Border upside: Surge of illegal immigrants helped U.S. economy avoid recession

The Biden administration issued nearly 3.5 million work passes last year to migrants, many of them caught and released at the border, and provided an unexpected boost to the economy.

The surge of migrants under President Biden helped stave off what some analysts predicted was a guaranteed recession and was poised to help keep the economy humming for the next couple of years, according to the Congressional Budget Office.

CBO now figures that the labor force will have 5.2 million more people over the next decade than projected, making the economic numbers a bit rosier. The U.S. gross domestic product will be $7 trillion more, and federal revenue will be $1 trillion more.

“More workers means more output, more income, and that in turn leads to higher revenue,” CBO Director Phillip Swagel told lawmakers on Wednesday.

The findings provided a different perspective on the chaos in the immigration system under Mr. Biden and delivered a new argument to immigrant rights advocates seeking to defuse anger over the border.

“We have an unexpected bounty in the American economy because of the unexpected surge in migration,” said Douglas Rivlin, senior director of communications at America’s Voice. “The reality is that immigrants and immigration are critical to economic growth and critical to the U.S.’s comparative advantage to other countries.”

CBO said it expects 3.3 million net new immigrants this year alone. An estimated 2.4 million of those are irregular migrants without legal visas who are either jumping the border or being brought into the U.S. through the Biden administration’s legally iffy use of “parole” powers.

In 2021, the country netted just 600,000 irregular migrants.

Mr. Swagel said the new arrivals fill the U.S. labor force, boosting the economy’s productivity.

That’s not good news for people who must compete with the newcomers. CBO said the migrants are generally expected to work in low-wage jobs, “putting downward pressure on average wages.”

Given the larger population, it turns out that per capita GDP will also dip. In other words, the economy will be bigger, but the average worker will be slightly worse off, said CBO, predicting that real wages will be “slightly lower than they would have been otherwise” in the coming decade because of immigration.

That part is not mentioned enough, said Steven A. Camarota, a demographer at the Center for Immigration Studies. He said the “bigger is better” argument obfuscates what it means for workers.

“If all that mattered was aggregate GDP, then India is a lot richer than Sweden. But what matters is per capita, and there’s no clear evidence that immigration increased per capita. In fact, because immigrants are poorer, it seems to lower it,” he said.

Mr. Swagel confirmed those calculations Wednesday in testimony to the House Budget Committee.

“The new immigrants will tend to go into industries that have relatively low productivity. That will lower the level of productivity of the country as a whole and lead to lower wages, on average,” he said.

Rep. Tom McClintock, California Republican, said that undercuts Democrats’ argument.

“So the party that keeps touting itself as the friend of the worker actually is advocating policies that are suppressing the wages of working Americans by flooding the labor market,” he said.

Rep. Ilhan Omar, Minnesota Democrat, countered that legalizing illegal immigrants could better boost the economy.

CBO, in a major demographic report last month, revealed the parameters of the current migrant surge. It calculated that immigration added a net of 2.6 million people to the U.S. population in 2022 and 3.3 million last year. It will add another 3.3 million this year.

Of those, 2.4 million lacked visas permitting them to be in the U.S.

Some, particularly those ushered through parole, could claim work permits immediately, helping fuel the nearly 3.5 million permits issued last year.

That was double the number of work permits issued in fiscal year 2019, the last full year before the pandemic.

CBO figures migration will cool off after 2026 but still represent 70% of America’s total population growth. From 2040 on, all population growth will come from immigration because fertility rates alone are no longer high enough to increase the population.

Mr. Rivlin said those sorts of calculations challenge a central tenet of the Trump-infused Republican Party, which he said has become increasingly hostile to all immigration.

“It’s part of the great American success story that we forged a multiracial democracy out of people that came from everywhere from different types of circumstances and makes us the envy of the world,” he said. “Republicans really aren’t so sure about that. They really have been taken over by the nationalists and the White supremacists that see the multiracial democracy part of the success story as problematic.”

Mr. Camarota said relying on immigrants to power economic expansion carries dangers.

He released a report this week that found immigrants accounted for all the nation’s labor force growth from 2019 through 2023. Meanwhile, the number of U.S.-born people in the workforce dropped, with non-college-educated U.S.-born men particularly suffering.

Those labor force dropouts signal a host of social ills, but the migrant surge is obscuring it, Mr. Camarota said.

“We will never address this problem if we keep having high immigration because we don’t have to,” he said. “We’re experiencing all the social problems, but if we have the availability of immigrants, then the difficult question of how do you get working-age people back into the labor force just simply won’t be addressed.”

He said other questions include the country’s ability to assimilate.

CBO said the total foreign-born population of the U.S. hit 55.1 million in 2023, or 16.2% of the total. That shatters the Census Bureau record set in 1890, when immigrants accounted for 14.8% of the population.