by Tony Wyman
Can we be honest about immigration for a change?
I know we want to blame the issue on politicians and business leaders, but they aren’t the real reason immigrants are coming to the United States. You are.
You, the consumer constantly demanding better goods and services at steadily declining costs, are the primary reason more low-skill immigrant laborers are coming to America. You are creating a demand for them, a demand that grows year-after-year.
And that is a good thing! Because consumer demand for affordable goods is making our industries more efficient and more productive. By forcing businesses to constantly improve the quality of their products, while keeping those goods affordable to the masses – consumers are making American companies more competitive, helping them successfully resist pressures from overseas manufacturers.
And not only are you demanding lower cost goods and services, you are retiring at increasing rates as Baby Boomers reach their mid-60s, creating a shortfall in available labor while simultaneously increasing demand for caregivers and others who serve America’s aging population.
Yes, it is you who are creating the demand for additional labor in this country and you should be happy that immigrants are heeding that call. Because, without them, America’s standard of living would take a major blow.
Immigration and Population
One of the major benefits of immigration is it increases labor resources, which, in turn, allows American businesses to increase productive capacity. Simply put, without an adequate supply of labor, businesses aren’t able to grow. Businesses that can’t grow in tandem with increased demand eventually get replaced by those that can.
This is a major challenge for U.S. businesses right now. With unemployment at very low levels, the supply of labor is critically tight. In April and May, unemployment numbers for black and Hispanic laborers hit record lows at the same time demand for laborers hit record highs. According to job numbers, there were 1.125 million unfilled jobs in March, a record high.
If not for immigrant workers, estimated to make up 13.5% of the population by the Migration Policy Institute, America’s labor shortage would be much worse than it is. In fact, it would be crippling to our economy.
“If all immigrants were just to disappear from the U.S. workforce tomorrow, that would have a tremendous negative impact on the economy,” said the Economic Policy Institute‘s David Costa. He warned that many positions in both high-skill and low-skill fields occupations and losing them in the workforce would would reverse years of economic development in the United States. While some of the openings would be filled by native workers, large gaps would remain as the supply of Americans able, trained and willing to replace immigrant labor would be insufficient to meet demand. “You’d feel an impact and loss in many, many different occupations and industries, from construction and landscape to finance and IT,” said Mr. Costa, Director of Immigration Law and Policy Research at EPI.
Not only would we feel an impact at the workplace, we’d feel it in our population, too. In fact, without immigration, American population would decline over the next 50 years. This reduction in both workers and consumers would lead to a significant decline in the size of the American economy and threaten the nation’s ability to maintain its leadership position in the world, both politically and militarily.
In addition, it would jeopardize the retirements of Baby Boomers counting on a growing workforce to pay their retirement benefits as elders start retiring in record numbers.
“The surge of retiring baby boomers is reshaping the U.S. into a country with fewer workers to support the elderly—a shift that will add to strains on retirement programs such as Social Security and sharpen the national debate on the role of immigration in the workforce,” the Wall Street Journal said in a recent article. They pointed out the the number of Americans 65 and older for every 100 workers will go from 25 in 2017 to 35 to 2030 and to 42 by 2060.
Paul Taylor, author of The Next America, called this shift in the number of retired persons dependent on fewer workers “uncharted territory.” He said the country is experiencing two major demographic changes: the first is the country is aging rapidly and the second is we are on the verge of becoming a non-white majority nation.
“These changes have created an America in which young and old don’t look, think or vote alike. We have one party that skews older, whiter, more religious and more conservative and the other that skews younger, more non-white, more liberal and more secular. There’s more animosity between partisans now than at any time in modern history. Some of it spills beyond politics into everyday life, influencing where people live, whom they befriend and how they search for news.”
Native Americans Aren’t Reproducing Fast Enough
To reverse the decline in workers per retiree, native Americans would have to reproduce at levels not seen since the Baby Boom of the 1950s and trends say that isn’t likely to happen. In fact, reproductive rates of Americans have plummeted since the end of World War Two. In the 1950’s, American population grew at an average rate of 1.6%. That rate dropped to 1% in the 1960’s and stayed at that level until 2007, when it dipped to .7%. Current projections by the United Nations projects U.S. population growth to dip below .4% by 2015.
The obvious impact of the decline in population growth is it reduces America’s economic vibrancy, leading to slower job growth, depressed wages, less innovation and harms our ability to compete with foreign companies.
But those proposing restricting immigration to past lower levels have claimed the reduction of foreign workers will lead to a rebirth of American economic prosperity, returning the nation to a period of better economic times.
The reality is, however, that immigrants are a vital part of the American economy.
Even though they make up only 13.5% of the American population, they account for 14.7% of our economic output. In addition, they contribute disproportionately to their percentage of the population because they are concentrated in working ages and make up 16% of our total workforce. In addition, more immigrants own their own businesses and employ others as a percentage than native Americans.
Immigrants Create Jobs and Better Wages for Americans
And contrary to what anti-immigration activists claim, immigrants don’t drive down wages or take jobs from Americans. In fact, they do the opposite. “It may seem surprising, but study after study has shown that immigration actually improves wages to U.S.-born workers and provides more job opportunities for U.S.-born workers,”
David Kallick, Fiscal Policy Institute’s director of the Immigration Research Initiative said in an ABC News interview last year. “The fact is that immigrants often push U.S.-born workers up in the labor market rather than out of it.”
By filling jobs that would otherwise go unfilled or that would be filled by higher-wage workers, immigrants make it possible for businesses to create additional, higher-paying jobs. A restaurant that can’t get workers to cook meals or do dishes, for example, would have no need for waiters, maitre d’s or managers. Without cooks and dishwashers, a restaurant couldn’t operate.
Factories unable to attract assembly workers would have no need for foremen, accountants, purchasing agents or controllers. And hotels without maids to keep the rooms clean would have no customers paying the salaries of event planners and general managers.
In addition, the millions of immigrant laborers are also consumers, buying nearly $1 trillion in consumer products in 2014, according to a study by the Partnership for a New American Economy. They earned $1.3 trillion in wages and paid $105 billion in state and local taxes and $224 billion in federal taxes, according to the study.
Director of Programs Meg Wiehe of the Institute on Taxation and Economic Policy, undocumented aliens paid $11.6 billion in taxes each year. “And if the estimated 11 million undocumented immigrants here were given a pathway to citizenship or legal residential status, those tax contributions could rise by nearly $2 billion,” she said.
The tax dollars immigrants pay go to supporting government jobs and contracts that employ higher-skill, higher paid American workers. Without the taxes paid and the additional revenue generated by the companies able to operate because of the availability of labor that otherwise wouldn’t exist with immigrant labor, many of those jobs wouldn’t exist.
Considering the positive impact immigrants have on the American economy and the downward spiral our population would be in without them, it is a wonder why immigration opponents want to build a wall keeping workers out. One would think if they understood economics at all, instead, they’d want to build a bridge.