Political Rhetoric Often Ignores Economic Necessity of Immigration

The U.S. has a long history of immigration. Outside of descendants of the continent’s Indigenous peoples and those Africans forced to its shores for enslavement, it is a nation of immigrants.

U.S. immigration rates began to rise after the Civil War, peaking between 1905-1914 with around one million migrants a year applying for legal status, a rate that would not return until the 1989, according to the U.S. Department of Homeland Security.

The period from World War I until 1970 saw a steady decline in immigration, as there was grave concern following both world wars that the country was allowing too many immigrants in.

Following the 1965 Immigration and Naturalization Act, numbers began to rise again. As of August 2020, the U.S. has almost 40 million residents who were born outside the U.S., which accounts for almost one-fifth of the world’s immigrants.

Nearly 14% of the current U.S. population was born in another country, but this remains below the all-time high of 14.8% in 1890.

Last year, the nation witnessed a record number of immigration encounters on the Southern border with 1,659,206 encounters but that was similar to the rate in 2000 (1,643,679) and 1986 (1,615,844).

While no one can deny that the U.S. is a country built on immigration, it does raise several questions:

• Is this rate too high?
• Are there social and economic challenges that are resulting?
• Are housing, employment and social service sectors being overwhelmed?

While concerns regarding impacts on employment and public services should not be ignored, the necessity for immigration needs to be acknowledged.

One of the most important aspects that immigration provides is population stabilization and protection against population erosion.

For example, according to the U.S. Census Bureau, half of all U.S. states witnessed a negative birth to death ratio between July 1, 2020, and June 30, 2021. While the nation still had a net increase of 229,000 births over total deaths, the rate of births has been declining for decades.

The U.S. had an average female fertility rate of 1.7 children per woman in 2019, which is down from a rate of 2 in 2009. This is not enough to sustain the population.

The reason the total population continues to grow is because Americans are living longer, so the death rate has not caught up yet. Eventually, the life expectancy of the Baby Boomers will equalize, and if the birth rate stays low, then immigration will be the only means to sustain the current population level.

This leads us to the economic necessity of immigration.

Since America’s economic infrastructure, agriculture, Gross Domestic Product and Social Security systems are dependent upon a population size of at least 300 million, this fertility rate trend will set the nation on an economic downward cycle without immigration.

Let me explain by looking at the potential impact on Social Security.

Most Americans have a grave misconception of how the SSI system works. It is not a pension or a retirement account. Rather, it is a retirement program where those who are currently working, and their employers, pay SSI payroll taxes. This revenue is then distributed to eligible recipients.

In 1960, the U.S. had roughly 5.1 workers per retiree. Today, that number is roughly 2.6. By 2040, it is expected to be 2.1. The resulting problem here is two-fold.

First, people are having fewer children. This means fewer future workers, which means fewer people paying into SSI.

Second, people are living longer. In 1950, the average life expectancy was 68 years. Today, it is 79, and by 2040, it will be 82.

Longer life expectancy means more people are receiving SSI benefits. Thus, there will be too many retirees in the system and not enough workers to pay into the system.

In order to sustain the SSI system with fewer workers, the government will be forced to raise payroll contributions from workers. As SSI payroll rates go up, net incomes go down, meaning fewer resources to pay for necessities.

The resulting reduction in respective standards of living will cause families to rethink the number of children that they can afford. If left unchecked, the fertility rate could drop to less than 1 as families struggle to pay for children.

A population implosion, leading to a collapse of SSI, could result. This would dramatically impact the GDP and stock markets and, in turn, cause further financial strain on families, many of whom already cannot afford to have children.

This is not just a U.S. problem. China, Japan, France and Germany are all facing similar issues. Affluent, industrialized communities and urban societies tend to have less children and this is a historical trend dating back centuries.

And this is not just an issue facing pension systems. The same problem impacts how societies sustain health care, manufacturing, agricultural and the transportation sectors. Industrialized nations need immigration to sustain the population rate and to avoid economic disaster.

We should not be asking if mass immigration is OK, because immigration is a necessity for survival. In fact, undocumented immigrants to the U.S. have been propping up the SSI system for decades by paying into a system from which they cannot derive benefits.

A 2013 Social Security Administration report concluded: “We estimate that earnings by unauthorized immigrants result in a net positive effect on Social Security financial status generally, and that this effect contributed roughly $12 billion to the cash flow of the program for 2010. We estimate that future years will experience a continuation of this positive impact on the trust funds.”

Therefore, we need to fix our immigration system making it more efficient and productive before political rhetoric leads to poor decisions and short-sighted policies that move us toward economic collapse.