On Friday shortly after waking up the monthly job numbers made headlines as I poured a cup of coffee. To say the data was exceptional would be an understatement. Regardless of where we align with a political party, everyone needed to agree—even if grudgingly so—that with more evidence based on the March numbers, the U.S. economy remains in prime health. Interest rates to combat inflation remain the fly in the ointment but there is no denying strong purchasing power in the country led employers to add 303,000 new jobs last month. As I sipped steaming coffee the television reporters noted that most economists had predicted the numbers for March to be about 200,000. They added the unemployment rate ticked down from 3.9% to 3.8%, and with his latest data it marks 39 months in a row of hiring increases and the longest sustained period of sub-4% unemployment in several decades. If one needed frosting on this cake it was noted on CNBC that hourly wages were up 4.1% annually. (For those keeping scores this means 15 million jobs were created since President Biden took office.)
The reason I write this post is not to place the latest economic news into a political construct, but rather place it into a human one with benefits to workers and businesses, alike. While an immigration reform package is very much needed to address issues at the southern border—a package like the one torpedoed by congressional Republicans at the demand of Donald Trump—we must not miss the positive upside these workers from other countries are playing in our national economy.
We have already seen solid evidence that as immigration adds to the labor supply, (and we know every sector of the economy desires more workers), the job growth over the years has not overheated the economy. We know, as economists and television analysts describe it, that our economy had a “soft landing” following the pandemic. Economists are studying how all the factors converged to allow for that outcome and argue that immigrant workers were a huge factor in the ‘landing’. A Brookings Institution analysisrecentlyestimated that employers could add 160,000 to 200,000 jobs per month this year without a big risk of wages spiking and inflation rising. Without immigration being a part of the monthly reports job growth numbers would be more in the range of 60,000 to 100,000.
There is no way not to have empathy for people who trek hundreds of miles to land at our borders in the hope of finding gainful employment and rooting themselves into a new beginning. That is, after all, the American Dream. Not only do they desire economic gain, but the data shows that those native to this country also greatly benefit from their labor. But there is, in my estimation, a far more valuable outcome than jobs and bottom lines about this story.
I would strongly argue that one of the benefits is that the human connections formed with these new workers can positively alter the mindset of Americans. It is harder to store up animosities when one sees an industrious worker from another country standing alongside a multi-generational American, each striving for a better tomorrow. Though this post is not politically aimed it does need to be said that when barriers come down in our understanding of people from other countries it will, over time, diminish the allure of candidates who demonize them. By listening to the stories and history of the new faces in our land we soon learn how much we take for granted.
So where does our economy, importantly shaped by a strong immigrant base, compare with the other large, industrialized countries? Well, it seems we should be honest. The US economic recovery from the pandemic has been nothing short of extraordinary. In the four years since 2019, the inflation-adjusted size of the US economy has grown by a cumulative 8.2%. That data shows the recovery is much stronger than what followed the Great Recession when the four years afterward GDP was only 1.8% larger than its pre-recession level. What we are now experiencing is growth that far exceeds other Western economies.
One more graph to make the point as to why immigration and migrants matter to the economy. The overall US labor force would have shrunk over the past four years, which would have severely crimped the growth rates coming out of the pandemic. Rather than losing workers our labor force grew by about 2 million. That is because immigrants more than filled in the labor shortage of native-born workers who for a variety of factors left the workforce.
As I was reading Friday morning about the March job numbers, I was linked to a report about the longer-lasting impacts on those places where immigrants and migrants live and work. Boston University economist Tarek Hassan has strong arguments about our economy and why immigration should be viewed in positive terms.
In aworking paper for the National Bureau of Economic Research, Hassan and his colleagues examined decades of US migration data to look at the impact of new arrivals on economic growth, wage levels, and innovation, which they measured through the number of new patents filed in a particular area. More new ideas, he says, generally means more new businesses and products.
“We find that when you have 10,000 extra immigrants arriving in a given US county, the number of patents filed per capita in that county dramatically increases, by something like 25 percent,” he says. It was an effect that rippled out as far as 150 miles. The research team also estimated that since 1965, migration of foreign nationals to the US may have contributed to an additional 5% growth in wages. They’re currently preparing the findings for journal publication.
“More immigrants creates more economic growth,” says Hassan. “And because it creates more economic growth locally, it raises the wages of the people who are already there.”
Inan earlier paper, Hassan had looked at migration’s impact over an even longer term: 100 years or more. With an international research team, he studied how the pull of one area for migrants from the same country could help attract foreign investment to that region for years afterward.
“You can still see today that places where Germans settled within the Midwest 100 years ago are much better at attracting foreign investment from Germany than places that didn’t see that migration,” says Hassan. The same is true for communities that had a concentration of Chinese or Polish migration, for example. “Ethnic diversity in that sense is really good for the ability of local firms to conduct business abroad, to both receive and make foreign investments.”
At a time when Wisconsin Republicans say the worker shortage is so dire, they felt legislation was required so fourteen-year-olds could serve patrons their drinks in a tavern, alerts us as to why more people who desire to live and make wages in the nation should be welcomed. The data is clear. There is a most positive impact immigrants and migrants have made on our economy. We also know they make good neighbors when we open up a conversation and hear their stories which soon alerts the listener as to how much is taken for granted. This latest economic data is also a very human story.
