In 2023, US real GDP grew by 2.5% after inflation – much better than expected. This has been heralded by the media and mainstream economists as refuting the doomsayers that the US economy was heading into a slump. Now in 2024, the pundits claim that we can expect more of the same – reasonable real GDP growth but this time with a return to lower inflation and thus falling interest rates. Corporate bankruptcies will be avoided and the growing impact of new technologies and AI will raise the rate of growth in labour productivity, setting the scene for a strong period of improved living standards. Perfect.
A key factor that has gone mostly unnoticed is that the pickup in US growth last year came from a sharp rise in net immigration. In simple terms, more workers generate more goods and services. A larger number of people earning paychecks means more consumer spending. And more people paying income tax on earnings boosts tax revenues. Last year, the US population rose by 0.9% in 2023, much faster than the US Census Bureau forecast of 0.5%. And the prime-age workforce participation rate—ie 25- to 54-year-olds—reached 83.5% in February, matching highs that hadn’t been seen since the early 2000s. Much of this is due to immigration. The US economy is outperforming in GDP terms mainly because of net immigration, twice as fast as in the Eurozone and three times as fast as Japan.
US population growth is set to slow over the next 30 years; in the US from 0.6% per year between 2024 and 2034 to just 0.2% between 2045 and 2054. So net immigration is going to be the only way that the US population will rise, particularly after 2040 when US fertility rates will fall below the rate that would be required for a generation to replace itself in the absence of immigration.
Unless net immigration continues to be strong, the only way economic growth in the major capitalist economies will be sustained will be through increased productivity of labour. But productivity growth in all the major economies has been slowing. And so for example, if the US workforce grows by say 0.5% a year and labour productivity rises by say 1.5%, then US real GDP growth will average 2% over the next decade. But more than likely, both the workforce and productivity growth will be less, so real GDP growth will be much less, especially if immigration is curbed. Moreover, this assumes no major slump in the economy during the rest of the 2020s.
The US is home to more immigrants than any other country – more than 45 million people. Foreign-born workers now make up 18.6% of the civilian labour force in 2023, up from 15.3% in 2006. Without foreign-born labour, the US labour force would shrink because of lower birth rates and an aging workforce.
The growth rate of foreign-born workers was 4.4% in 2023 compared to native born workers of just 1.1%.
This net immigration is not by ‘illegals’. In 2021, only 4.6% of US workers were ‘unauthorised’, a share that’s pretty much unchanged since 2005. The Pew Research Center’s latest estimates indicate about 10.5 million undocumented immigrants live in the United States. That means the vast majority of foreign-born people living in the United States (77%) are here legally.
For decades, a national original quota system, passed by Congress in 1924, favoured migrants from northern and western Europe and excluded Asians. In 1965, the Immigration and Nationality Act created a new system that prioritised highly skilled immigrants and those who already had family living in the country. That paved the way for millions of non-European immigrants to come to the United States. In 1965, 9.6 million immigrants living in the US comprised just 5% of the population, according to the Migration Policy Institute. Now more than 45 million immigrants make up nearly 14% of the country. And most of these are skilled workers and their families.
That 13.6% of the US population is about the same as it was a century ago. But over the years, that has been a significant shift in where immigrants to the US come from. Mexicans still represent the largest group of immigrants living in the United States. And the Mexico-US route is the largest migration corridor in the world. But the total number of Mexican immigrants living in the US has been on the decline for more than a decade. An estimated 10.7 million Mexican immigrants lived in the US in 2021, roughly 1 million fewer than the number a decade earlier.
Meanwhile, immigration from other countries, including India and China, has been on the rise.
About 42% of all immigrants, or 638,551 people, came for work. And 39% of all immigrants were from Asia.
There has been a burst in immigration since the end of the pandemic which has helped sustain US GDP growth. “Reopening of borders in 2022 and easing of immigration policies brought a sizable immigration rebound, which in turn helped alleviate the shortage of workers relative to job vacancies,” Evgeniya Duzhak, regional policy economist at the Federal Reserve Bank of San Francisco, wrote in a 2023 paper. About 50 percent of the US labour market’s extraordinary recent growth came from foreign-born workers, according to an Economic Policy Institute analysis of federal data. And even before that, by the middle of 2022, the foreign-born labour force had grown so fast that it closed the labor force gap created by the pandemic, according to research from the Federal Reserve Bank of San Francisco.
The influx of immigrants to work and to study is helping the US economy – it’s keeping a high supply of labour available for employers particularly in the areas of heavy demand for labour: healthcare, retail and leisure, also sectors of relatively low pay.
Net immigration is becoming vital to US capitalism. According to the Congressional Budget Office, the U.S. labour force will have grown by 5.2 million people by 2033, thanks mainly to net immigration and the economy is projected to grow by $7 trillion more over the next decade than it would have without new influx of immigrants.
