Will Closed Borders Actually Boost U.S. Jobs?

March 1, 2017 09:36 AM

President Donald Trump doubled down on claims that restricting immigration will benefit the U.S. economy -- a position widely disputed by economists.

Undocumented workers already are being rounded up and deported in a broader plan to restrict flows into the country, Trump said Tuesday in his address to a joint session of Congress. He said that his crackdown, along with measures to overhaul legal immigration, would improve Americans’ employment and wage outlook.

“By finally enforcing our immigration laws, we will raise wages, help the unemployed, save billions of dollars, and make our communities safer for everyone,” he said. “We want all Americans to succeed –- but that can’t happen in an environment of lawless chaos.”

Trump’s statement cuts against economists’ estimates that immigration can boost U.S. growth by lifting a depressed workforce participation rate and raising overall productivity. While Trump was right to say that 94 million Americans are out of the labor force, the figure includes retirees and students who might prefer not to work at this time.

The labor market in recent years has had to contend with significant structural challenges: a flood of baby boomer retirements, higher levels of disabled amid an opioid epidemic, and an army of long-term unemployed still struggling to return to work following the 2007-2009 recession. 

More longer-term restrictions to immigration mean the U.S. economy could suffer from an even greater slide in workforce growth and productivity, Daan Struyven, an economist with Goldman Sachs Group Inc., wrote in a Feb. 15 research note.

In the absence of immigration, the level of the U.S. working-age population probably would fall by 0.2 percent per year between 2020 and 2030, based on Census projections, Struyven wrote. Many immigrants are highly skilled and file a greater share of patent applications than their U.S. counterparts, meaning the loss of foreign workers hurts productivity.

And while shrinking the supply of immigrants could boost wages for some Americans, it also threatens to put certain employers out of business, such as farms that depend on migrants.

In turn, Trump’s restrictions could further threaten potential growth that’s already estimated to be low at 1.75 percent for the coming years, the Goldman report estimates.

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