11/23/2005

The Immigration Policy Center has just released its study dated November 2005 on "Economic Growth and Immigration" which establishes that the American population will face labor force problem without continuing feed-in of the immigrants.

EXECUTIVE SUMMARY

If the U.S. economy is to maintain at least 3 percent annual growth in its Gross Domestic Product (GDP) over the coming decade and beyond, the U.S. labor force must continue to expand. In many industries that rely heavily on workers who fill less-skilled jobs, increases in the labor force will be the primary means by which growth is achieved.

The significant increases in productivity, which could substitute for labor force growth, are unlikely to occur. Moreover, this rising demand for labor likely will not be met solely by a native-born population that is growing steadily older and better educated, and which has already achieved high levels of participation in the labor force. Since few additional workers can be culled from the native-born population, particularly in occupations that require little formal education or training, immigration has become a critical source of labor force growth. Immigrants fill more and more of the jobs that utilize younger workers with less education. 

At the same time, as immigrant workers spend their wages on housing and consumer goods, new jobs are created and labor demand increases. Yet current U.S. immigration policies remain largely unresponsive to the labor needs of the U.S. economy by imposing arbitrary and static limits on employment-based immigration that have merely diverted labor migration to undocumented channels or further clogged the family-based immigration system.

Among the findings of this report: U.S. Labor Force Growth is Critical to U.S. Economic Growth—Due to the flattening or decline of productivity growth, labor force participation rates, and average hours worked, the level of U.S. economic growth in Bureau of Labor Statistics (BLS) projections for 2002–2012 is predicated on a growing supply of workers that likely will not be found in the native-born population alone.

BLS assumes that the U.S. GDP will grow by 3 percent a year between 2002 and 2012 and projects that this economic growth will increase the number of U.S. jobs by 14.6 percent, from 144 million to 165 million.

BLS projects that the number of workers in the United States will increase 11.7 percent between 2002 and 2012, from 145 million to 162 million, as a result of both natural population increase and immigration. BLS assumes that significant increases in productivity, which could sustain economic growth with fewer workers, are unlikely over the coming decade. Productivity growth has in fact declined in recent years, from 4.0 percent in 2002 to 3.8 percent in 2003, 3.4 percent in 2004, and 2.5 percent in the first two quarters of 2005.

It is unlikely that many additional workers can be squeezed from the existing U.S. population given that the labor force participation rate among the native-born has actually declined from 66.4 percent in 1994 to 65.5 percent in 2004.

U.S. workers are unlikely to work additional hours. Workers in the United States currently average 35 hours of work per week, which is high compared to most other developed countries, but represents a steady decline from the U.S. average in the 1950s. Immigration is Key to U.S. Labor Force Growth—Given that labor force participation rates in the United States are trending downward, population growth will be the primary source of labor force growth in the years to come. Because natural population increase is unlikely to provide suffient workers, immigration will play a critical role in sustaining the labor force growth needed to maintain overall economic growth.

BLS devotes special attention to immigration in projecting future labor force growth by noting that growth in particular age groups of the labor force must come from immigration, since the U.S. workers in some age groups, such as those age 25 to 34 in 2012, are already born. BLS projects that net immigration will add 4.25 million workers to the U.S. labor force between 2002 and 2012, representing a quarter of total labor force growth.

Absent a change in current immigration law, undocumented immigrants will likely account for 1 in 8 new workers between 2002 and 2012. The U.S. Economy Continues to Demand Workers for Less-Skilled Jobs—The shifting demographics of the native-born workforce would present less of an economic challenge if the number of less-skilled jobs were not expanding. However, BLS projects that a significant share of new jobs and job openings during 2002–2012 will occur in industries that employ large numbers of workers with lower levels of formal education or training.

Many of the 58 mostly service industries projected to have faster than average employment growth between 2002 and 2012 employ workers in less-skilled jobs, and these fast employment growth industries collectively account for 84 percent of the total projected employment growth.

Because of turnover, BLS projects 56 million job openings between 2002 and 2012, or an average of 2.6 job openings for each net additional job. In many of the fastest growing sectors of the economy that require workers for less-skilled jobs, there are projected to be 3 or 4 job openings for each
net new job.

In 2004, the foreign-born share of workers was highest in less-skilled occupations such as farming, janitorial services, construction, and food preparation, where between 20 and 38 percent of workers were immigrants.

 

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