We need immigrants to grow the economy. Without them our population is falling. As a first approximation, a nation’s GDP and its growth rate is the product of total population and GDP per person. In order for GDP to grow, either population or GDP per person (productivity) or both must be growing. Productivity depends on several factors; the rate of technological advancement, the educational level of the population, and perhaps other factors. Sticking with the first approximation, if a country’s population is shrinking, in order for its economy to grow, productivity must be growing faster than population is shrinking. So where does the U.S. stand?
Since at least 1990 Congress has enacted no comprehensive immigration reform. The Biden administration largely ignored the influx of immigrants enabled by Congressional inaction, so there was a problem with excessive immigration. The Trump administration has been proactive in dealing with immigration but in the cruelest, likely unlawful, and economically nonsensical way. Beyond closing the boarders, immigrants have been rounded up and deported, a few killed, or collected in internment camps. Barring immigration and deporting many is a bad idea. Unless technology bails us out, expect falling economic growth in the near future.
The Trump policy seems to assume all immigrants arrive illegally with the intention of becoming public assistance recipients or, worse, criminals. Illegal immigrants are legally barred from receiving most benefit programs. The truth is, according to the CATO Institute, “. . . non-citizen immigrants consume about 53% fewer welfare benefits per capita than native-born Americans.” CATO also finds all immigrants, legal and illegal, have lower incarceration rates than native-born citizens. Immigrants come here seeking to make a better life by being productive members of society.
Our fertility rate is about 1.6 child per woman. The replacement rate, the fertility rate necessary for the population to be constant, let alone growing, is 2.1 children per woman. Our fertility rate has been below replacement since 2007. Hence, absent immigration, the population is falling. Therefore, unless productivity rises faster than the population is falling, GDP will also fall. But labor productivity has been growing at only 2 percent lately.
It’s an open question whether technology will keep productivity rising fast enough to prevent economic growth from slowing or actually falling. Artificial intelligence holds some promise to keep productivity rising in the face of falling fertility but that remains to be seen.
Immigration has been talking up the slack of falling domestic fertility. Immigrants not only fill the population gap left by citizen women bearing few children they bring initiative, imagination, and a will do better for themselves and their families. It may keep our economy growing. That’s a good thing.
Patrick Taylor lives in Ridgeland.
