More Immigration, Stronger Economy
Debate rages in Congress over what to do with the tens of thousands of unaccompanied children who are trying to join their relatives in America. There can be no clearer sign of the need for immigration reform than children putting themselves in physical peril for a better life in the U.S. Increased legal immigration and a simpler, shorter process for crossing the border would have enormous humanitarian benefits.
But these reforms would also help solve America's economic and budgetary problems. The weak recovery and an aging population have labor-force participation hovering around its lowest rate in 35 years. America's birth rate is less than half of what it was a century ago. The cost of programs such as Medicare and Social Security is projected to raise publicly held federal debt to over 100 percent of GDP by 2036. And there is good evidence that immigration could help to address all of this.
Research by Giovanni Peri at the University of California, Davis, shows that more immigration will raise U.S. wages and create additional jobs for native-born Americans. Immigrants bring different skills into the economy and typically do not compete for the same jobs as natives. Further, immigrants are generally paid lower wages, which allows businesses to expand and hire additional workers.
Beyond the benefits to the economy as a whole, all this adds up to more tax revenues. The Congressional Budget Office has concluded that 16 million additional immigrants by 2033 would decrease the federal budget deficit by $700 billion over 2024-2033 period.
Some worry that immigration will strain the safety net, but low-income immigrant households with children rely less on the safety net than do similarly-situated native households. Welfare reform in 1996 eliminated most eligibility for immigrants -- even legal immigrants, who had previously been equal to U.S. citizens under welfare law. As a result, immigrants have a labor-force participation rate almost two percentage points higher than native-born Americans. The vast majority of immigrants come here to work, not to take advantage of our welfare system.
Immigrants do impose some economic costs in the short term. Immigrants tend to have more children than native-born Americans, putting pressure on school districts. U.S.-born children of immigrants are eligible for welfare programs, regardless of their parents. And immigrants have a low rate of health-insurance coverage, burdening health providers.
However, the longer-term gains of increased immigration outweigh these costs. A 2012 literature review by Daniel Griswold shows that the largest factors behind increased K-12 spending are special education and administrative overhead, which have nothing to do with immigration. Griswold cites the 2011 Social Security Trustees Report, which says 300,000 more immigrants per year would extend Social Security's solvency by one year. Griswold also shows that, despite having a lower health-coverage rate than native-born Americans, immigrants are younger and healthier and do not significantly burden the overall health-care system.
As the children of immigrants grow up, they will begin paying taxes and contributing to the economy -- most likely, some will even become great entrepreneurs and scientists. For instance, Mario Capecchi came to the United States in 1946 as a nine-year-old. He went on to earn a Ph.D. in biophysics from Harvard and won the Nobel Prize in 2007. Elon Musk came to the United States during college and later co-founded PayPal, SpaceX, and Tesla Motors. The next great technological breakthrough may well come from a foreigner, and it is in our interest to have that individual here, not brushed aside by overbearing immigration rules.
Today, America has the world's strongest economy, and immigrants will help ensure that it remains that way. Immigrants and their children should not have to risk their lives to come to the land of opportunity.
Jason Russell is a research associate at Economics21, a project of the Manhattan Institute.