How immigration reform would help the country’s economy

CComprehensive immigration reform would be a giant step forward in increasing the nation’s secular economic growth rate.

The bipartisan Congressional Budget Office says immigration reform could boost the country’s growth rate and would be an important step in addressing the looming bankruptcy of the Social Security and Medicare trust funds. Immigration reform would increase the labor force. More workers translate directly to higher long-term growth. Additionally, more workers mean more revenue for entitlement programs, including Social Security and Medicare. Immigration reform would improve the dependency ratio in the United States because too few workers would support an ever-increasing retiree population. Demography is destiny.


The University of Pennsylvania’s Penn Wharton Budget Model clearly states that immigration reform is good policy. GDP increases. Immigrants work more to “save wealth for later consumption”. The model shows that an increase in labor supply lowers wage inflation. The returns on capital would be higher. The savings would therefore be higher. Higher returns on capital would also attract more foreign capital, which is needed for new investment and to finance the structural budget deficit. As capital investment increases, so does productivity, which over time will result in higher wages for everyone. Of course, stronger economic growth through more workers and higher productivity leads to higher tax revenues, especially tax revenues that fund Social Security and Medicare. Immigrants work, they don’t retire. It is important that immigrants do not access social programs disproportionately. Immigration reform leads to smaller deficits and extends the fiscal stability of entitlement programs.

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In addition to raising the long-term rate of economic growth, addressing the structural budget deficit, improving the balance sheets of the Social Security and Medicare trust funds, and reducing wage inflation, comprehensive immigration reform would help address critical shortages of physicians and health care workers in the country’s rural geographies country. Hospitals are closing in rural America because there are no doctors and nurses. In rural America, people are dying needlessly.

Immigration reform is urgently needed to maintain the US comparative advantage in technology, particularly in high technology and high value-added manufacturing. Between 40% and 70% of technology and advanced manufacturing workers are foreign-born. US tech and manufacturing companies have been vocal in calling for more visas for advanced-skill workers looking to migrate to the US. Canada understands that high-tech skills are in short supply worldwide. Canada accelerates workers with science, engineering, engineering, and math skills. The US must do the same. A high level of human capital is required for a progressive prosperous economy.

Comprehensive immigration reform would accelerate the positive process of dynamic destruction. Dynamic change is necessary in a vibrant economy. Dynamic change is triggered by new companies, which are the real engines of growth in the USA. New business, not small business, not big business, is the essential characteristic of a prosperous dynamic economy. Immigrants are disproportionately creating new businesses, particularly new businesses in emerging industries and technologies. Importantly, the data shows that new businesses started by immigrants create more jobs. Immigrant companies are “job creators, not job takers”.

Comprehensive immigration reform is good policy.

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James Rogan is a former US Field Service Officer who later spent 30 years in finance and law. He writes a daily note on finance and economics, politics, sociology and criminal justice.

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