But here is the rub. Americans now cite immigration as the country’s top problem, surpassing inflation, the economy and other issues with government. All the talk is of ‘illegals’ and Republican candidate for the 2024 election, former president Trump talks of deporting millions if re-elected as president – even though the ‘undocumented’ foreign-born population has been falling while legal immigrants have risen.
The usual (non-racist) argument against immigration is that wage levels of US workers will be reduced as native-born workers compete for jobs with foreign-born workers. But so far, all the evidence suggests not. A 2017 meta analysis of economic research on immigration conducted by the National Academies of Sciences, Engineering, and Medicine suggests the impact of immigration on the overall U.S.-born wage “may be small and close to zero,” particularly when measured over a period of 10 years or more. There are much more significant hits to labour’s share of value-added in the economy, namely globalisation, weaker unions and a stagnant federal minimum wage. And there are other reasons why labour force participation may have declined long-term: automation and technology reducing the demand for low-skilled labour; and the shift away from manufacturing and toward service-oriented jobs, which often require higher educational attainment.
For now, contrary to the Trumpist talk, immigration for US capitalism is good news. That could change if the US economy drops into a recession where jobs become scarce.
Michael Roberts Blog 
More than 30 million suffering Long Covid in the US!
They need child labour, immigrant labour, pensioer labour and people doing more than one job to make up the shortfall.
Even then Long Covid will hit the children, the immigrants and the pensioners.
Covid infections are putting a massive strain on economies. The Financial Times has noticed, Bloomberg has noticed. The left now needs to catch up to the business press
More than 30 million suffering Long Covid in the US!
That doesn’t sound right since it amounts to 8% of the population. The US Census Bureau reports 25.6% of those with the infection reported symptoms of long covid. Other studies report the incidence of long Covid among those infected declined from about 19% to 11%.
CDC survey data conducted in 2023 reports a total of 9 million cases of long Covid in the US, far less than 30 million.
It is interesting to do some comparative observations between the first true big wave of immigration of the late 19th Century and from the Cold War on.
In the USA, historically, immigration doesn’t pull wages down significantly because the development of the productive forces there happens “first”, only to then the immigrants “follow the lead”. This is different from other nations, who usually see big waves of immigration either due to catastrophic wars in their immediate neighborhood and/or because their population was declining sharply for decades.
What has changed in the USA of the 19th Century and the USA from the Postwar on is the economic dynamism: gone are the days of blistering growth. There is no comparison in scale between the two periods: in the 1890s, the USA would grow in orders of magnitude; in the Postwar, at most the immigration waves did guarantee vegetative growth of the population.
Another factor is the pressure put on the USA by the Soviet Union: the ideological fanaticism and political paranoia of the Cold War led to a shift in the profile of the average immigrant to the USA. The first waves of immigration of the 19th Century were composed by European immigrants who did not have any national identity that mattered, and only sought to flee Europe in order to work. Countless are the anglicised surnames or German, Dutch and Italian families in the USA, fruit of people who just wanted to flee the Hell that was Europe in the 19th Century and be integrated and productive as fast as possible in the New World.
The Cold War era immigrant is completely different. They are mostly political refugees seeking asylum who just wanted to set foot in the USA in order to work as propagandists while earning, in some cases, generous pensions while doing so — that’s specifically true for Cuban immigrants and East Europe immigrants: they just had to manage to flee their home countries, set foot in US soil and say the magical words. Meanwhile, the Latin American immigrants from the south saw the USA as the land of milk and honey, the Shining City on a Hill, an image carefully sculpted by a relentless and unstoppable propaganda machine (all the while US-proped up liberal dictatorships deepened inequality and rose poverty levels in Latin America).
Those differences in profiles would only be a cultural curiosity if only for one little problem: those new, political-ideological immigrants, are much less productive than the past immigrants. In the 19th Century, no one knew the USA would be the most prosperous empire ever built, so they built it (without knowing it). In the late 20th Century, everybody knew what the USA was, so they started to immigrate in order to become immediately prosperous — be it by thinking they could rack 4,000 USD per month by mowing lawns, be it by thinking they could rack 100,000 USD per month by publishing some anti-communist book. Luckily for the USA, its “native” population is falling, so there is not that much of a shock in wages and unemployment levels.
I don’t think the phenomenon of Brain Drain (the case with many Indian and Chinese immigrants) should be considered immigration. I think that, historically, this phenomenon is more akin to the hostage system of the Roman Empire than the typical image of immigration, that is, of the Germanic warrior-peasant trying to cross the border of the empire with his family and baggage. So I’m not considering this imperial feature as immigration.
All hope is not lost for the Americans, though: they can always incite unrest in Latin America in order to induce more immigration. A sudden spurt of Haitian immigrants is already expected for 2024 due to this new, probably US-backed, coup that, once again, collapsed the Haitian government.
Immigration is being used to fan the flames of conservative nationalism. It’s an issue which may propel Donald Trump to the Presidency of the U.S.A. and has already resulted in the rise of the right in Europe as well as elsewhere in the world e.g. Australia and Thailand.
