Immigration and the Economy

April 2018 -

While Americans have disputed immigration policy since the founding of the country, passions tend to be highest during periods when the numbers rise, says Theresa Cardinal Brown, director of immigration and cross-border policy for the Bipartisan Policy Center in Washington. With the foreign-born population in the United States reaching 43.4 million in 2017 (compared with 25.3 million in 1997) now is one of those periods, says Brown.

The debate often generates more heat than light, she adds, sometimes obscuring the benefits that immigrants bring to the U.S. economy, including agriculture and other industries. In a recent BPC report, “Immigration Trends and the Immigration Debate,” Brown and co-author Jeff Mason suggest that the U.S. discussion on immigration has failed to keep pace with significant changes in recent years. For example, despite the relentless focus on Mexico, Asia is now the largest source of legal immigrants to the United States. As for illegal immigration, heated arguments for or against a border wall seem at odds with the fact that border crossings have dropped and that most undocumented immigrants these days are those who remain in the country after their visas expire.

An expert who has helped guide policy for organizations ranging from the Department of Homeland Security to the U.S. Chamber of Commerce, Brown spoke with OUTLOOK about what immigrants add to the economy, and what she sees as the need for a concerted policy based on U.S. labor needs rather than politics.

OUTLOOK: Where does the U.S. immigrant population stand today in comparison to historical averages?

Theresa Cardinal Brown: More than 13 percent of people in this country today are foreign-born. That’s not the highest it has ever been, but it is close. The late 1800s and early 1900s saw huge waves of immigrants, reaching a high point of nearly 15 percent of the population in 1890.

The current spike is due largely to increases in unauthorized immigration that started in the 1980s and ramped up in the 1990s. Additionally, many unauthorized immigrants gained amnesty under the 1986 Immigration Reform and Control Act, became U.S. citizens in the 1990s, and then sponsored their family members for green cards. However, unauthorized immigration to the U.S. has largely plateaued and even declined in the last five years. And it should be noted that we’re by no means at the top of the list of developed countries when it comes to immigration. Nearly 20 percent of Canada’s population is foreign born and in Australia the percentage is even higher.

OUTLOOK: Americans have long prided themselves on being in many ways a nation of immigrants. To what extent is that still the case?

Brown: While it’s true that many of us take considerable pride in coming from immigrant stock, as a country we’ve always been ambivalent about actual immigrants. Looking back in history, we can see, “No Irish need apply,” and that Italians were looked down on, and that Jewish immigrants were turned away. Asian and Chinese immigrants were banned from the United States for decades. We tend to look with reverence on immigrants of the past and with concern on immigrants of the present, whoever they may be.

OUTLOOK: What impact does immigration, both legal and undocumented, have on the U.S. economy?

Brown: Immigration, like anything else that increases available labor in the workforce, helps grow the economy. Immigrants are workers, but they’re also consumers. They contribute to the overall gross domestic product by demanding goods and services and paying for them, as well as by providing labor, legally or not.

Certain types of immigrants-scientists, engineers and entrepreneurs-are very much job creators, and immigrants as a whole are far more likely to create their own companies than Americans are, and to hire more people. They help generate economic value.

Immigrants can also be a positive for the federal budget. Most immigrants receive far less in benefits than they pay into our systems. In fact, Social Security and Medicare trustees have reported that having so many immigrants contributing to those systems who will never be able to get benefits has helped extend the solvency of those programs by many years.

OUTLOOK: You’re talking about legal immigrants?

Brown: Undocumented immigrants, too. They do pay taxes, using individual tax ID numbers that the IRS gives to people who can’t get Social Security numbers. Many undocumented immigrants file tax returns every year, in part because they hope that one day, when they’re legalized, the fact that they paid taxes will help them.

Percentage of U.S. Population that is Foreign Born

OUTLOOK: Do you see the world’s borders as becoming more porous, or less?

Brown: In this age of international criminality and terrorism, most countries are securing their borders more tightly than ever. We require applications, screening and vetting to be sure we know who’s getting in, and where they travel. That has been a very significant effort, and I think it has made most borders a lot less porous.

