Immigrants Key to Future U.S. Economy

Both the Left and the Right are attacking the Senate’s immigration reform bill. But immigration reform is more complex than the question of the nation’s estimated 12 million illegal immigrants. The real concern should be in attracting enough workers to maintain the U.S. labor force at a time of declining fertility rates and an aging native-born population. These newcomers, many from Latin America, will be necessary to maintain America’s competitive advantage, while the tax income from new legal workers will be essential in paying for the social security of retiring baby boomers.

The United States is not the only country with large immigrant inflows. Despite common impressions, the relative size of the foreign-born U.S. population (13 percent of the total) is similar to that of Western European countries; in Germany, 12 percent of the population is foreign born, in France 11 percent. But one key factor differentiates U.S. from European immigrants: American immigrants more quickly adapt to their new land, both socially and culturally.

A few key historical differences explain the different reception for immigrants on the two sides of the Atlantic. The United States is a nation founded by immigrants that has traditionally relied on new foreign labor to provide needed skills and fill jobs. In fact, roughly one-third of U.S. immigrants arrive at our shores with a college degree. Once here, the American melting pot assimilates new immigrants, incorporating some of their traditions in mainstream U.S. culture at the same time that newcomers learn American customs and practices.

The European immigrant experience is a stark contrast. Historically, the continent has been characterized largely by emigration, with immigration becoming a new phenomenon only in the last 60 or so years. Partly attributed to this lack of an immigration tradition, many European immigrants today are viewed as second-class citizens who threaten the national culture and heritage. Europe’s "mixed salad" environment for immigrant assimilation has led to the immigrant population often failing to integrate into European society. Left on the sidelines of society, many immigrants suffer from high unemployment and fewer opportunities for individual prosperity. Immigrant-related anxiety is often associated with tragic explosions of frustration such as last year’s riots in France and the murder of Theo Van Gogh, or, on the other side, the rise of nativist politicians like France’s Jean-Marie Le Pen and Austria’s Joerg Haider.

Highlighting differences on the two continents, the Pew Research Center recently looked at the lives and attitudes of Muslims in both the United States and Western Europe. Released in May, Muslim Americans: Middle Class and Mostly Mainstream found that Muslims in the United States are better off economically and more closely identify with their new country. In Germany, 53 percent of Muslims reported family incomes of less than 18,000 euros (compared with 35 percent of the overall population), and in Spain, 73 percent had incomes less than 14,500 euros (compared to 50 percent of all Spaniards). In the United States, the study found that only 35 percent of Muslim families belonged to the equivalent lower income category (less than $30,000 annually)—just 2 percent more than observed across the entire U.S. population. Beyond these numbers a deeper difference exists regarding the sense of immigrants’ belonging to their newly adopted home countries. Nearly half of American Muslims think of themselves as Muslim first, while in Great Britain (81 percent), Germany (66 percent) and Spain (69 percent), they overwhelmingly identify as being a Muslim first.

The United States should be careful to avoid the European immigrant trap. In the next few decades, it is estimated that Europe must attract approximately 50 million new immigrants to maintain the continent’s current economic position. The net growth in the U.S. labor force of native-born workers between the ages of 25 and 54 will be zero through 2020. From 2020 to 2030, annual labor force growth is expected to fall to 0.3 percent. Our ability to compete with China and other rising economies hinges on a favorable immigration climate that can meet labor needs to maintain and even expand current productivity.

Much debate has focused on whether immigrants depress wages or take jobs from native-born workers. In 1997, the National Research Council’s National Academy Report concluded that immigration reduced the wages of competing natives by one to two percent. Six years later, George Borjas found a three to four percent wage decline for every 10 percent increase in immigrants with similar skills. In contrast, a 2005 working paper by Ottaviano and Peri found that 92 percent of total U.S.-born workers benefited from a 2.4 percent real wage increase due to immigration. High-school dropouts were the only population group to experience a real wage decrease.

So, recognizing that the United States needs immigrants, the next step is ensuring continued integration into U.S. society. As witnessed in Europe, immigrants outside the social mainstream are prevented from achieving potential economic success and seeing a boost in their overall livelihoods. Today, successful immigration policy means expanding proven integration practices to cities and towns outside the traditional gateway destinations. Immigrants today are as likely to settle in New York as they are in Raleigh or Peoria. While New Yorkers may be accustomed to a heterogeneous cultural environment, the recent flood of immigrants in rural areas, which have fewer support networks, has presented more of a challenge. More can be done to develop channels and means to teach immigrants English and other basic skills and to assist them in navigating bureaucratic and legal procedures. This is necessary to allow them to become more effectively embedded in communities.

The U.S. is at a crossroads in its immigration history. One path is occupied by anti-immigrant rhetoric and fears that the United States risks being taken over by foreign labor—a position strikingly similar to the concerns about Italian, Polish, and other migrants nearly a century ago. The more sensible approach recognizes the economic and strategic importance of foreign labor to maintaining the U.S. position as an economic superpower. Now is the time to strike a sensible approach for the good of the country and its millions of immigrants.

Jason Marczak is Director for Policy at the Americas Society and Council of the Americas.