Beyond the Borderline

Immigrants are an economic powerhouse, fueling the U.S. economy

This original image was created with the assistance of DALL-E.

AUSTIN, Texas—America is in the middle of a border crisis. But these days, it’s hard to tell how much of it is real or manufactured.

We know for sure the sheer number of people crossing the Southern Border each day—the U.S. Customs and Border Patrol estimates it to be around 10,000. We also know they’re coming from countries as far away as Russia, India and China. And they’re leaving an indelible mark on the social, political, and economic fabric of this country already, whether they intend to or not.

The epicenter of this crisis is just over 200 miles southwest of here in Eagle Pass — about the distance from Washington, D.C., to New York City. However, the debate around the nation’s immigration system extends far north to the so-called sanctuary cities where Governor Greg Abbott has bused over 100,000 undocumented people awaiting asylum hearings to cities like Washington, D.C., New York and Chicago.

New York Mayor Eric Adams went so far as to say, “This issue will destroy New York City,” in a town hall meeting in September. However, his comment was less about the future of New York than the overwhelmed city budget, which is being tapped to house newcomers, provide essential services, and educate their children. New York, which counts itself as one of the most diverse and multicultural cities in the world, has always relied on immigrants to help drive its growth.

According to a recent NewsHour/NPR/Marist poll, Adams’ concerns are not unique. However, others have raised nationalist or cultural reasons. More than four out of ten Americans overall—including nearly three-quarters of Republicans—said they felt that if the U.S. is too open, it risks losing its identity.

This article isn’t about the border crisis or the immigration debate. It’s about the nuanced labor realities facing the U.S. economy that are driving immigration. It’s also about the economic contributions foreign-born citizens, residents and the undocumented make here—in short, they’re massive and often buried far below the lead, if reported at all.

Drama, drama, drama

But first, some background on the current state of political play.

The high political drama in recent months appeared to be coming to a head in January, inching toward a constitutional crisis between Texas and the federal government. At the same time, a bipartisan immigration deal was in the works, nearing the finish line in the House and Senate.

Texas believed it had the right to block the federal government from border enforcement—an old-fashioned standoff that echoed the turf battles leading up to the Civil War. However, the U.S. Supreme Court effectively ruled in January to maintain the long-standing precedent that the federal government—not individual states—has the authority to enforce border security.

Around the same time, Republicans and Democrats were working to finalize new legislation on border security. However, just days before its vote, the deal was harpooned by Republican leadership at the bequest of presidential candidate Donald Trump, killing it in its tracks.

These intersecting events didn’t quiet the chatter around immigration—they managed to turn up the volume.

Just a few weeks ago, President Joe Biden and Donald Trump visited Texas on the same day, albeit for competing political reasons. According to senior administration officials, the president came to amplify his efforts to remind Americans that Republicans derailed the bipartisan border deal he and a group of GOP lawmakers worked on together to draft was prepared to sign into law. Trump, who is credited with convincing his party loyalists to scuttle the same deal, came to blame Biden for the current state of affairs.

And, in a raucous and somewhat combative State of the Union speech last week, Biden doubled down on his rhetoric. The Republicans, in their response, delivered by Alabama Senator Katie Britt, did the same.

The government remains at an impasse, yet people keep coming. But why?

Hotter than a two-dollar pistol

The economy beacons like a giant neon help wanted sign to those seeking opportunity. Make no mistake: America's economy is red-hot right now, and blue-collar workers—those at the bottom 25 percent of wage earners—saw the biggest wage gains last year, according to data from the Federal Reserve Bank of Atlanta.

The U.S. economy grew faster than expected in the final months of last year, driven by robust household and government spending. According to the Commerce Department, the world's largest economy expanded at an annual rate of 3.3% over the three months to December, outpacing most peer nations. Just last week, the Department of Labor announced that unemployment remains near historic lows at 3.7% with strong job growth.

The tight labor market is due in part to decades of low birth rates—native births are well below the replacement rate of 2.1 needed to sustain the population. Also, a remarkable number of older adults—3 million more than expected—are taking advantage of strong real estate and stock markets and exiting the workforce into retirement, leaving job openings across all industries.

When a hot economy and a tight labor market combine, a surge of immigrants seeking new economic opportunities always follows. According to the U.S. Labor Department, between the pre-pandemic months of January 2020 and July 2023, the immigrant labor force grew by 9.5%. That compares to a tiny 1.5% growth rate among the native-born.

There are also a significant number of immigrants who are fleeing religious or political persecution or conflict. The U.S. isn’t somewhere to go just to earn a better salary, it’s somewhere that’s historically been a safe harbor.

You better work

One common assumption about immigrants is that they take jobs from American-born workers and harm the economy. The opposite is true. Immigrants create new jobs by forming new businesses, spending their incomes on American goods and services, paying taxes, and raising the productivity of U.S. businesses. They also fill a good number of positions that American employers have a hard time filling.

Despite only making up one in seven people, immigrants are responsible for the creation of one in four new businesses, according to the U.S. Census Department. They also have a higher labor force participation rate than the native-born population. According to the Bureau of Labor Statistics, in September 2023, the participation rate of the foreign-born labor force was 67.1%, and that of the native-born was 61.8%.

According to the American Immigration Council, immigrant households earned $66.5 billion in income in 2021, with $11.1 billion going to federal taxes and $5.2 billion going to state and local taxes. This left them with $50.2 billion in spending power that was mostly reinvested in American businesses and communities—the United Nations estimates that up to 15% of immigrant salaries, on average, are sent back to family in their homelands.

Further, the Congressional Budget Office noted last month that the surge in immigration will help bolster the U.S. economy by about $7 trillion over the next decade by expanding the labor force and increasing demand. The stronger growth will also be good for the federal government, lifting revenues by about $1 trillion more than otherwise over the same period. State and local governments will also benefit.

It’s the economy

So, let's break this down.

Everywhere you look, America seems to be at a crossroads, and the current debate about immigration is no different. Yet, while all the political drama unfolds and the rhetoric continues to get louder, an important story might be missed. Immigrants have actually helped the U.S. stave off recession and contributed to growth.

In a CNBC interview earlier this year, Mark Zandi, chief economist at Moody’s Analytics, said that the increase in foreign-born workers is “taking pressure off the economy.”

“In fact,” he noted, “it’s probably one reason why the economy grew so strongly last year.”