As Republicans in the House of Representatives search for a way forward on immigration reform, they should keep in mind a critical point: overhauling the U.S. immigration system would help jump start the sluggish U.S. economy. In other words, any Member of Congress who has expressed a desire to cut the federal budget deficit, create new jobs and businesses, boost wages, and increase U.S. economic output should be for immigration reform—not against it. Conversely, those who stand against reform should carefully consider the price that will be paid by the U.S. economy, and U.S. workers, if reform does not occur.
The many economic benefits which would flow from immigration reform are outlined in a new report from the White House. More precisely, the report describes how the immigration reform bill passed by the Senate in June (S. 744) would touch virtually every aspect of the U.S. economy:
Economic Growth
- As summarized by the White House report, the Congressional Budget Office (CBO) estimates that S. 744 would “boost real GDP {Gross Domestic Product} by 3.3 percent ($700 billion) in 2023 and by 5.4 percent ($1.4 trillion) in 2033.”
- Moreover, “new immigrants of working age are projected to participate in the labor force at a higher rate than native workers, increasing labor force participation rates.” This is a crucial consideration given that tens of millions of native-born baby boomers are now aging into retirement and out of the labor force.
Innovation and Job Creation
- According to the White House report, the Senate bill “makes meaningful improvements to the existing employment-based green card system and creates new provisions that strengthen the United States’ ability to attract and retain highly-skilled global talent.”
- This would have important entrepreneurial implications given that many high-skilled immigrants go one to create their own businesses. As the White House report points out, “more than 40 percent of Fortune 500 companies were founded by immigrants or children of immigrants,” and “immigrant-owned small businesses generated a total of $776 billion in receipts and employed an estimated 4.7 million people in 2007.”
Productivity and Wages
- The White House report notes that “researchers have generally found that immigrants may mostly complement rather than substitute for” native-born workers, “and that increased immigration raises average wages of U.S.-born workers and has little or no effect on wages even for low-skilled workers.
- In addition, “higher immigration increases U.S. workers’ productivity by contributing to technological advancement—leading to rising average wages over the long term.” As a result, the CBO “estimates that real wages will be 0.5 percent higher in 2033” if the Senate bill is enacted.
Budget Deficits and Social Security
- The White House report emphasizes that “over the twenty years between 2014 and 2033, the Senate bill would reduce federal deficits by nearly $850 billion.”
- Moreover, the Senate bill would “add nearly $300 billion to the Social Security Trust Fund over the next decade…extending the life of the Trust Fund by two years.”
Immigration has been a critical economic resource for the United States since its founding. Immigration reform would maximize the benefits which the U.S. economy derives from that resource. Reform would allow immigrants to realize their full potential in the many economic roles they fill: workers, taxpayers, entrepreneurs, innovators, investors, consumers, homebuyers. The native-born population stands to gain much from the economic boost which immigration reform would provide. On the other hand, everyone will lose if reform does not come to pass.
FILED UNDER: Economics, immigration legislation, S.744, Senate, Wages
