In Washington, a recent report from Congress’ independent budgeting office suggests that the influx of illegal immigrants into the United States could play a significant role in averting a recession this year, potentially injecting $US7 trillion ($11 trillion) into the economy over the next decade.
However, despite this optimistic economic forecast, experts are raising concerns regarding the broader implications, both economic and societal, of the surge in illegal immigration witnessed since President Joe Biden assumed office, reversing many of his predecessor’s hardline immigration policies.
The issue of immigration has consistently ranked as a top concern among voters in various polls. Public sentiment surrounding immigration often reflects apprehension and frustration over perceived competition for jobs, affordable housing, and resources, particularly among lower-income Americans residing in urban centers such as Chicago, Denver, and New York.
Phillip Swagel, director of the Congressional Budget Office, outlined projections indicating that the country’s labor force could expand by 5.2 million individuals from 2023 to 2034, resulting in a $US7 trillion boost to Gross Domestic Product (GDP) and an additional $1 trillion in government revenues. Swagel emphasized that the surge in immigration, ongoing since 2022 and anticipated to continue through 2026, will contribute to economic growth by expanding the workforce and stimulating economic activity. However, he also cautioned that further assessment is required to gauge the full implications of immigration on government finances.
Despite initial concerns about a looming recession, the US economy exhibited unexpected resilience in 2023, posting a growth rate of 3.1 percent. This robust performance, coupled with a low unemployment rate of 3.7 percent, has tempered recession fears among economists, with a recent survey by the National Association for Business Economics indicating a notable decline in recession expectations for the current year.
Immigration is cited as a significant factor contributing to the improved economic outlook, with a majority of economists surveyed expressing support for increased levels of legal immigration. However, some economists caution that the purported benefits of cheaper labor and heightened economic activity must be weighed against potential costs.
Herbert Grubel, an economics professor at Simon Fraser University, warns that the need to provide public services for new immigrants could offset economic gains. He cites the example of Switzerland, where liberalized immigration policies in the 1970s led to heightened demand for housing and infrastructure, ultimately prompting public backlash and a referendum to restrict immigration.
Moreover, concerns persist regarding the strain placed on public finances by the influx of illegal immigrants. Cities like New York, Denver, and Chicago have incurred substantial costs in providing shelter and services to migrants, exacerbating existing budgetary pressures.
Steven Camarota, director of research at the Center for Immigration Studies, highlights the potential adverse effects of increased immigration on wages, particularly for low-skilled workers who may face heightened competition for jobs. He cites research indicating negative wage impacts, particularly among the least educated segments of the workforce, underscoring the complex economic dynamics at play.
As debates surrounding immigration policy continue to unfold, policymakers and analysts grapple with balancing economic considerations with broader social and fiscal implications.
