Editor’s note: This post was originally published on the U.S. Chamber blog here.
Earlier this week, S&P chief US economist Beth Ann Bovino, made a strong case that immigration reform will be good for the economy [emphasis mine]:
If such immigration reform becomes law, we expect that it could add about 3.2 percentage points to real GDP in the next 10 years (2015 to 2024). It would likely add even more to growth in the following decade—a meaningful bump for an economy continuing to recover from the Great Recession. This would also help reduce Uncle Sam’s growing budget problems, likely cutting about $150 billion in real terms from our deficit in 10 years and likely even more the next.
Reform would “lead to higher productivity of both labor and capital because the influx of workers–particularly those highly skilled–could make for additional technological advancements, such as new inventions and improvements in production processes,” she writes.
In the report, Bovino tackles the question of why increasing immigration into the United States won’t hurt American workers [emphasis mine]:
The immigrants that come to the U.S. typically complement the native labor force; they don’t substitute for American workers. The two groups will overlap somewhat, in terms of demographic and socioeconomic features, but immigrants often fit into the labor force in areas and occupations where there are insufficient numbers of comparable native workers, both for high- and low-skilled occupations. In other words, more people entering the jobs market doesn’t mean lower wages and a higher unemployment rate, it means a bigger economy.
Whether they are new immigrants or recent college graduates, new workers will need to buy food, some mode of transportation to get them to work, and other consumable goods and services. In short: They need to buy stuff, which creates more jobs. Demand for housing will also likely increase dramatically as these new immigrants enter the economy and form households. They would also need to buy furnishings, meaning more money spent, more jobs, and more tax revenue. Once businesses expand to absorb the larger work force to meet the increased demand from a larger population, these short-term imbalances to the labor market early on will give way to increased productivity and higher wages later.
Last year, Madeline Zavodny of the American Enterprise Institute and Tamar Jacoby, President of ImmigrationWorks USA wrote in more detail how immigrants are complements to and not substitutes for native workers.
Through a propensity for entrepreneurship—immigrants “are 30% more likely to start a new business than U.S.-born citizens”—increased innovation and productivity gains, as well as a greater number of people wanting more goods and services, immigration reform would provide an economic boost to the economy and in turn help American workers.