Immigration Can Save the American Economy – But will the politicians let them?

One of these solutions, as economists have long predicted, is to ease restrictions and attract more youth immigration to the country.

With two consecutive quarters of inflation outpacing economic growth, the U.S. economy is now officially going through a recession in the aftermath of the COVID-19 pandemic and the Russian Invasion of Ukraine. And yet, despite the highest inflation rate in more than four decades, the politicians in Washington seem to be more interested in pointing fingers than looking for durable solutions. One of these solutions, as economists have long predicted, is to ease restrictions and attract more youth immigration to the country.

The current inflationary run began in the immediate aftermath of the COVID-19 pandemic, as the country began to reopen and consumer spending skyrocketed. The Republican Party has long blamed government spending for pandemic relief, but it is clear that this inflation is actually caused by supply-chain problems and labor shortages created by decades of neoliberal neglect of the working class. As Milton Ezrati, a senior journalist writing for Forbes, observes, the United States is suffering from two types of inflationary pressures. The short-term fall in industrial production and supply can be correctly attributed to what has been called ‘The Great Resignation’, and can only be solved by fundamentally transforming the U.S. markets to be more labor-friendly. This could be achieved by raising the minimum wage to at least subsistence levels. The only permanent solution to a long-term dip in labor supply, resulting from a falling birth rate and aging population, is more immigration, plain and simple.

A fall in native population growth is a universal trend observed throughout the developed world since the early-twentieth century; the U.S. is no exception, with fertility rates below the sustainment level of 2.1 since the early ‘70s. For decades, however, U.S. politicians have stubbornly refused to invest in maternity welfare, child care, or improve economic conditions for the majority of the population. Instead, we turned healthcare and immigration into a political wedge issue, and the results have nothing less than disastrous. Over the past five years alone, the U.S. net immigration rates have fallen to only a quarter.

There is no doubt that the U.S. is facing a shortage of workers to sustain its rapid economic growing; more specifically, the nation already suffers from a lack of low-skilled immigrants. Prior to 2019, the U.S. foreign-born population grew by around 660,000 people each year; in the past three years, the net growth has been precisely zero, meaning that the economy is missing at least 2 million workers due to authoritarian border policies. This immense shock to the labor markets is one of the key factors behind the current supply shortfalls, as shown by the underlying data. Two University of California economists found that the sectors most reliant on immigrant workers have suffered from the highest levels of vacancies in 2021. Germany suffered from a similar lack of workers during its peak growth years more than half a century ago, and kept its borders more open to non-European workers. Many economists today attribute the country’s economic miracle to the same policies. The United States must do the same, if we are concerned with the long-term future of our country.

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