American Immigration in the 2020s
New Ellis Island or invasion?
Key takeaways
1. Culture wars: The immigration debate in America has become a battleground of cultural identity and political ideology, with a stark partisan divide reflecting broader societal tensions.
2. Economic imperatives: It's crucial to recognize the economic underpinnings of immigration, historically driven by economic motives and impacting key indicators like GDP and wages.
3. Realistic solutions: Moving forward, a pragmatic approach to immigration policy is needed, one that balances economic imperatives with humanitarian considerations.
As noted this week, immigration is a uniquely polarizing political issue in American politics. According to Gallup, 48% of Republicans view immigration as the top political issue in 2024 versus 8% of Democrats (Independents fall roughly in the middle, at 25%). The gaps between Republicans and Democrats mentioning it in the poll are greater than for any other issue in the past 25 years. This partisan gap reflects how immigration has become a “culture war” issue that belies rational discussion.
In the early days of America, politics were mainly debates over economics, like currency and internal infrastructure. As the US became more affluent, economic debates gave way to cultural debates, which have more to do with how the citizen self-identifies than economics. These debates have taken on an almost religious nature. There is no way to compromise in a religious war.
I will argue in this post that immigration is primarily an economic issue. I’ll start with a broad overview of historical immigration patterns in America, summarize the current immigration situation using official government statistics, then propose a path forward on the immigration issue.
Settler nation
The US was founded by European migrants in the 18th century seeking economic opportunity and religious freedom. 19th century America was about first discovering, and then populating a continental nation. The important issue of North America’s indigenous inhabitants is out of scope for this article. Most of the new arrivals were European settlers, primarily Irish and German migrants. By 1890, the portion of inhabitants born outside the US reached a high of 14.8[i]%.
Then, in 1921 Congress passed the Emergency Quota Act[ii], restricting the flow of immigration into the country. The law was a response to the large influx of Eastern and Southern Europeans and restricted immigration to quotas based on national origin. The act restricted the number of immigrants admitted from any country annually to 3% of the number of residents from that country already living in the United States as of the 1910 Census. That meant that people from Northern and Western Europe had a higher quota and made up a larger share of immigrants[iii]. Immigration rates fell until the mid-1960s.
In 1965, LBJ signed into law reforms to immigration policy as a part of his sweeping Great Society agenda. At the time, opponents to the new law argued it would unleash a massive wave of new immigration, while allies of LBJ said the law would not significantly increase immigration. History has shown that the proponents of the bill were wrong. Beginning with the passage of the law, America has seen the greatest wave of immigration in its history. In October 2023, the foreign-born population of the US passed the 1890 peak to set a new record at 15.0%[iv]. The driver of this wave was family chain-migration, which was uncapped and greatly exceeded forecasts.
Recent history
Immigration has been a deeply partisan issue since at least the 2010s. President Donald Trump made building a wall along the US-Mexico border a marquee issue in his successful 2016 presidential campaign and immigration is again the top issue in the 2024 US Presidential campaign. The Trump Administration did restrict immigration levels and the 2020 COVID-19 pandemic further reduced migration. After the end of the pandemic and under the less restrictive immigration policies of President Joe Biden, elected in 2020, migration has surged.
Since Mr Biden became president, over 3.1m border-crossers have been admitted. That is more than the population of Chicago. At least a further 1.7m have come in undetected or overstayed their visas.[v]
The politics around this already-partisan issue have been further inflamed by Republican officials from border areas sending migrants to Democratic areas across the country. A Freedom of Information Act request in September 2023 revealed that the government had flown 200,000[vi]migrants to 43 inland airports[vii] in 2023 to relieve overflowing facilities at the southern border.
The economics of migration
Immigration affects the economy in two important ways: consumption and labor supply.
First, the primary way we measure the economy is Gross Domestic Product (GDP). In America, the largest contributor to GDP is consumption. When you eat at a restaurant or see a movie, the value of those expenditures are counted as consumption. Population and consumption move together, so more immigration means a bigger population means more consumption, increasing GDP.
Second, more immigration means a greater labor supply. When the labor supply is larger, businesses can pay lower wages (the law of supply and demand). Increased immigration keeps wages lower, meaning things like Uber rides and cleaning services stay cheaper.
Immigrants can be high or unskilled laborers. In practice, most migrants arriving via the southern border are unskilled. Unskilled migrants compete directly with unskilled native laborers, in particular those without a college degree. As a result, higher immigration tends to depress wages for unskilled jobs. It’s is no coincidence that low immigration during the mid-20th century coincided with a golden era for low-end wage growth. We tend to credit unions with causing thriving mid-20thcentury middle-class economic conditions, but it was also low immigration.
