Immigration, both legal and illegal, has been a driving force of the economy over the past few years. According to the Congressional Budget Office (CBO), less than 30%, 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, such as family or employment-based visas. The remaining are arguably the illegal, unauthorized, or undocumented immigrants (depending on who is classifying them), about 6.5 million. Of those, the majority crossed the border one way or another without authorization, requested asylum, and are now waiting for their trial dates, which are years away.
According to the Transactional Records Access Clearinghouse (TRAC), a database of immigration-court filings curated by Syracuse University, these immigrants are overwhelmingly Spanish-speaking. They are younger, less-educated, and more available to work than the native U.S. population. According to CBO statistics, of the immigrants who arrived since 2020, 78% are between the ages of 25 and 54, compared with 60% of those born in the U.S, and boast a higher labor participation rate as well as a higher unemployment rate.
The Dallas Federal Reserve estimates that in 2023 alone, Customs and Border Protection (CBP) personnel encountered 2.54 million migrants at the southwest border, which is about the same as the 2.58 million migrants in 2022, a record year. Pre-pandemic the annual average was 500,000 migrants. Further, in 2023, fewer than a quarter of encounters at the southwest U.S. border ended in migrants being refused entry into the U.S., and 58% of encounters resulted in migrants released or paroled into the interior of the country.
The 12 largest source countries for newcomers assigned immigration-court hearings since late 2020 are in Latin America or the Caribbean, the TRAC data show, led by Venezuela at 14%, Mexico at 13%, and Honduras at 8.5%. These immigrants are settling across the country although Florida, Texas, California, New York, and New Jersey as popular destinations. Interestingly, other surveys show that India is another country of origin and that many have degrees.
Given the labor shortages in a variety of jobs – think home caregiving – these immigrants will likely increase their labor participation rates. The top five jobs for these immigrants are construction, housekeeping, cooks, janitors, and carpenters. But software developers and nurses are also popular professions (and more likely legally obtained status to work either H-1B or TN), although the H-1B is being investigated for lottery fraud, as one applicant may be submitted a number of times for similar jobs. As such, they need to and are paying for shelter, food, clothing, transportation, and other things for their families, which, like during the pandemic with the increased weeks for unemployment, has positively impacted the economy.
“More workers means more output, and that in turn leads to additional tax revenue,” stated Phillip Swagel, director of the Congressional Budget Office, in an interview earlier this year. Further, according to the CBO, it estimates that by 2033, the labor pool will have 5.2 million more workers due to immigration than it estimated last year.
Moreover, immigration has been a boost to the economy with it growing by an additional $7 trillion over the next decade per the CBO. Inflation-adjusted GDP is set to add 0.2 percentage points on average every year because of greater immigration. In a pre-pandemic report analysis released by the U.S. Department of Health and Human Services, an estimated net $37.5 billion was attributed to the federal government between 2005 and 2019, but the report also stated that these immigrants cost state and local governments. Therefore, immigration was still a positive to the economy by an estimated net of $21.4 billion.
Immigration is important to the U.S. economy. With retiring baby boomers, smaller households, and lowering fertility rates, immigration has picked up the slack. It will, according to the CBO, depress wages, as issues of shortages of labor supply eases, especially in those sectors that require low skill and education. However, the question of how to handle unauthorized immigration is a political issue. For HR professionals, I-9s are still required, and down the road when there is immigration reform, there will likely be E-Verify requirements for all employers.
Source: The Wall Street Journal 9/4/24, Dallas Federal Reserve 7/2/24, CNN 3/20/24