For more than a century, anti-immigrant activists have assured Americans that increased immigration would harm the economy and prevent U.S. workers from finding jobs. However, years of employment data and decades of analysis have left the anti-immigration economic argument in tatters.
Latest Jobs Report: More Good News
Immigration has increased after restrictive Trump administration policies and the Covid-19 pandemic ended. The continued good economic news contradicts what anti-immigrant groups (and some elected officials) have argued, that more immigration would make life miserable for U.S. workers.
Nonfarm employment increased by 303,000 in March 2024 and the U.S. unemployment rate remained around a historically low 3.8%, according to the Bureau of Labor Statistics. BLS reported that the jobless rate for adult men in the United States is only 3.3%.
An anti-immigration organization responded to a tweet by Washington Post columnist Catherine Rampell by stating, “No one is scapegoating immigrants. People are pointing out that the federal government’s immigration policies are hurting American workers.”
Rampell responded, “Unemployment is at historically low levels. It’s been below 4% for over two years; the last time this happened Nixon was in office. Real wages are growing.”
Rampell possesses a stronger argument. Economists note that by increasing the labor supply, immigrants have tamed immigration and contributed to higher economic growth. Lower inflation raises real wages for U.S. workers, while economic growth is essential for Americans. (Real wages are “how much money an individual or entity makes after adjusting for inflation.”)
Immigrants Controlling Inflation
“Increasing our ability to produce by increasing the supply of labor is the least painful way to control inflation,” according to Mark Regets, a labor economist and a senior fellow at the National Foundation for American Policy. He notes that inflation occurs when the demand for goods and services grows faster than supply.
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Economists Justin Gest (George Mason University) and R. Andrew Butters (Indiana University) explained in research for FWD.us that “To achieve higher real wages while reducing inflation and encouraging employment, the U.S. must either increase labor force participation and expand training or increase the pool of workers available through the admission of foreign workers.”
Gest wrote in the Wall Street Journal, “Our discovery of the link between migration and inflation highlights the way that immigrants also help labor markets be more responsive to local changes in demand and supply. The pandemic gave the Trump administration the opportunity to experiment with a zero-immigration future. It didn’t go well for anyone.”
Because immigration has helped with inflation, the Federal Reserve may cut interest rates, which has buoyed the stock market. “Fed Chair Jerome Powell in recent months has signaled, however, that he no longer regards strong hiring as something to fear,” reported the Wall Street Journal’s Justin Lahart. “That is because the labor force has been growing steadily, largely due to a strong rebound in immigration. As a result, brisk hiring isn’t stoking concern on Powell’s part that the economy is at significant risk of overheating.”
Lahart writes, “Like the Fed, many economists believe that, in part as a result of immigration, the supply of available workers has increased. If that is right, the number of jobs can grow faster.”
Immigrants And Economic Growth
Economists Pia Orrenius and Chloe Smith of the Federal Reserve Bank of Dallas explain that America experiences economic growth due to “growth in the labor force and its productivity.” (Economic growth is needed to raise a country’s living standards.)
Orrenius and Smith note that due to retiring baby boomers and an aging U.S. population, immigrants are needed to boost growth in the labor force and economic growth (gross domestic product growth). “Absent offsetting increases in productivity growth, less immigration will, therefore, translate directly into slower gross domestic product growth.”
That is what University of North Florida Professor Madeline Zavodny found in examining several years of data. “Slower growth in the working-age foreign-born population between 2016 and 2022 reduced U.S. real GDP growth by an estimate of up to 1.3 percentage points in 2022,” according to a National Foundation for American Policy study. “U.S. real GDP would have risen by up to an estimated 3.2 percentage points in 2022 if the working-age foreign-born population had continued to grow at the same rate it did during the first half of the 2010s.” U.S. real GDP rose by only 1.9 percentage points in 2022.
It is true immigrants fill many jobs. However, most workers in the U.S. labor force were born in the United States, and earlier research by Zavodny found having more immigrants raises the labor force participation rate of U.S.-born workers. That likely happens due to increased investment and consumer spending, among other factors.
Economists Giovanni Peri, Kevin Shih, Chad Sparber and Angie Marek Zeitlin analyzed H-1B visas and employment and found if more foreign-born scientists and engineers were approved for H-1B petitions, jobs for U.S.-born workers in computer-related industries “would have grown at least 55% faster between 2005-2006 and 2009-2010.”
Social science research reveals due to zero-sum thinking, many immigration opponents mistakenly believe that if immigrants do well in America, it is likely at the expense of U.S.-born workers. However, decades of research and years of job data show that is not the case, and immigrants have helped U.S. workers by taming inflation and boosting economic growth.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
