960 and 2010 — with a whopping 85 percent of that growth projected to come from immigrants.
Indeed, without future immigration, our working-age population would fall by nearly 18 million by 2035. By increasing the size of the working-age labor force, immigrants — both “skilled” and “unskilled” — help fill critical labor shortages while providing fuel for our long-term growth.
As Chairman Yarmuth noted in his opening remarks at a June 2019 Budget Committee hearing, America needs an immigration system that encourages hardworking and creative people to come to our country, provides pathways to citizenship, protects our borders, and keeps families together.
Committee members on both sides of the aisle agreed that our immigration system is broken. By passing a comprehensive immigration reform bill that reflects our national needs and our values, Congress can help secure our long-term fiscal health and create a more vibrant and dynamic economy.