U.S. immigration and the impact of the labor force

The first debate between the two presidential candidates will take place this week and one of the most important issues for voters is immigration. Trump and Harris have vastly different opinions as Trump wants limited and controlled immigration and to build a wall on the border to Mexico, whereas Harris wants an open border policy and millions of new immigrants. During the last few years during the Biden-Harris administration’s open border policy, the U.S. is experiencing its largest immigration wave in generations, swelling the population, and changing the makeup of the U.S. labor force in ways that are likely to be felt for decades.  

The number of people who have migrated to the U.S. legally and illegally since the beginning of 2021, subtracting those who have left, exceeds nine million according to the Congressional Budget Office (CBO). This is nearly as many as in the whole of the prior decade. Immigration has lifted U.S. population growth to almost 1.2% a year. Without it, the population would be growing just 0.2% a year and would begin shrinking around 2040.

The surge in immigration has been controversial. Less than 30% of migrants, or 2.6 million, are what the CBO counts as lawful permanent residents, which includes green-card holders and other immigrants who came through legal channels. The CBO refers to most of the other 6.5 million as other foreign nationals. The bulk of that group crossed the southern border without prior authorization and requested asylum. They were assigned court dates, sometimes years in the future. While waiting in the U.S. for their court date, many of them work. There is much that is unknown about the segment of the population. There are already millions of illegal immigrants in the country, so they sort of join that pool.

Of foreigners, or immigrants, about 78% are between the ages of 16 and 64, compared to 60% of U.S. citizens. This means they are more likely to be participants in the labor force as they are in general young. Most of them are either working or looking for a job. Recent immigrants’ participation rate is likely to climb further in coming years as it often takes more than six months for someone who has entered the U.S. to receive a work permit. The largest source countries for newcomers are in Latin America and the Caribbean, with Venezuela, Mexico, and Honduras in the top. There are also a surprising number of immigrants coming from India and China.

But while most recent immigrants can work, many are not read for high-skilled jobs. The census data show immigrants who arrived since the beginning of the Biden-Harris administration are more than twice as likely to lack a high-school diploma as U.S. born workers. About 80% of recent immigrants’ spoken language is Spanish. They tend to earn less than U.S. born workers. They will likely compete with existing workers with less education and put downward pressure on their wages. So, the surge in immigration could weigh slightly on overall wages and productivity. This will change over time as people will gain experience and education. It is clear thought that a majority are working in low-paying jobs such as construction workers, maids, housecleaners and in the service industry. This keeps the economy going. The same phenomenon with cheap labor has been seen in the EU as certain countries like Germany has benefited from bringing in low wage workers from other EU countries and immigrants and these new segments have created a new low wage working class. For the U.S. this is also a benefit for the economy as it is cheap labor.

Politically, the reasons for the different opinions between the parties and the candidates are both practical and philosophical. From a practical perspective, the democrats want more cheap labor and more democratic voters. Minorities tend to lean democratic. Republicans are more protective of the American worker and do not want more cheap labor and they realize that more minority voters are not helping them. Philosophically, the democrats are for open borders, international camaraderie, and globalism. Republicans are by nature nationalistic, protectionists, and against global cooperation.

So, from an immigration perspective, this election is important as the candidates’ agendas are vastly different. Either open borders with millions of new immigrations or a border wall with limited immigration. The question is very clear, and it is up to each voter to make a decision.