A little over a year ago, most analysts agreed that an immigration surge in the first years of this decade had created economic growth. Behind that conclusion, however, was the reality that this boom of unauthorized migrants had expanded a shadow economy, creating social costs and housing pressures. The political price was inevitable.
A year later, we are facing a different scenario, with an administration enforcing anti-illegal immigration policies that have led to a dramatic reduction of undocumented migrants entering the country.
The decline in border crossings began late in the Biden administration, when a loose border policy extracted an unacceptable political toll. Crossings have fallen even more dramatically since President Donald Trump took office, and we expect them to remain low for a long time to come.
So, what is the impact on the economy? A recent analysis published by the Dallas Federal Reserve answers this question with a thorough and data-based analysis of different scenarios.
The main takeaway is that an immigration slowdown comes with economic costs, including a likely decline in GDP growth. Another takeaway from the study is that immigration doesn’t have a serious impact on inflation.
The Dallas Fed analysis takes the Congressional Budget Office’s net unauthorized immigration projection as a baseline. That number is higher than current migration. Using their model, Dallas Fed economists were able to quantify the change in GDP growth as a result of immigration policy changes after January 2025. The study estimates that GDP growth is 0.8 percentage points lower than it would have been if net unauthorized immigration had evolved as in the CBO’s projection.
We’ve long understood that our country needs immigrants. They renew the labor force. They bring new life and new ideas to our country. They are the foundation of the American experience.
But we don’t take the Fed’s analysis to be an argument in favor of illegal migration. Instead, it speaks to the urgency for our country to implement a robust foreign worker program and ensure that there is a speedy process for accepting a large number of legal migrants, especially from nations in our hemisphere.
For years, the agricultural sector has been pleading for a strong and efficient guest worker program. According to federal estimates, over 40% of farmworkers are unauthorized immigrants. These numbers should give us pause. Our food supply depends on foreign laborers who are in the country illegally.
Americans broadly agree on immigration issues. They want a secure border, and they want a path for legal immigrants to be able to come here, work here and ultimately join the American dream in full.
This shouldn’t be that difficult, but somehow Washington keeps making it that way.
— The Dallas Morning News
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