“A large proportion of recent and projected immigrants are expected to be 25 to 54 years old – adults in their prime working years,” he said, although he did issue a note of caution: “We are continuing to assess the implications of immigration for revenues and spending.”
The US economy was surprisingly strong in 2023, growing 3.1 per cent. That helped the country escape a recession that many economists had all but locked in, after high interest rates to tame record inflation sparked a cost of living crisis. Unemployment remains at 3.7 per cent, near a 50-year low.
The National Association for Business Economics released a survey this week showing that only a quarter of their members now expect a recession this year, down from 50 per cent late last year.
Immigration plays a key part in the improved economic outlook, and two thirds of the NABE economists said the number of legal immigrants should be increased.
But some economists are concerned that the benefits of cheaper labour and higher economic activity ignore other costs.
Simon Fraser University economist professor Herbert Grubel said the additional public services needed for millions of new immigrants can outweigh the economic advantages.
“In Switzerland during the 1970s an economic boom led to labour shortages and immigration was liberalised,” Grubel said. “It turned out that the need to produce housing infrastructure and public services for these immigrants actually worsened the labour shortage.”
He noted that Swiss citizens then demanded a public referendum that ultimately ended the liberal immigration policy.
Grubel also said such an increase in the labour pool reduced employers’ incentives to adopt labour-saving technology and to avoid the cost of teaching skilled workers to operate the new technology.
Weighs on public finances
Spending on caring for illegal immigrants also weighs considerably on government finances. Since 2022, more than 100,000 illegal immigrants have entered New York, where local laws require the city to offer them shelter.
Mayor Eric Adams said the city will end up spending $US12 billion by the end of 2025 to “meet rapidly expanding needs” which so far have included shutting down local high schools to house migrants.
In Denver, more than 40,000 migrants have arrived in the last year, the biggest influx per capita of all US cities. The Colorado capital has spent more than $US42 million to house and feed the new arrivals.
In Chicago, the influx of more than 35,000 migrants has left Black communities pleading with city leaders to shift tens of millions of dollars earmarked for migrants back into poor Black neighbourhoods.
Centre for Immigration Studies director of research Steven Camarota said the increased labour pool might also drive down wages, as lower skilled workers end up competing with immigrant labour for jobs.
“Lower wages for some Americans can increase economic opportunities for other workers, and it can also increase profits for businesses and lower prices for consumers. But there is no free lunch. These benefits require that some Americans, typically at the bottom of the labour force, lose out,” Camarota said.
He noted that the National Academies of Sciences, Engineering and Medicine reviewed research on the effects of immigration on the US labour market, and cited numerous academic studies showing negative wage impacts from immigration, particularly on the least educated.
