Immigration is Our “Superpower”
Politicians risk squandering a valuable asset
In an era when most developed countries are anticipating economic decline due to an aging population, the US is potentially squandering a valuable resource by resisting an influx of young, ambitious people traveling to our borders, due to shortsighted political stances.
The recent flood of immigrants on the southern border has caused both parties to panic and engage in a game of blaming each-other instead of working on ways to maximize this economic bonanza.
The truth is that immigration has more often than not been a boon to the economy and according to a recent episode of the Dollar and Sense podcast, is a “superpower” of the US economy.
In the podcast Wendy Edelberg, senior fellow and director of The Hamilton Project at Brookings, tells host, David Dollar that immigration has a mostly beneficial impact on the economy.
Historically, the U.S. has seen immigration as a key driver of its labor force. Immigrants accounted for a vital half of the labor force growth from 2010 to 2018. The future projections are even more striking, with immigration expected to contribute to three-quarters of the population increase over the next decade. Because of the aging of the country’s native born population, this labor force is vital for the economy.
They value of this population can’t be underestimated, Immigrants are pivotal in driving productivity growth and innovation in the U.S. They receive patents at twice the rate of their native-born counterparts. This high rate of innovation is attributed to the unique and diverse skill sets that immigrants bring, complementing the skills of the native workforce and boosting overall productivity.
The pandemic had a significant, detrimental, impact on immigration. In 2020, visa issuance plummeted, drastically reducing the number of new immigrants. Although there has been a recovery, the U.S. is yet to return to pre-pandemic immigration levels. This reduction in immigration has implications for labor force availability and economic growth. In spite of the shortsighted wrangling of politicians, we need these people.
Federally, immigrants contribute more in taxes than they receive in benefits. One problem is that this positive effect is not mirrored at state and local levels, There the immigrants often impose higher costs, primarily due to the education requirements for their children. But, over a 75-year lifespan, immigrants generally offer a net benefit.
Like all complex issues, Edelberg emphasized, a nuanced approach is necessary. One striking aspect is the educational diversity of these immigrants; they are often either much more educated or less educated than the native population, with fewer falling in the middle.
While many of the immigrants have little education and typically are employed in occupations with lower wages, paradoxically, a significant number hold advanced degrees, contributing considerably to sectors requiring high skill levels.
Different communities in the U.S. experience immigration differently, based on the education levels of the immigrants they receive. Areas with a higher influx of less-educated immigrants face significant fiscal burdens, particularly in public education and healthcare services. In contrast, communities with more educated immigrants may experience fiscal upsides.
To address the uneven fiscal impact of immigration, Edelberg proposes a redistribution mechanism. This policy involves transferring approximately $2,500 per less-educated, recent immigrant from federal to state and local governments. This transfer aims to cover the additional costs incurred in education and healthcare in these communities.
The proposed redistribution mechanism is designed to be administratively simple, akin to the Impact Aid system used for school districts. This system compensates districts for fiscal burdens imposed by federal policies, such as the establishment of military bases. Similarly, the proposed mechanism would address the fiscal burdens created by federal immigration policies.
In summary, while political discourse often polarizes the issue of immigration, Edelberg and Dollar’s commentary highlights the indispensable role of immigrants in the U.S. They are not only crucial for labor force growth but also drive innovation and productivity.
The proposed policy changes aim to balance the fiscal impacts of immigration, ensuring a more equitable distribution of its benefits and costs. Recognizing and leveraging the positive impacts of immigrants, while pragmatically addressing the challenges, can help maintain the U.S. as a dynamic and thriving economy. This comprehensive view of immigration underscores its status as a significant asset, a true “superpower,” within the nation.
