Immigration and Economic Growth

Why people are the ultimate resource for prosperity

Introduction

Debates over immigration often ignore a basic fact: people are the ultimate resource. In a free country, individuals transform natural resources into wealth, innovate and collaborate. Immigrants are no exception. They are workers, inventors, investors and entrepreneurs. By coming to the United States, immigrants enlarge both the supply and the demand for labour, creating better‑paying jobs for everyone. Fundamentally, immigrants are collaborators, not competitors1.

Population and labour force

America is confronting a demographic crunch. The population is growing slower than at any point in U.S. history, and by 2022 international migration accounted for 80 percent of the meagre 0.4 percent population growth2. Without immigration, the U.S. population will begin to decline in the 2030s2. Population decline erodes property values, shutters businesses and strains public services, particularly in rural counties where decline is already underway2.

The labour force is shrinking too. Labour‑force growth has fallen by 65 percent since the 1960s, when the immigrant share of the population reached its low point3. From 1995 to 2022, immigrants and their children accounted for 70 percent of labour‑force growth; in the last two years, immigrants accounted for 100 percent of the increase in the working‑age population3. Without immigrants, the working‑age population will fall by about six million over the next two decades3.

Fiscal and economic contributions

Immigrants are not a fiscal burden. A Cato update of a National Academy of Sciences report found that immigrants generate, in inflation‑adjusted terms, nearly $1 trillion in state, local and federal taxes—about $300 billion more than they receive in government benefits4. The net present value of taxes paid minus benefits received for a 25‑year‑old immigrant is positive across all education levels, including for high‑school dropouts, partly because immigrant workers spur firms to invest more capital4.

Beyond fiscal contributions, immigrants sustain housing values and spur economic activity. Immigration has created or preserved an estimated $3.7 trillion in housing wealth for U.S. households by preventing declines in low‑cost areas5. Every 1,000 new immigrants to a county create opportunities for roughly 270 additional U.S. residents, helping struggling regions recover5.

Filling labour shortages

America faces millions of unfilled jobs. U.S. nonfarm employers currently have about nine million open positions, and since early 2021 this number has averaged around 10 million5. Filling these jobs would have increased gross domestic product by about $2 trillion5. Immigrants can help close this gap across the skill spectrum, easing inflation pressures by boosting the supply of goods and services and expanding economic opportunity5.

Conclusion

Immigrants are vital to America’s future. They are creators and collaborators who strengthen the labour force, sustain communities and pay more in taxes than they receive in benefits. As population growth stalls and labour shortages intensify, a freer and more orderly immigration system is not just humane—it is economically essential. By welcoming newcomers and enabling them to work, innovate and invest, the United States can secure prosperity for generations to come.

References

  1. David J. Bier, “Unlocking America’s Potential: How Immigration Fuels Economic Growth and Our Competitive Advantage” (Cato Institute testimony, Sept. 13 2023) – explains that immigrants are workers, inventors, investors and entrepreneurs who increase the supply and demand for labour.
  2. David J. Bier, “Unlocking America’s Potential” – notes that international migration accounted for 80 percent of the United States’ 2022 population growth and warns that without immigration the population will decline.
  3. David J. Bier, “Unlocking America’s Potential” – reports that immigrants and their children accounted for 70 percent of labour‑force growth from 1995–2022 and 100 percent of recent working‑age population growth, and that without immigration the working‑age population will fall by about six million.
  4. David J. Bier, “Unlocking America’s Potential” – cites research showing immigrants generate nearly $1 trillion in taxes—about $300 billion more than they receive in benefits—and that the net present value of an immigrant’s fiscal contribution is positive across all education levels.
  5. David J. Bier, “Unlocking America’s Potential” – details how immigration preserves $3.7 trillion in housing wealth, creates opportunities for additional U.S. residents and describes the economic benefits of filling millions of open jobs.