But when people are in desperate situations-refugees and asylum seekers, from Syria and other places, or Central Americans going north to the U.S..Mexico border-they will do whatever they need to do to find a better way of living. In those cases, efforts at the borders are a deterrent, but they are not likely to stop the flow completely.

That’s one of the defining issues of immigration around the world right now- the dichotomy between countries that are trying to make their borders more secure and these movements of people who are desperate to get in by any means necessary.

Immigration, like anything else that increases available labor in the workforce, helps grow the economy. Immigrants are workers, but they're also consumers.
OUTLOOK: To what extent do immigrants displace U.S. workers?

Brown: There’s not wide-scale economic evidence of immigrants stealing jobs of U.S. workers. Most immigrants complement the U.S. workforce. They either have less education than the average U.S. worker, or more education, so they either take jobs at the lower end of a skill set that Americans no longer want or jobs at the higher end that Americans may not be qualified to do.

It’s pretty clear that immigrants have little or no impact on overall U.S. wages in the long run. There may be short-term impacts in certain locations when immigrants come in, but those tend to average out over time as the economy adjusts.

Percentage of Foreign-Born Population by Region of Origin, 1997 and 2017

OUTLOOK: How many immigrants does the United States need each year to sustain its economy?

Brown: That’s a very interesting question that has never been figured out, because our legal immigration system has set the number at a static rate since 1990. We accept an average of about 1 million legal immigrants-that means new green card holders-into the country each year. That number isn’t based on an evaluation of economic need, nor any study of how many immigrants the economy might be able to accommodate.

In terms of how many immigrants we might need each year, most economists agree the number should be based on an ongoing evaluation of our future needs. The system could adjust according to workforce projections-for example, that our native-born workforce is getting older and shrinking. Or we might have a number linked to U.S. employment rates. When we are close to full employment, and there are still jobs available, maybe we would allow more immigrants to help fill those jobs. When the economy’s retracting and more Americans are out of work, we could allow fewer. There are many ways to adjust that number, but probably the worst way is what we have now, which bears no relation to the economy.

OUTLOOK: How heavily do agriculture and other rural industries depend on immigrant labor, and where is that dependence most pronounced?

Brown: Those industries are among the most dependent on immigrant labor. Historically, farmers would have lots of children, and that’s where the farm labor workforce came from in communities in which farms were passed down from generation to generation. But during the second half of the 20th century, and especially now in the 21st, those families are having fewer kids-and fewer and fewer of those kids want to stay in farming.

Today, even with considerable automation, it still takes a lot of labor to run a farm, and some crops require more labor than others. There are year-round labor needs in dairy and livestock, for example, and seasonal needs in produce and other sorts of agriculture, such as forestry and flower growing.

OUTLOOK: How do immigrants fill that need for agricultural labor?

Brown: U.S. agriculture has always been supplemented by a migrant labor force. For much of our history, Mexican migrants would flow freely over the U.S.-Mexico border, work for a while in the United States and then go back to Mexico when the season was done.

After World War II, the country created the Bracero Program for temporary workers, which legally brought a lot of agricultural workers in. But when there started to be concerns that those migrant workers were taking jobs that Americans back from the war might need, there was a crackdown. The Bracero Program was ended in the 1960s.

However, by then a lot of American farmers had become dependent on a migrant workforce and had trained those workers, while a lot of people coming back from the war didn’t want to go back into the fields. Circular migration continued, albeit illegally. Then, after crackdowns at the border, starting in the mid-1990s and especially after 9/11, it became harder and harder for migrants to come and go. Many just settled in the United States and eventually brought their families. That’s the root of a lot of the current unauthorized immigration to the United States from Mexico. The American Farm Bureau Federation estimates that 50 to 70 percent of laborers on U.S. farms are unauthorized.

It's pretty clear that immigrants have little or no impact on overall U.S. wages in the long run. There may be short-term impacts in certain locations when immigrants come in, but those tend to average out over time as the economy adjusts. 
OUTLOOK: What are the means for workers to come here legally to work in agriculture and other industries? Are the H-2A and H-2B visas sufficient?

