Sorry, Trump supporters, but the US economy needs more immigrants

 Market Watch | By Rex Nutting

Donald Trump’s supporters have it all wrong about immigration: Immigrants make America’s economy stronger, not weaker. And we are going to need a lot more immigrants in coming decades if we want our economy to grow at a faster pace.

America’s economy badly needs the immigrants that Trump’s supporters want to exclude.

Trump himself distinguishes between legal immigration, which he supports (he should: he married two of them!), and illegal immigration, which he says is “killing us.” Trump has called for the forcible removal of 11 million undocumented immigrants, including 8 million workers.

But many of Trump’s supporters don’t accept the distinction between legal and illegal immigrants: They don’t like either kind.

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About two-thirds of Trump’s supporters in the primaries said they think immigration is a burden on our country. About 84% of Trump’s primary supporters say the U.S. should build a wall on the Mexican border to keep them out.

Among all Republicans, 71% say immigrants make the economy worse versus 12% who say it makes the economy better. (Among Democrats, 34% say immigrants hurt the economy while 38% say they make it better.)

But is it true that immigration is a burden on our economy? There’s little evidence of that. Even the most-cited economist who holds a dim view of the benefits of immigration (Harvard Professor George Borjas) has found a small but positive contribution to the economy as a whole.

Most studies have shown that immigration has a modestly positive impact. For instance, immigrants (and their children) are far more likely to start businesses, including iconic companies such as Apple, Google, Intel, Bank of America, AT&T, Procter & Gamble, Kraft, Pfizer, DuPont, eBay and Ford.

Other studies have found that immigrants actually raise wages for native-born Americans, in part because the competition gives them an incentive to improve their own skills, and in part because immigrants aren’t just workers, they are also consumers. The money spent by immigrants creates more jobs, most of them held by native-born Americans.

In other words, the people who think immigrants make the economy weaker are just wrong.

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Of course, there are winners and losers from immigration. The biggest winners are the immigrants themselves. The businesses who employ them and the consumers who buy the goods and services produced by immigrants are also big winners.

The biggest losers are the people who compete directly with immigrants for jobs. If you don’t have a high school education, or any marketable skills except your manual labor, you may have become unemployable due to competition from immigrants, or your wages may have dropped. You’re probably among the poorest Americans, and immigration makes you even poorer.

It makes perfect sense that, if you’ve lost a job due to competition from an immigrant willing to work for less, you’d resent it and vote for a candidate who promises to “take our country back.”

Sorry, Trump supporters, but the US economy needs more immigrants 2
The counties with the largest percentages of foreign-born residents are shown in red, dark green, and bright green, with the largest concentrations in California, Texas, Florida and in urban areas. Most counties in the Midwest and South have few immigrants.

There’s only one problem with that analysis: The low-skilled jobs that immigrants take are in very localized job markets. An immigrant taking a hotel maid’s job in Las Vegas isn’t going to have much impact on a woman applying for a similar position in Pittsburgh. An immigrant farm worker in the Rio Grande Valley isn’t going to impact the wages of a farm worker in North Dakota.

And yet the people who decry immigration the most (in general, Republicans) don’t live near very many immigrants. The 10 large cities that have the largest number of immigrants (Los Angeles, New York, Miami, Chicago, Houston, Anaheim, San Diego, San Jose, Phoenix and Dallas) are overwhelmingly Democratic.

Of the 36 U.S. counties with at least 25% immigrant population, just five voted for Mitt Romney in 2012. Most of them voted for Barack Obama, with winning percentages of up to 90%.

The places that have lots of immigrants seem fine with it.

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In this election cycle, Trump is counting on outrage against illegal immigrants in the swing states to help propel him to the White House. But of the swing states, only Florida and Nevada have above-average employment of illegal immigrants.

The Rust Belt states of Ohio, Pennsylvania, Indiana and Michigan — where you might expect a lot of anger at the “illegals” who are “taking all of our jobs” — actually have relatively small populations of them, with fewer than 2% of jobs held by illegal immigrants. Nationally, the figure is more like 5%.

There is a lot of anger about immigration in this country, but it doesn’t seem to be based on personal experience. Most likely, people who’ve been displaced from their jobs by globalization or technological progress have found an easy scapegoat.

Furthermore, Donald Trump knows immigrants didn’t take their jobs. He is just exploiting their anger and fear for his own political gain.

I think the evidence is clear that immigrants are good for America’s economy, but here is the clincher: We are going to need a lot more immigrants in coming decades to keep the economy strong. The economy is likely to face labor shortages in the coming decades if we don’t let more immigrants in.

Sorry, Trump supporters, but the US economy needs more immigrants 3
The working-age population is growing at a much slower rate, and that means the economy will grow slowly as well.

Why? Because the working-age population will barely increase over the next three decades, which means the economy will barely grow. Slow growth will mean public debts will be a larger burden. It will mean any fiscal fix for Social Security and Medicare will fall more heavily on retirees.

Because of low birth rates and increased longevity, the labor force is expected to grow at just 0.4% per year over the next 30 years, down from an average of 1.8% from 1970 to 2000, according to the Congressional Budget Office. Gross domestic product is expected to average 2.1% a year, down from 3.3% a year in the final three decades of the 20th century (and that’s based on the debatable assumption that productivity will rebound to its longer-run average).

Looking ahead, most of the fastest-growing occupations — health-care aides, food-service workers, salespersons, construction workers, janitors and laborers — don’t require much education. They are perfect for immigrants.

But instead of allowing in more immigrants, Trump is proposing to kick out 8 million workers who have come here without the right papers. If President Trump does deport all the illegal immigrants, it’ll kill the economy in the short run, and in the long run as well. Not smart. Sad.

 

This post first appeared in the Market Watch

Rex Nutting is a columnist and MarketWatch’s international commentary editor, based in Washington. Follow him on Twitter @RexNutting.