If the U.S. reduces legal immigration, what happens to the economy?

We learn from Stuart Anderson, Executive Director of the National Foundation for American Policy.

July 21, 2021

Often immigration policy discussion centers on the U.S. border, illegal immigration, and undocumented immigrants. This crowds out an equally lively conversation on the legal immigration process: particularly, the ways U.S. employers in health care, business, tourism, research, agriculture, and other industries can attain visas to attract talent from around the world.

For this partner viewpoint, we learn from Stuart Anderson, Executive Director of the National Foundation for American Policy (NFAP). NFAP is a non-profit, non-partisan organization dedicated to public policy research on trade, immigration, education, and other issues of national importance.

CKI: What does the research tell us about the impact of reducing legal immigration?

Anderson: Reducing legal immigration would harm the U.S. economy and have a negative impact on many Americans. We projected that legal immigration would fall by 49% between FY 2016 and FY 2021 under the past administration’s policies. The research, which was widely cited, found: “Average annual labor force growth, a key component of the nation’s economic growth, will be approximately 59% lower as a result of the administration’s immigration policies if the policies continue. Economic growth is crucial to improving the standard of living, which means lower levels of legal immigration carry significant consequences for Americans.”

In April and June 2020, the Trump administration suspended the entry of nearly all legal immigrants (except the spouses and children of U.S. citizens) as well as high-skilled (and lower-skilled) temporary visa holders because it was claimed to be necessary due to high unemployment rates. However, in October 2020, a judge ruled in favor of businesses and said the proclamation against temporary visa holders was unlawful. The judge cited National Foundation for American Policy (NFAP) research that showed hundreds of thousands of active job vacancy postings for jobs in computer occupations. Other NFAP research was cited in three other successful lawsuits against immigration restrictions in 2020.

Economist Madeline Zavodny has produced research for NFAP that shows: “[I]nternational migration was the only source of population growth in rural areas as a whole during most of the 2010s. International migration is strongly related to employment growth in both rural and metro counties. Each additional international migrant is associated with an additional 1.2 jobs in rural counties over 2010 to 2018. The estimate for rural areas suggests that international migration adds to total employment well beyond the jobs filled by international migrants.”

Earlier NFAP research by Zavodny found immigrants do not increase the unemployment rate and are more likely to expand job opportunities for natives. “A 1 percentage point increase in the share of the labor force comprised of immigrants appears to reduce the unemployment rate of U.S. natives in the same sex-education group by 0.062 percentage points, on average,” she wrote. “A 1 percentage point increase in the share of the labor force comprised of immigrants appears to raise the labor force participation rate of U.S. natives in the same sex and education group by 0.045 percentage points, on average.”

The most significant mistake committed by policymakers opposed to employment-based immigration is to assume there is not a global market for labor. Research by Britta Glennon, an assistant professor at the Wharton School of Business at the University of Pennsylvania, found new restrictions on H-1B visas, primarily used by foreign-born scientists and engineers, are likely to push jobs out of the United States. She concluded, “[A]ny policies that are motivated by concerns about the loss of native jobs should consider that policies aimed at reducing immigration have the unintended consequence of encouraging firms to offshore jobs abroad.”

Immigrants are not statistics, of course. During the Vietnam War, Mexican-born immigrant Alfred Rason saved the lives of his fellow soldiers and was awarded the Medal of Honor. Hungarian-born immigrant Katalin Karikó produced the underlying research breakthrough that eventually made messenger RNA possible for vaccine use. And immigrants played crucial roles at both Pfizer and Moderna to develop the vaccines. Both companies even had immigrant founders. In making the case for immigration, we should remember the stories of immigrants who have inspired us through devotion to family, love of country and contribution to the economy and the nation.

The Charles Koch Institute inspires and invests in social entrepreneurs developing solutions to America’s most pressing problems. Read more about our support for social entrepreneurs committed to immigration.