As U.S. Labor Force Growth Slows, Immigration Can Bolster Economic Growth & Help Fill Skills Gaps

WASHINGTON — Clouds hover over what has been a strong U.S. economy, with long-run projections significantly less bright because the U.S. labor market is being reshaped by forces such as aging of the workforce, the lowest rate of population growth since the 1940s and emerging gaps between the skills employers seek and those workers possess. As these trends intensify, globalization and automation also are likely to dramatically transform how and where work is done.

Against this backdrop, a think piece commissioned by the Migration Policy Institute (MPI)’s new Rethinking U.S. Immigration Policy Initiative, asks: What role can immigration play in bolstering future workforce and economic growth, and meeting shifting demand for both high- and low-skilled labor?

In How Does Immigration Fit into the Future of the U.S. Labor Market?, Federal Reserve Bank of Dallas Vice President Pia Orrenius and co-authors Madeline Zavodny and Stephanie Gullo argue that while immigration is unlikely to reverse the intensifying trends hitting the labor market, it can help mitigate a number of symptoms of the U.S. economy’s long-run malaise, which include low productivity growth, declining domestic geographic mobility and falling entrepreneurship.

But they also acknowledge that while immigration may benefit employers, consumers and some U.S. workers, it can adversely affect others, particularly low-skilled U.S. natives and earlier-arrived immigrants. As a result, they say, increases in employment-based immigration should be paired with policies and programs to support these groups in acquiring new skills and shifting to growing sectors.

To the question of how much immigration is the “right” amount, the authors note there is no optimal number but that the setting of immigration levels should be driven by flexibility and needs-based mechanisms, for example an auction system where employers bid for permits to bring in foreign workers.

“Immigrants are a small share of the U.S. labor force, but they represent a disproportionately large fraction of its growth,” they write. “A future with less immigration is a future with less economic growth. This may be a tradeoff Americans are willing to make, but the decision deserves careful examination.”

The multi-year Rethinking U.S. Immigration Policy Initiative, launched earlier this week, aims to generate a big-picture, evidence-driven vision for the role immigration should play in America’s future. A concept note written by the initiative’s director, MPI Senior Fellow Doris Meissner, explains the project focus and lays out some of the changed realities that require new solutions to fix a dysfunctional U.S. immigration system.

Read the brief here: www.migrationpolicy.org/research/immigration-fit-future-us-labor-market.

To keep up with the latest developments in the Rethinking initiative, sign up for updates here.

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The Migration Policy Institute (MPI) is an independent, non-partisan, non-profit think tank in Washington, D.C. dedicated to analysis of the movement of people worldwide. MPI provides analysis, development and evaluation of migration and refugee policies at the local, national and international levels.