Immigration Labor Force Critical to U.S. Economy

Accounting for almost half the population growth in the United States, immigration plays a central role in the growth of the nation’s labor force, especially with an aging native population. In their forecasts around the Gross Domestic Product (GDP), economists look at assumptions about population growth and immigrants that are provided with statistics from the U.S. Census Bureau.

According to a CNBC report, the economists have forecasted a 2 percent growth rate for the nation based on the labor force and productivity assumptions, says Joel Prakken, senior managing director and co-founder of Macroeconomic Advisers. In his assumptions, Prakken speculates immigrants make up a significant portion of the growth in the labor force.

The declining labor force in the United States is something rooted in the country’s aging population. Added to this is that falling fertility rates in the country means organic means of growing the national labor force are insufficient.

The elements involved in labor force growth, and the unsustainability of internal factors in the United States, demonstrates the importance of immigration. Immigrants to the United States, who tend to be younger, also tend to come to the country specifically to work.

“Most people are totally shocked when they actually process the fact that immigrants are already almost half the population growth, assumed in our 2 percent GDP projection and by the time you get to 2045, 80 percent of it is,” Prakken said.

Under a proposed bill that limits immigration, Prakken says the reduction could reduce immigrant arrivals in the country could drop to around half of that in 2015. In that year, 1.1 million immigrants came to the United States. What’s more, Prakken says, the proposal could dent the “secular growth rate of 2 percent by about a quarter point,” CNBC reports.

Prakken explains that the “effect gets bigger over time because the Census assumptions for immigration keep growing and growing and growing, and the bill would not allow any growth.”

As immigration continues as a top political issue in Washington D.C., lawmakers must take into account associated economic and workforce issues, says Prakken.

“Implicit in the Census projections is either more illegal immigration or somehow immigration reform allows an increase in the legal immigrants. This issue is not going to go away,” he says. “It’s a big deal.”