The Biden Administration has presided over relatively high GDP growth and rapidly falling inflation (after a spike in 2021). Though Democrats do not talk about it this way, there is no doubt that less restrictive immigration policies have contributed to both faster GDP growth and falling inflation.
America has 4% more workers than it did at the end of 2019, thanks in part to rising workforce participation, but mainly owing to higher immigration. The foreign-born population is up by 4.4m, a figure which may undercount those who arrived illegally. And the expanding workforce is being put to productive use. America’s flexible labour market has almost certainly made it easier for the economy to adapt fast to a changing world.[viii]
Figure 2: Rise and fall in US inflation and GDP growth after pandemic
Though nobody is talking about it, there is a tradeoff between increasing low-income wages, and thus decreasing inequality, and having a more permissive immigration policy.
A path forward
In this article, I have tried to make the case that immigration is a major economic issue. Now, I will foolishly propose an immigration policy for America in the 2020s.
Barbra Jordan was a 3-term Democratic Congresswoman from Texas widely admired for her competence and bipartisanship. In 1995[ix], President Clinton asked her to lead a bipartisan committee on immigration reform and to recommend a successor policy to the 1965 immigration law.
Figure 3: Barbra Jordan
In what became known as the Jordan Commission, the following policy proposals were recommended, but never adopted:
A focus on the admission of highly-skilled individuals to support the national interest by bringing individuals whose skills would benefit America. Recommended the elimination of the admission of unskilled workers and elimination of the diversity visa lottery.
A roll back of family chain-migration by implementing a prioritization of family relationships to determine who will be admitted through family-based immigration. Spouses and minor children of US citizens would continue to be admitted as first priority.
Immigration admissions level of 550,000 per year, to be divided as follows:
Nuclear family immigration 400,000
Skill-based immigration 100,000
Refugee resettlement 50,000
Deportation is crucial. Credibility in immigration policy can be summed up in one sentence: those who should get in, do; those who should be kept out, are kept out; and those who should not be here are required to leave.
The Jordon Commission policy should be adopted as the law of the land, with the 1990s quotas updated to the appropriate levels for the 2020s.
The immigration debate in America become a battleground of cultural identity and political ideology. As evidenced by the stark partisan divide, the issue of immigration has morphed into a symbol of broader societal tensions rather than a topic of rational discourse. However, amidst the fervor of the culture wars, it's crucial to remember the economic underpinnings of immigration. Looking back at America's historical immigration patterns, it's evident that economic motives have long been a driving force behind migration. Today, as we grapple with the complexities of modern immigration, it's essential to view it through an economic lens.
Immigration impacts both consumption and labor supply, influencing key economic indicators like GDP and wage levels. While proponents of more restrictive policies argue for protecting native workers, the data suggest that immigration has historically contributed to economic growth and dynamism. However, this doesn't negate the real challenges posed by unskilled migration, particularly in terms of wage suppression for certain segments of the workforce. Moving forward, a pragmatic approach to immigration policy is needed—one that balances economic imperatives with humanitarian considerations.
The recommendations put forth by the Jordan Commission in the 1990s provide a solid framework for such a policy, emphasizing the importance of skilled immigration, rationalizing family-based admissions, and maintaining control over deportation procedures. In embracing a policy grounded in economic realities while addressing societal concerns, America can forge a path forward that honors its legacy as a nation of immigrants while ensuring the prosperity and well-being of both newcomers and citizens alike.
[i] https://cis.org/Report/October-2023-ForeignBorn-Share-Was-Highest-History#
[ii]https://en.wikipedia.org/wiki/Emergency_Quota_Act#:~:text=An%20Act%20to%20limit%20the%20immigration%20of%20migrants%20into%20the%20United%20States.&text=The%20Emergency%20Quota%20Act%20restricted,as%20of%20the%201910%20Census.
[iii]https://en.wikipedia.org/wiki/Emergency_Quota_Act#:~:text=An%20Act%20to%20limit%20the%20immigration%20of%20migrants%20into%20the%20United%20States.&text=The%20Emergency%20Quota%20Act%20restricted,as%20of%20the%201910%20Census.
[iv] https://cis.org/Report/October-2023-ForeignBorn-Share-Was-Highest-History#
[v] https://www.economist.com/leaders/2024/01/25/how-the-border-could-cost-biden-the-election
[vi] https://cis.org/Bensman/New-Records-Biden-DHS-Has-Approved-Hundreds-Thousands-Migrants-Secretive-Foreign-Flights
[vii] https://cis.org/Bensman/Government-Admission-Biden-Parole-Flights-Create-Security-Vulnerabilities-US-Airports
[viii] https://www.economist.com/leaders/2024/03/14/americas-extraordinary-economy-keeps-defying-the-pessimists
[ix] https://www.numbersusa.org/pages/barbara-jordan-commission
This is an excellent article