In recent years, it has become common to hear American politicians claim that immigrants are the main cause of various social ills. But the most careful studies continue to show that immigration is overall good for the U.S. economy because it expands the workforce and accelerates growth. These effects were recently reaffirmed in a July 2024 Congressional Budget Office (CBO) analysis of the post-2020 immigration surge.
The recent surge in new arrivals coincided with the receding effects of the coronavirus pandemic and the reversal of certain enforcement policies during the early months of the Biden administration. The combined effects have resulted in a notable deviation from the pre-2021 trend.
According to CBO, from 2021 to 2026, “other alien” immigrants (CBO refers to various categories of immigrants arriving outside of legal resident immigration routes, such as green card applicants, students, and other temporary visa holders) term) would total 8.7 people. 1 million compared to pre-2021 trends. After 2026, this surge is predicted to subside. But even if we return to pre-2021 baselines, by 2034 the total U.S. population will be 10 million people, or 3% more than it would have been without the surge, and the number of children born to new immigrants There will also be an increase.
In addition to other categories of aliens, there will be approximately 820,000 new arrivals each year, including new permanent resident immigrants based on legal work and study-related provisions of federal law.
CBO estimates that about half of the post-2020 surge population will be allowed to work for a variety of reasons, including while on parole while their cases are being considered and processed, and about 60% will receive various federal benefits by 2034. We estimate that we will qualify for the program (only 35% will initially be eligible for such benefits). Notably, CBO predicts that 10 years from now, about 40% of the rapidly growing population will remain undocumented and therefore remain ineligible for much of the government’s financial assistance.
The agency expects immigration to increase the U.S. workforce and provide tangible economic benefits.
More workers will lead to higher federal income and payroll tax revenues, totaling $0.8 trillion over the 2025-2034 period. In addition, increased productivity will further increase revenue. Overall improvements are projected to be $1.2 trillion over 10 years. Federal spending would also increase, but the amount would decrease. From 2025 to 2034, federal spending will increase by an estimated $0.3 trillion, of which $0.2 trillion will be related to benefit increases. The net effect is a $0.9 trillion reduction in the projected federal deficit over 10 years. This estimate includes the potential for higher costs for certain immigrant-friendly discretionary spending programs, some of which are federal-state initiatives, such as federally funded health services and other social assistance activities. Gender is not reflected. CBO estimates that the net boost to GDP from the surge in immigration will be $8.9 trillion over 10 years. Overall, the addition of immigrants is expected to initially put downward pressure on wages paid to the existing domestic workforce, but within 10 years the effects will be reversed, leading to overall productivity gains and growth. The acceleration will cause wages to rise more than they would have otherwise. .
The CBO will have less fiscal impact on states and localities because state costs for public education and Medicaid may place spending pressures on them and further eliminate the beneficial revenue effects of a large workforce. It is pointed out that there is a high possibility that it is not desirable.
Immigration has become a polarizing topic in American political debate. It is certainly legitimate to question the validity of a system characterized by wide variation in outcomes based on executive discretion within the executive branch. Additionally, the overall lack of integrity and fairness in border control and inconsistent enforcement of federal law are understandably major concerns.
Still, the United States is fiscally stronger due to increased immigration, because a larger workforce generally means higher productivity, faster growth, and a more dynamic economy. Countries that seek to close themselves off from this source of economic vitality will therefore become poorer in the long run.
As the United States faces serious fiscal challenges in the coming years, an orderly program of legal immigration could be a key part of the solution.
The public would benefit from hearing more often about the economic and financial benefits of immigration, to provide some balance to the one-sided and often false narratives about the problems immigrants are accused of causing.
