Immigrants really do get the job done

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America is a nation of immigrants, and yet migration as a political issue is tearing the country apart. An April Gallup poll notes that for the third month in a row, immigration is the number one political concern for Americans, topping government dysfunction, the economy and inflation.

Voters across the board are uneasy with the rise in asylum seeking following the surge in southern border crossings. But Republicans are, not surprisingly, much more obsessed with the issue. There is a 40 percentage point gap in concern about migration between Republicans and Democrats. Red states such as Iowa and Texas are attempting to enforce their own statewide migrant bans.

Migration is also rising as a priority for independents, who rank it higher as a political concern than they have since the polling began in 2014, and are twice as likely to agree with the Republicans’ handling of the issue as they are with the Democrats’. There are plenty of Democrats in so-called sanctuary cities who are also worried about the pressures that migration brings with it, even if they are sympathetic to migrants themselves and generally pro-immigration.

In New York, the cost of migrant care is one of many reasons that governor Kathy Hochul is so worried about keeping the city’s economy in good shape. This has in turn prompted her to push back against things such as higher taxes on the super-rich and congestion pricing, which is essentially a tax on commuters who drive.

Meanwhile in Massachusetts, a buckling shelter system and the problem of migrants sleeping in airports and other public spaces, has voters calling for reform.

Biden recently passed an executive order cracking down on illegal migration, but not before he took much of the blame for the issue. At the beginning of his presidency he rolled back some of the Donald Trump-era restrictions on legal migration at the same time as some illegal migrants began to take advantage of loopholes in asylum law in order to stay in the US longer.

All of this was exacerbated by a rise in crime in Latin America and Mexico which pushed people across the border towards a raft of unfilled jobs in the US.

But that last fact points towards the hypocrisy of this whole debate. Economically speaking, immigration is far from being America’s worst problem. In fact, it’s the quickest way to address pressing labour shortages and inflation. Apollo’s Torsten Slok recently produced an eye-catching graph showing the rise in the foreign-born labour force, which has increased 11 per cent since February 2020 while the native-born labour force has remained flat. That means the entire growth in the US labour force is coming from immigration.

Indeed, migrants are a key reason that inflation in the US hasn’t risen further and faster. As Goldman Sachs has noted, immigration is the answer to “one of the biggest puzzles of the last year”, namely why America has both robust growth and lower inflation in recent years than any other wealthy country. Net immigration is at its highest level in two decades, particularly in lower wage sectors like agriculture, construction, childcare, and hospitality.

While some voters and labour unions advocating for workers in such industries may be worried about this, business is not. Trade groups representing construction workers are pushing for immigration reform, as are groups representing restaurant and hotel workers. Such groups want more immigration across the socio-economic spectrum, while policymakers have mostly been focused on getting higher skilled immigrants into the US over the past two decades.

That’s a good idea, but you can argue that more immigration of lower-skilled workers is good as well. Not only can it keep growth high and inflation low but there are some new studies showing that it can boost the wages of native born workers as well.

Despite the rhetoric of immigrants “taking” US jobs (an argument that Trump cynically and incorrectly employed in the last presidential debate) there is complementarity between the two groups. Think of a working family with an immigrant caregiver or gardener, or an immigrant working in a hotel or restaurant.

Should the attitude towards migrants change quickly under a second Trump administration, it could have a dramatic effect on the economic picture in the US. I recently spoke to one Swiss chemical company CEO who told me he was eager to invest more in America to take advantage of the tailwind from fiscal stimulus, but that he couldn’t find anywhere near the number of skilled staff that he needed. Re-industrialisation in sectors such as manufacturing, where older staff have retired and there has been little interest in joining among younger people, will exacerbate this trend.

This isn’t just a US problem of course. Anti-migrant sentiment in Europe has been a headwind to growth for some time. And in the UK, the new Labour government is stressing job retraining for native-born citizens in order to address labour issues. It’s worth noting, however, that Japan, where growth has long been constrained by the lack of women and migrants in the workforce, is now trying to encourage migrant labour. Good idea. As the famous “Hamilton” chorus rightly puts it, “Immigrants: we get the job done.”

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