How Does Immigration Fit into the Future of the U.S. Labor Market?

This issue brief looks at economic trends in the U.S. and considers whether and how immigration fits into the country’s economic future. The essay begins with an examination of demographic trends affecting the workforce, and the impact of those trends on the economy. Baby Boomers are moving into retirement, and workforce participation by natives has been declining beyond what can be explained by retirements. Productivity growth has slowed. Internal migration rates have fallen as has the rate of business creation. There is a growing skills mismatch between employer needs and workforce skills. The authors explain how immigrants can mitigate these trends—by rounding out the workforce skills distribution, participating in the workforce at higher rates than natives, being more likely than natives to start new businesses, and having more geographic mobility, among other characteristics. The authors also examine other trends that might preclude the need for more immigrants—automation and outsourcing—and conclude that these forces will not significantly reduce the need for labor in the long run. The authors also suggest ways to reduce adverse impacts that might result from increased immigration. The authors conclude that a future with less immigration is a future with less economic growth. Americans may be able to live with that outcome, but such a tradeoff should first be carefully examined (Maurice Belanger, Maurice Belanger Associates)

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