Brown: The H-2A program for temporary agricultural workers is underutilized, primarily because of its bureaucratic hurdles for farmers, who may not get workers in a timely manner, particularly if they’re hiring for the harvest. And it’s strictly for seasonal labor.

The H-2B program is also for seasonal or temporary work, but not in agriculture. Some industries can’t use either of those programs to hire workers legally. Neither program allows you to sponsor an immigrant permanently, for example-a worker you want to keep and promote.

Most immigration reform proposals that could help with agricultural needs would legalize the current undocumented agricultural workforce and then provide a reformed temporary visa program to reignite some of the circularity of seasonal migration.

OUTLOOK: Where do we stand with regard to attracting skilled labor to the United States? Is our visa system working as it should?

Brown: About two-thirds of our visas each year are issued to family members. One-third are issued to people based on a workforce skill. That is the exact opposite of most developed countries in the world, in terms of the annual percentage of people let in. A lot of businesses would like to see us increase the availability of visas for those who are coming in with skills, coming to work, as a percentage of our overall immigration.

OUTLOOK: How would you rate President Trump’s record on immigration a little over a year into his term, compared with his positions as a candidate?

Brown: Some of his campaign promises haven’t gone as planned. He hasn’t gotten the money to build the wall on the border with Mexico, and the travel ban has had a hard time in the courts. But he has decreased substantially the number of refugees we take in. He has implemented increased enforcement inside the country, with many more arrests than under the previous administration, although deportations are taking a little longer.

OUTLOOK: What would be the impact of President Trump’s proposed deep cuts to legal immigration and tough stance on illegal immigration?

Brown: So far, his proposed cuts to legal immigration have been related to family sponsorship. That could affect families in agriculture, where someone may be here legally or is a citizen and wants to sponsor family members, so they can come to work on the farm.

The crackdowns on undocumented or illegal immigration could be more far-ranging. With increasing security at the border and fewer Mexicans interested in making the trek north, there’s a reduced supply of undocumented labor in agriculture. That’s one reason why more employers are starting to use the H-2A program, as difficult as that is.

OUTLOOK: How do our current battles over immigration compare with those of previous eras? Are we at a uniquely contentious moment?

Brown: Our most restrictive laws on immigration were passed in 1924, at a time when Americans were extremely concerned about where immigrants were coming from. That was at the height of the eugenics movement, and there was a belief that certain people were genetically superior and more inclined to succeed than others.

Then, during the height of the civil rights movement, we passed the Immigration Act of 1965. It did away with those country-of-origin quotas from 1924, in hopes that we would accept people from anywhere in the world, but that was very contentious because people were afraid it would change how America looked. One reason we have so much family immigration stems from that fight. People argued that by prioritizing family unification over employer-based immigration, we would bring in more people related to those already here-so it wouldn’t change how the United States looked at all. But it didn’t actually play out that way. In the decades that followed, we saw a significant increase in Hispanic immigration, and now there has been a shift toward Asian and South Asian immigration and immigration from Africa. The sources of immigrants change but I think our fights over immigration will always be there.

OUTLOOK: Do you see any long-term solutions, or are we destined to forever be a nation of immigrants fighting over immigration?

Brown: We have had our current immigration system 30 or so years, and it hasn’t been upgraded or adapted. People may disagree about how to fix it, but no one likes how it’s working now, and at some point, we’ll reach a breaking point and have some changes.

At the Bipartisan Policy Center, where I work, our mission statement is to bring together committed partisans to develop practical and pragmatic solutions for our nation’s biggest problems. I’m always surprised when we pull people together, at the amount of agreement that actually exists. When you get people in the right environment to talk through issues and set aside political rhetoric, people are closer together on those things than you think they are.

Also in this issue

  • Interest Rates and Economic Indicators
  • Former CoBank Chairman Everett Dobrinski Reflects on 20 Years of Board Service

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