Immigrants are saving the American economy

In his 2024 campaign, like his previous campaigns, Trump is pitting native-born Americans against immigrants. Sometimes, this is expressed through rank bigotry. Trump has claimed repeatedly that undocumented immigrants are "poisoning the blood of our country," a phrase with a dark history. In other instances, Trump makes more specific claims about the impact of immigrants on the American economy. In a February rally in Michigan, Trump told the crowd that immigrants coming into the country are "going to take your jobs." During his presidency, Trump imposed significant restrictions on legal immigration, arguing that new arrivals displace American workers and reduce wages. 

New data, however, confirms that these claims are false. Rather, immigrants have powered the remarkable recovery of the US economy after the shock of the pandemic.

In 2023, the US economy grew at a 2.5% rate, "outpacing all other advanced economies." The US is on track "to do so again in 2024." This is only possible because of a substantial increase in immigration.

Since February 2020, there has been no net job growth among native-born Americans. One reason is that the native-born workforce is flat or shrinking. Baby boomers are retiring, and birth rates remain low. But there has been substantial job growth in the US since February 2020 because more immigrants are working. 

(The Washington Post)

A new study published by the National Bureau of Economic Research (NBER) reveals that contrary to conventional wisdom, the immigrant workforce in America benefits native-born workers. The study concluded that "immigrants raise wages and boost the employment of U.S.-born workers." This is especially true for native-born workers with less education. The study found that "immigration, thanks to native-immigrant complementarity and college skill content of immigrants, had a positive and significant effect between +1.7 to +2.6% on wages of less educated native workers, over the period 2000-2019 and no significant wage effect on college educated natives." 

Giovanni Peri, one of the study's authors, explained this phenomenon. According to Peri, "[w]hen immigrants work in manual labor jobs, U.S.-born workers often specialize," moving into jobs with higher wages. The "complementarity" of immigrant workers means they are filling openings in sectors with labor shortages, like health care and hospitality, facilitating the hiring of native-born workers in those sectors at higher salaries. 

A similar point was made by Federal Reserve Chairman Jerome Powell during a February 2024 interview with CBS' 60 Minutes:

60 MINUTES' SCOTT PELLEY: Why is immigration so important to the economy?

JEROME POWELL: …[O]ver time…the U.S. economy has benefited from immigration. And, frankly, just in the last, year a big part of the story of the labor market coming back into better balance is immigration returning to levels that were more typical of the pre-pandemic era.

PELLEY: The country needed the workers.

POWELL: It did. And so, that's what's been happening.

Further, Peri notes, "[i]mmigrants are not simply workers but consumers." With immigrants adding to the total number of consumers, there is "greater demand for labor and thus increased wages and employment in the economy."

The ability of immigrants to spur growth overall helps explain why immigration has "a positive employment rate effect for most native workers," according to the NBER study. In other words, immigrants are not taking jobs from native-born workers, as Trump claims. They are facilitating economic growth and creating more jobs for everyone. 

How immigrants help keep inflation in check

The push-and-pull of economic policy is that if growth is too rapid, it can spur rapid inflation, leading to a host of other problems. Immigrants can help an economy achieve steady growth without excessive inflation. 

Mark Regets, an economist at the National Foundation for American Policy, explained to Forbes that "increasing our ability to produce by increasing the supply of labor is the least painful way to control inflation." The native workforce is not growing, so immigration is the only way to significantly increase the labor supply. 

Writing in the Wall Street Journal in May 2023, economist Justin Gest posited that vastly reduced immigration during the Trump administration contributed to high inflation as the pandemic faded from public consciousness. Very low numbers of immigrants — along with more people deciding to relocate within the US — "generated great imbalances in the labor market." These labor imbalances can create rapid wage spikes that are ultimately passed onto consumers. A steady rate of immigration, however, helps "labor markets be more responsive to local changes in demand and supply."

How immigration reduces prejudice and increases foreign investment

Living near people from different countries can also help reduce prejudices and negative stereotypes, recent research shows. A study published earlier this year found that “long-term exposure to a larger population from a given country induces greater generosity toward that group.” According to the study, which focused on behaviors towards Arab-Muslims, white Americans were “less implicitly and explicitly prejudiced” against Arab-Muslims and more knowledgeable of Islam if they lived in areas with a larger percentage of Arab-Muslims. White residents were also less supportive of policies targeting Arab-Muslims, like Trump’s Muslim Ban, researchers said. 

Immigration can also help attract foreign investment. In 2016, researchers amassed 130 years of county-level, immigration data and discovered that counties “that historically received more migrants from a given country were significantly more likely to later receive investments from that country.” Specifically, the group observed that “doubling…the number of residents with ancestry from a given foreign country” increased the probability of foreign investment by 4%.