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Feb 16

Current Immigration Is a Net Loss

More Misinformation from the Media:

For [Trump’s] plan, at the scale he promises, would shrink the American economy and impoverish the world. If greatness is what he purses, a straightforward way to bulk up the economy . . . would be to allow many more immigrants in. . . .

Consider the report on immigration released last fall by the National Academies of Science, Engineering and Medicine. I concluded that immigration to the United States from 1990 to 2010, both legal and illegal, produced net benefits worth $50 billion a year to the native population. . . . This might seem insignificant in an $18 trillion economy. But it packs more than what meets the eye. . . . Immigrants are slowing the aging of the workforce. . . . High-skilled immigrants contribute disproportionately to innovation, seeking patents at a higher rate than natives. – How to Make America Greater: More Immigration, Eduardo Porter, The New York Times, Eduardo Porter, 2/7/17.

Fact Check: This study did find a net benefit of immigration to the native-born American population, a total of $54.2 billion. But this benefit mainly went to the better-off segment of Americans, in effect making them richer, and it came at the cost of making less-well-off citizens poorer. It works this way: Lowered wages as the result of immigration cost working Americans $493.9 billion a year. But those lower wages provide an economic windfall for businesses totaling $548.1 billion. The difference between the two figures is the net of $54.2 billion. This is a questionable gain considering the liabilities it entails.

And the liabilities don’t stop there. The study found that immigration is causing a significant fiscal loss. Immigrants in general consume a good bit more in services than they pay in taxes. The study said this total net loss could be as high as $299 billion—which far overshadows the alleged net gain of $54.2 billion a year. The report does raise the possibility that over the next 75 years immigrants and their descendants will pay as much as they take. But as one commentator observes, this is nothing more than “assumption-driven speculation.” Without a doubt, immigrants will cause a fiscal deficit for many years to come.

With respect to slowing the aging of our population, current immigration is having an effect, but not enough to make any significant difference. In 2010, 66.6 percent of our population was of working age. If we had cut all immigration that year, that percentage by 2050 would have declined to 59.2 percent. But with our current policy of immigration remaining in effect, the total would only be 60.3 percent.

The outcome would be different if our policy specifically selected for young people, but the current policy selects for other criteria such as family ties, diversity, and lastly—far down the list—various skills. All of these categories have strong constituencies, and it’s unlikely they would all yield to a policy largely based on age.

As for skilled immigrants “seeking patents at a higher rate than immigrants,” one should note again that the great majority of legal immigrants are not selected on the basis of skills. Therefore, immigration could be cut sharply without impacting this category. In any case, it is by no means clear that immigrants, skilled or not, are much more likely to innovate and secure patents.

Despite Porter’s recommendation, increasing our already record sustained-level of mass immigration is absolutely the last thing we need to regain national greatness. It might “bulk up” the economy of America’s economic and political elites, but the rest of us will pay a price for their prosperity.

Permanent link to this article: http://www.aicfoundation.com/current-immigration-is-a-net-loss/

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