Immigration is a class issue. There are lots of unemployed in the U.S., many of them in the prison system. The fact is that the in the marketplace of commodities, labour power is oversupplied. The U.S. Congress could make it a law that all U.S. citizens who need to work for wages in order to put food on the table and a roof over their heads, would be eligible to obtain a free U.S. passport or a citizen work card. These work cards would be secure forms of identification and would have the same standard of proof of citizenship that a passport would have.. That way anyone looking for a job would be required to prove to their employer that they were: A, a U.S. citizen; B, a foreign national with a valued work visa in their passport or C, a foreign national with a Green Card. Face it. Most people crossing the border illegally are just unemployed workers looking for a job or even a higher paying job than they can get in the country they are a citizen of. My best guess is that the bourgeois, who citizens elect to run the immigration show in government, don’t want to really solve the problem of illegal immigration because: 1. passing such legislation would see bourgeois employers jailed for violating the law–let’s make the punishment five years in the Federal Pen and 2. wage-slaves without the legal right to be in the U.S.A. are easier to pay low wages by employers because they fear being discovered. Lower wages make for higher rates of profit. Republicans and Democrats in government are all part of the upper 10%, the bourgeois, and are happy to continue using the issue as a political football. Workers remain pawns in the game because they are not class conscious: they still believe that the best they can get in this best of all possible worlds is a fair day’s wage for a fair day’s work. The working class is NOT looking for more competition in the labour market. At least they know that much about the wages system of slavery.
Well, obviously, a bourgeois government (like the US’s) won’t pass anti-bourgeois laws. So you already answered your own question. I could imagine such type of legislation being passed and enforced in a government like China’s, which is dominated by the proletariat.
But even if that wasn’t a problem, I don’t think it would be cost effective from a capitalist point of view to do such a sophisticated filtration system: since capitalism thrives on free and anarchic competition in the labor market, the optimal strategy would be simply to let people in — the end result would be a supply of cheaper labor power either way.
It doesn’t always work: Angela Merkel, being informed that most of the Syrian refugees from the war against ISIS were well-educated middle class people (doctors, engineers, professors etc.), infamously opened the door for them. They came, but it turned out they didn’t come to Germany to work and be assimilated, but simply to stay there until the war was over and go back; or live from welfare and other types of political asylum pensions.
If Merkel had read Marx (and she should have, because she was born and raised in East Germany), then she would have known that a person only becomes part of the industrial reserve army if he/she is willing to enter the free market of labor.
the best of all possible worlds: complacency or desperation, all end in rote life. Minds need be fed or else no more revolutions.
“There are much more significant hits to labour’s share of value-added in the economy, namely globalisation, weaker unions and a stagnant federal minimum wage. And there are other reasons why labour force participation may have declined long-term: automation and technology reducing the demand for low-skilled labour; and the shift away from manufacturing and toward service-oriented jobs, which often require higher educational attainment.”
1) Globalization and immigration are two sides of the same coin.
2) What is this about automation and tech reducing the demand for low-skilled labor and about the shift from manufacturing to service jobs requiring more education? The basic fact is polarization: the heaps of precarious jobs like food and package delivery on one hand, a smaller addition of highly skilled jobs on the other hand.
agreed
“US economy: saved by immigrants” – Well, why the U.K seeming dodges reality or it’s a political showoff of trans-deportation. Anyway, anywhere there is that political nugget never to miss with immigration.
The National Accounts, which values commodity production in any market economy, is measured in one of three ways. GDP, the expenditure side and the income side. GDP and expenditure are linked as both are based on the value of final sales. The difference between them being the inventory adjustment. The income side however is compiled differently being the sum of reported net surpluses plus worker renumeration. Theoretically the income and the GDP side should balance. Recently it has not, with the income side trailing behind the GDP or product side.
This could be due to the phenomenon described by Michael above and that is the increase in the number of unregistered workers due to migration. Generally unregistered workers working in the black economy do not report their earnings but they do buy things boosting final sales. If an unregistered worker works for herself or himself, then the recorded income is lost altogether. And if they work for someone else, a registered employer, then the reported income by that employer will be reduced by the amount of wages they pay off the books.
Whatever the case I do not accept that the US economy grew by 2.5% in real terms. Each quarter I check the volume of 30+ market dominating US corporations to obtain their volume growth and over the course of 2023 their volume growth fell between 0.5% and 1% which is inconsistent with a volume growth of 2.5% in GDP. Before the Pandemic and the rise in inflation, volume growth reported by corporations and volume growth reported as GDP matched. C’est la vie.
GDP Per CapitaGiven Michael’s comprehensive review of the increased population, migration and workforce statistics in the United States. I wonder how this is reflected in per capita GDP rather than in total GDP figures. Perhaps more significant that per capita GDP figures which mask the increasingly unequal share of GDP-generated wealth that goes to the super-rich elite, there should be a better statistic. Mean GDP for example. Anyone have access to these figures?