An increase in legal immigration might help to alleviate the increased shortage of labor, but the existing situation is aggravated by a fall in the immigrant population's growth
There are currently more job openings than unemployed people in the United States. An increase in legal immigration might help to alleviate the increased shortage of labor, but the existing situation is aggravated by a fall in the immigrant population's growth. Diane Swonk, Chief Economist at Grant Thornton LLP, recently tweeted a figure showing that 1.9 million additional immigrants would have populated the United States over the 2017–2021 period if net migration had continued to grow according to the Census Bureau’s 2016 estimates.Swonk's forecast is correct, but she is overly optimistic, as the reduction in immigrant population growth is likely to be considerably bigger.
We decided to replicate her results going back to 2008 using Census Bureau data and using her estimate for the increase in the stock of immigrants in 2021. Our results are in Figure 1. The yellow line shows the actual change in the net immigrant number (immigrants minus emigrants) annually, which increases sharply from 2010 to 2015, levels off in 2016, and then declines thereafter (Figure 1). We produced two counterfactuals.
The first is a mirror of Swonk's counterfactual, which represents the gray line and basically maintains the 2016 net migration pattern out to 2021. (Figure 1). During that time, we predicted a net increase of 2.4 million immigrants, whereas she estimated a net increase of 1.9 million.
The dashed grey line represents the continuation of the linear increasing trend from 2014–2015 through 2021 in the second counterfactual (Figure 1). In this counterfactual, an extra 4.8 million immigrants would have landed in the United States, assuming that net migration growth does not slow down in 2016 and does not fall thereafter.
All foreign-born residents, including legitimate permanent residents, naturalized Americans, those on temporary residence and work visas, and illegal immigrants, are included in the figures in Figure 1. The decline in net immigration is mostly due to the fall in legal immigration. In these counterfactuals where the net cumulative increase in the immigrant population would have been 2.4 million to 4.8 million higher, not all of the immigrants would have been workers. With an average labor force participation rate of about 64.5 percent in 2020, the increase in the net immigration numbers would have resulted in about 1.5 million to 3.1 million additional workers in the United States.
The radical decline in the growth of the immigrant population in 2009 and 2010 was due to the negative effects of the Great Recession and the passage of numerous state‐level immigration enforcement laws that prompted many illegal immigrants to leave the United States, reducing the increase in the immigrant population. The decline in the annual increase of immigrants since 2016 makes it look like the United States has suffered a prolonged period of slow growth or economic contraction.
Diane Swonk’s figure is a useful way to think about problems in the U.S. economy that have been exacerbated by the decline in immigration. Her figure paints a grim picture for immigration, but it is likely much worse than she estimates. The cumulative decline in the growth of the immigrant population over the 2016–2021 period is between 26 percent and 251 percent greater than she estimated.