Immigration is a hot button political topic, but understanding its economic effects is key to having an informed discussion. With the United States now having some of the highest immigration rates in its history, understanding the economic impacts of immigration is particularly relevant. This article examines the economic effects of immigration in the United States, looking at both positive and negative effects.

Economic Benefits of Immigration in the United States

There are proven economic benefits to immigration in the United States. Many of the economic gains come in the form of a rising labor supply, which can drive productivity in several ways. This labor supply can come in the form of a contribution to GDP, as well as help offset an aging population and low fertility rates. Additionally, immigrants often bring specialized skills and knowledge with them that can help stimulate an existing economy.

  1. Increased GDP: One of the most obvious economic benefits of immigration is the increased spending that comes from having immigrants in the United States. According to a study from the Migration Policy Institute, immigrants accounted for 17 percent of total US GDP in 2017.

  2. Offsetting an Aging Population: Immigration can help to offset an aging population, which can have a major impact on the economy. This is due to the fact that an aging population will not only drive up spending levels due to greater healthcare costs, but also decrease labor participation at a time when labor participation is already a major factor in economic growth.

  3. Low Fertility Rates: Immigration can also help offset the effects of a low fertility rate, which is the number of live births per 1000 people in a given year. The fertility rate in the United States has been in decline for years, so the economic effects of immigration can help to counterbalance this change.

  4. Specialized Skills: Immigrants can bring a unique set of skills that can help to stimulate an existing economy while filling jobs in niche and specialized fields that may not be easily filled by domestic citizens. These skills can help to provide needed capital and knowledge to a specific business sector.

  5. Increased Purchasing Power: The purchasing power of immigrants in the United States is also an economic benefit. As of 2018, immigrants in the United States held over $767 billion in buying power, a significant amount of money that helps to stimulate the economy of local businesses and create jobs, as well as draw investment into certain regions or businesses.

Economic Challenges of Immigration in the United States

Like any economic change, immigration can have certain negative economic impacts. These issues, while valid, must also be taken in context with the overall economic gains that immigrants can bring to an economy.

  1. Lower Wages: One of the more often discussed issues around immigration has been that it can lead to a reduction in wages for domestic citizens already in the labor force. This is especially true when immigrants are willing to work for lower wages than their domestic counterparts. While this assumption has been disproven to a degree, it can still be the case in certain industries or occupations.

  2. Skilled vs. Unskilled Labor Debate: There has been a debate in the economic community over whether to place greater focus on skilled or unskilled labor when it comes to immigration. Since resources are limited, many economists feel that skilled labor is the best choice for economic gain, while others believe that unskilled labor can have a larger overall impact as it can make up a larger share of the labor force.

  3. Security Concerns: Immigration has also been linked to security concerns, particularly in the form of terrorism or drug running. While these concerns may not have an obvious economic impact, they can reduce consumer confidence, which can lead to a decrease in spending and reduced economic stability.

  4. Cultural Impact on Alignment with Local Law: The economic impacts of immigration extend beyond the borders of the United States. Many immigrants come to the US not only for economic opportunities, but also to escape violence and oppressive regimes. However, in some cases, these immigrants can bring cultural norms that clash with American culture, which can lead to differences in terms of laws and customs.

Overall, the economic effects of immigration in the United States have both positive and negative aspects that must be examined for an informed discussion about policy. Immigration can provide significant economic gains in the form of increased GDP, offset population aging and low fertility, bring specialized skills and knowledge, and provide more purchasing power. Conversely, it can also lead to lower wages, cause debates over skilled vs. unskilled labor, and bring up security and cultural consequences. By understanding the full scope of economic effects, we can ensure the debate over immigration is based on the best information available.