Immigration Could Help the Economy Expand

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The slowing growth of the U.S. population, detailed in a recent report by the Census Bureau and an analysis from the Brookings Institution, presents the country with some difficult fiscal and economic challenges.

The Census Bureau estimates that the country’s population grew by only 0.62 percent between July 2017 and July 2018. Census data show that this is the slowest rate of growth since 1937, according to William H. Frey, a demographer at Brookings.

“While some of these downward demographic trends reflect the delayed impact of the Great Recession,” Frey says, “the aging American population is the broader cause, a factor that the nation will have to cope with for years and decades to come.”

Such coping won’t be easy, particularly if the debate over immigration fails to include more thoughtful fiscal and economic thinking than we have seen in the political debate over President Trump’s request for border wall funding.

The aging of the U.S. population is a critical factor in the growing pressures on the federal budget. As more and more baby boomers reach retirement age, many start paying less in taxes while becoming eligible for benefits from the big federal entitlement programs: Social Security and Medicare.

So the federal government must pay more and more just to provide the same level of benefits for a larger number of older Americans. This dynamic, along with other federal spending and stagnant revenue, is pushing federal deficits towards $1 trillion a year.

An aging population can also mean slower economic growth because the labor pool is too small and many employers — particularly in certain parts of the country — cannot find enough workers to meet the demands for products and services.

For example, James Tierney, a former attorney general in Maine, told The New York Times that much of that state suffers from “acute shortages” of police officers, firefighters, teachers, snowplow drivers and others.

“These shortages are immense and growing and in some parts of the state, desperate,” he said.

The recent Census Bureau report says that the “natural increase” in the population — meaning the excess of births over deaths — was 1.04 million last year. That is down from nearly 1.8 million only a decade ago.

“Many states have seen fewer births and more deaths in recent years,” says Sandra Johnson, a demographer/statistician at the Census Bureau. “If those states are not gaining from either domestic or international migration they will experience either low population growth or outright decline.”

In the year ending last July, nine states and Puerto Rico had population declines.

“As a whole, the U.S. population continues to grow due to both natural increase and international migration,” the Census Bureau said. “Though international migration was slightly higher last year (978,826 compared to 953,233 the year before), natural increase was slightly lower last year (1,041,487 compared to 1,122,546 the year before).”

Frey notes that the nation’s growth rate has “varied through wars, economic upheavals, baby booms, and baby busts.” But the growth rate has been below 0.80 percent since the Great Recession, and the 0.62 percent rate for 2017-2018 reflects “a further dip” in the downward trend.

“The decline in births may have been accentuated by young adult millennials, who, still bearing the brunt of the Great Recession, may be postponing births,” he says. “However, the long-term trajectory should yield fewer rather than more births as the population ages, with proportionately fewer women in childbearing ages. The rise in deaths is more directly related to the nation’s aging population. . . . This leaves immigration as an ever-more-important contributor to national population growth.”

Immigration, he adds, is projected to be the “primary contributor” to national population growth after 2030 as the natural increase in the American population continues to decline.

As Robert L. Bixby, executive director of The Concord Coalition, has written, “achieving growth anywhere near past levels will require new policies that increase the size of the labor force and improve productivity. Many studies have indicated that higher levels of immigration could help with both.”

“While it is not a magic bullet,” Bixby added, “it would be a source of strength for the economy.”

That potential source of strength is something that — as the U.S. population ages and its growth rate dwindles — elected officials in both parties and the American public should keep in mind.

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