Amid worries over rampant inflation and whether the US may be slipping into a recession, some economists see one simple fix that could lift the economy: immigration.
“The economy would benefit enormously from more immigration,” says Mark Zandi, Moody’s chief economist. “It would alleviate labor shortages and cool inflation and interest rates.” Economic research by Moody’s Analytics has shown that for every 1% increase in the population made of immigrants, the GDP rises 1.15%.
The US still has nearly 11 million unfilled jobs, according to the latest data from the Bureau of Labor Statistics (BLS). The biggest driver: Baby boomers have been retiring in droves, leaving huge gaps in the workforce. As of late 202150.3% of US adults 55 and older said they had retired from the workforce, according to a Pew Research Center analysis. The pace of those retirements has accelerated since 2020, even as the US population growth has slowed. The Pew Research Center projects that the growth rate for the average working-age adult population will hover around 0.3% for the next two decades.
Meanwhile, immigration has taken a nosedive. In 2016, new arrivals to the US peaked with 1 million legal immigrants, but those numbers began declining under the Trump Administration. Then, in 2020, COVID-19 shut down most travel, stopped immigration processing, and prompted many foreign workers to return to their home countries. In 2021, just 247,000 people legally immigrated to the US If the nation had continued at prepandemic levels, it would have 2 million more immigrants, according to one estimate—the absence of which are especially felt in hospitality, retail, and healthcare job vacancies.
“You approxn’t grow the economy without labor,” says James Feigenbaum, a macroeconomics professor at Utah State University. Without bodies, the economy will start to shrink, he says. “The only way to actually add more bodies to our labor force is to let people come in from outside the country.”
Although some Americans worry that increasing immigration will make it harder to find a job—some 41% shared that concern, according to a recent survey town ResumeLab—eeconomic research suggests that immigrants actually create more jobs. The National Academies of Sciences, Engineering, and Medicine found “little evidence that immigration significantly affects the overall employment levels of native-born workers.” They can even raise the incomes of other citizens, according to Pia Orrenius, vice president and senior economist at the Dallas Federal Reserve Bank.
Jeremy Robbins, executive director of the American Immigration Council, explains it this way: When you can’t get truck drivers, you can’t move goods around. When a restaurant can’t hire employees, people miss their rent. “There’s an economic imperative that we fix the immigration system,” he says.