The Entrepreneurial View #484

Population Change and Immigration

by Raymond J. Keating

Check out the latest population numbers from the U.S. Census Bureau, and it becomes pretty clear how reliant our nation and economy are on immigration.

The Census Bureau reported on May 1 that the U.S. population grew by 20.2 million between April 2000 and July 2007.

Of that increase, 12.2 million - or 60 percent - were the result of "natural increase," that is, births minus deaths. The remaining 8 million came from net international migration. So, immigration accounted for 40 percent of U.S. population growth over this period.

In addition, individuals of Hispanic ethnicity (the Census Bureau points out that "Hispanic" is considered an ethnicity, and that Hispanics can be any race) accounted for 10.2 million - or just more than half - of the April 2000-July 2007 growth in population. So, while Hispanics accounted for 12.5 percent (or 35.3 million) of the U.S. population in 2000, they registered 15.1 percent (or 45.5 million) in 2007.

What does this mean?

First, it says that despite the anti-immigration ravings of some in the political arena, the U.S. remains a country that de facto welcomes immigrants. It also says that ethnicity, race and creed do not matter in terms of becoming or being an American. The U.S. is a nation built on ideas - not race or ethnicity - and as long as you subscribe to those ideas, such as freedom and individual responsibility, you too can be an American.

Second, this population data speak to the tremendous need that U.S. consumers, businesses and our economy have for immigrants.

A truly robust, dynamic, growing economy needs to grow in terms of its population. More people mean more consumers, more workers, more entrepreneurs, more innovators and more inventors.

But does the U.S. economy really need more immigrant workers? Well, the 2007 edition of the "Economic Report of the President" noted: "Foreign-born workers (the sum of both legal and illegal migrants) make up 15 percent of the total U.S. labor force, and since 1996 they have accounted for about half of the total growth in the labor force, thereby fueling macroeconomic growth." For good measure, a host of economic studies make clear that immigrants do not displace current workers, but instead, compliment those workers.

Third, we are fortunate to see these increases in immigration given the aging of America's native-born population. Consider the following points made by Dowell Myers, professor of urban planning and demography and director of the Population Dynamics Research Group at the University of Southern California, in a January 2008 report for the Immigration Policy Center:

"U.S. society is itself changing, and the aging of the Baby Boom generation will create growing demand for younger workers. The ratio of seniors (age 65 and older) to working-age adults (25 to 64) will soar by 67 percent between 2010 and 2030. The rapid rise in the senior ratio will precipitate not only fiscal crises in the Social Security and Medicare systems, but workforce losses due to mass retirements that will drive labor-force growth perilously low. Immigrants and their children will help to fill these jobs and support the rising number of seniors economically."

The bottom line is clear: The U.S. economy has been helped tremendously by immigration, and will need to rely on immigrants to keep growth chugging along in the future.

Therefore, it's time to alter immigration law to reflect economic reality. That means not just tightening up the borders for national security purposes, but opening paths to legalization for undocumented workers and greatly expanding legal avenues for immigration.

Quite simply, immigration policy that ignores real-world economics places U.S. prosperity in peril.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.