US Immigration Policy on a Collision Course with the Economy

Immigration — the issue the president credits with propelling him to election — has now become a barrier to sustained economic growth. Falling numbers of undocumented workers – coupled with the administration’s agenda of decreased legal immigration, new impediments to legal status, and indiscriminate deportation policies – have exacerbated labor shortages and will increasingly slow economic growth. In a welcome development, the United States just pledged $5.8 billion in public and private investments to the Northern Triangle states of Central America to promote “institutional reforms, development, and economic growth” and another $4.8 billion to Mexico, including $2 billion in development aid to southern Mexico, as part of a plan to curb illegal migration. This announcement prompted Mexican President Andres Manuel Lopez Obrador to express his hope that “nobody will want to go work in the United States anymore.” If fewer immigrants are coming and more leaving, who will do the work?

Earlier this year, the Center for Migration Studies (CMS) reported that the U.S. undocumented population had fallen in 2016 to 10.8 million, its lowest level since 2003, driven by a 1 million decrease in undocumented residents from Mexico between 2010 and 2016. Earlier this month, the Pew Research Center reported a similar decline, from an historic high of 12.2 million U.S. undocumented immigrants in 2007, to 10.7 million in 2016. A preliminary CMS analysis of American Community Survey (Census) data for 2017 found that the total undocumented population from Mexico fell an additional 363,000 from 2016 to 2017.

What does this trend, combined with the administration’s immigration policies, portend for the economy? The Federal Reserve projects that the “natural rate of unemployment” — the lowest rate that the economy can sustain without causing inflation — will settle at between 4 and 5 percent over the next five to six years. Full unemployment is both undesirable and unattainable given the natural churning in the labor market, as workers enter, leave, and seek better jobs. In October 2018, the U.S. unemployment rate remained at 3.7 percent. Of those that might join the labor force, the long-term unemployed declined by 120,000, those marginally attached to the workforce increased by 197,000, and the rate of discouraged workers remained mostly unchanged from the previous year.

By Donald Kerwin for THE HILL
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