This article originally appeared in The Hill on July 09, 2018.
Immigration is best solution for shortage of workers
The Bureau of Labor Statistics released the June jobs report, which shows that the labor market is tight. American companies are looking for workers. In fact, nonfarm payroll employment increased by 213,000, which gives us a total of 2.4 million more jobs in the last year alone.
One affordable and perhaps even desirable solution to continue to fill the jobs that are opening at a steady pace is to increase immigration. As the heated debate continues on both sides of the aisle on this issue, the president emphasized that the administration is “working very hard on immigration.” He said his team is tackling it like the administration “dealt with an economy heading in the wrong direction.”
This president, like others before him, has often used the economy as a reason to limit immigration to the United States, arguing that immigrants take American jobs. Yet, many contend that the dichotomy between immigration and a strong economy is a false one. In fact, most modern economists would argue that increased immigration is the key to solving labor shortage problem facing our country.
The United States is going through painful demographic change. By 2035, people over the age of 65 will outnumber people under the age of 18 for the first time in American history. This has numerous adverse consequences for the U.S. economy, from the Social Security and Medicare trust funds to the broader issue of the public debt.
The aging of the population leaves fewer people to contribute taxes to Social Security and Medicare, while there are more recipients of both. This year, Social Security costs are predicted to exceed its income, meaning the government would have to tap into its trust fund. Social Security and Medicare experts have forecasted that the reserves will be empty by 2034. Workers who contribute their hard earned wages to these programs may not see the benefits that they have been told to expect.
There is a particularly large need for health aides and nurses. The United States will need 2.3 million new health workers by 2025 to take care of its aging population. In June alone, employment in health care rose by 25,000 jobs. Who are the health care workers of today? They are immigrants. In fact, they represent 24 percent of the least skilled care workers and 28 percent of the highest skilled care workers.
Beyond just health care and Social Security, the United States desperately needs more workers to protect its fiscal health. It will come as no surprise that the nation has a public debt problem. This problem arises, for the most part, from large spending costs and relatively low GDP growth. If the United States allows 100,000 more working age immigrants each year, the nation gets a free infusion of human capital that would otherwise cost $47 billion to obtain through education and child rearing spending for U.S. born workers. It has been estimated that the presence of immigrant workers, both legal and illegal, already makes the GDP about 11 percentlarger each year than it would be without them.
The most recent administration policy has focused on illegal immigration, but even those in the country illegally play a significant role in the U.S. economy. Our civilian labor force contains an estimated 8 million unauthorized immigrant workers. That is a noteworthy 5 percent of the American labor force. These workers pay more than $13 billion annually in payroll taxes, according data from the Social Security Administration. Undocumented immigrants even make our Social Security system more solvent, as they pay into it, but they cannot collect the benefits.
The immigration system certainly is far from perfect. However, the administration and others should be careful before taking a strong stance against immigration while simultaneously boasting about our economic prospects. In the end, we cannot have a economic growth without labor force growth. The latest jobs report only confirms that a strong economy and increased immigration are not diametrically opposed.
Joseph J. Minarik (@JoeMinarik) is senior vice president and director of research at the Committee for Economic Development. He served as chief economist at the White House Office of Management and Budget for eight years under President Clinton. He previously worked with Senator Bill Bradley of New Jersey on efforts to reform the federal income tax, which culminated in the Tax Reform Act of 1986. He is coauthor of “Sustaining Capitalism: Bipartisan Solutions to Restore Trust & Prosperity.”
Caroline L. Ferguson is a researcher at the Committee for Economic Development, where she is author of the “Debt 101 Primer Series.”