Economy

The surge in immigration is a $7 trillion gift to the economy

Published

9 months ago

February 13, 2024

As the economy has improved, and consumers have begun recognizing that improvement, Republicans have pivoted to attacking President Biden on a different policy weakness: immigration. After all, virtually everyone — Democrats included — seems to agree the issue is a serious problem.

But what if that premise is wrong? Voters and political strategists have treated our country’s ability to draw immigrants from around the world as a curse; it could be a blessing, if only we could get out of our own way.

Consider a few numbers: Last week, the nonpartisan Congressional Budget Office released updated 10-year economic and budget forecasts. The numbers look significantly better than they did a year earlier, and immigration is a key reason.

The CBO has now factored in a previously unexpected surge in immigration that began in 2022, which the agency assumes will persist for several years. These immigrants are more likely to work than their native-born counterparts, largely because immigrants skew younger. This infusion of working-age immigrants will more than offset the expected retirement of the aging, native-born population.

This will in turn lead to better economic growth. As CBO Director Phill Swagel wrote in a note accompanying the forecasts: As a result of these immigration-driven revisions to the size of the labor force, “we estimate that, from 2023 to 2034, GDP will be greater by about $7 trillion and revenues will be greater by about $1 trillion than they would have been otherwise.”

Got that? The surprise increase in immigration has led a multitrillion-dollar windfall for both the overall economy and federal tax coffers.

The CBO is hardly the only observer that has highlighted the benefits of the recent influx of foreign-born workers.

As I reported in 2021, “missing” immigrant workers — initially because of pandemic-driven border closures and later because of backlogged immigration agencies — contributed to labor shortages and supply-chain problems. But since then, work-permit approvals and other bureaucratic processes have accelerated. Federal Reserve officials noted that this normalization of immigration numbers boosted job growth and helped unwind supply-chain kinks.

Over the long term, Federal Reserve Chair Jerome H. Powell recently said on CBS News’s “60 Minutes,” “The U.S. economy has benefited from immigration. And, frankly, just in the last year a big part of the story of the labor market coming back into better balance is immigration returning to levels that were more typical of the pre-pandemic era.”

A rise in the number of people ready and willing to work is not the only economic benefit. Immigrants are also associated with other positive growth effects, including higher entrepreneurship rates and disproportionate contributions to science, research and innovation.

Consider, too, the national security, humanitarian and religious arguments for providing refuge to persecuted people around the world.

None of this is to diminish the near-term stresses on the U.S. economy that come from poorly managed flows of immigration. These challenges clearly exist, both at the southwest border and in cities such as New York and Chicago, where busloads of asylum seekers are ending up (by choice or otherwise). Absent more resources to manage these inflows and expedite processing either to authorize migrants to work in the United States or to return them to their home countries, this strain will continue.

But there are ways to harness the energies and talents of the “tempest-tost” and patch our tattered immigration system. Some of those tools were built into the bipartisan Senate border bill, which now appears dead.

Instead GOP lawmakers scaremonger about the foreign-born, characterizing immigration as an invasion. As Rep. Mike Collins (R-Ga.) dog-whistled last week, “Import the 3rd world. Become the 3rd world.”

Alas, the faction working to turn the United States into a developing country is not immigrants but Collins’s own party. It’s Republicans, after all, who have supported the degradation of the rule of law; the return of a would-be dictator; the gutting of public education and health-care systems; the rollback of clean water standards and other environmental rules; and the relaxation of child labor laws (in lieu of letting immigrants fill open jobs, of course).

America has historically drawn hard-working immigrants from around the world precisely because its people and economy have more often been shielded from such “Third World”-like instability, which Republican politicians now invite in.

Ronald Reagan, the erstwhile leader of the conservative movement, often spoke poignantly of this phenomenon. In one of his last speeches as president, he described the riches that draw immigrants to our shores and how immigrants in turn redouble those riches:

Thanks to each wave of new arrivals to this land of opportunity, we’re a nation forever young, forever bursting with energy and new ideas, and always on the cutting edge, always leading the world to the next frontier. This quality is vital to our future as a nation. If we ever closed the door to new Americans, our leadership in the world would soon be lost.

— https://www.reaganlibrary.gov/archives/speech/remarks-presentation-ceremony-presidential-medal-freedom-5

Reagan’s words reflected the poetry of immigration. Since then, the prose — as we’ve seen in the economic numbers, among other metrics — has been pretty compelling, too.

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Economy

Canada’s unemployment rate holds steady at 6.5% in October, economy adds 15,000 jobs

Published

1 day ago

November 8, 2024

Anne Joseph

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.

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Economy

Health-care spending expected to outpace economy and reach $372 billion in 2024: CIHI

Published

3 days ago

November 6, 2024

Anne Joseph

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.

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Economy

Trump’s victory sparks concerns over ripple effect on Canadian economy

Published

3 days ago

November 6, 2024

Anne Joseph

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.

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