How Does Immigration Fit into the Future of the U.S. Labor Market?
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Highlights
Workforce aging and slowing labor force growth make a compelling case for expanding employment-based immigration as a driver of U.S. economic productivity.
- U.S. labor force growth is one-third of its historical average; GDP growth is projected at only 1.8 percent annually over the next decade, driven by workforce aging.
- Immigrants—particularly high-skilled and STEM workers—help fill critical labor gaps and complement native-born workers rather than displacing them.
- Automation and globalization are unlikely to eliminate demand for immigrant workers; historical data show technology raises productivity and aggregate employment.
- Expanding employment-based immigration should be paired with worker assistance programs—such as retraining, relocation aid, and Earned Income Tax Credit (EITC) expansion—for low-wage U.S. workers.
2018 was a banner year for the U.S. economy, but long-run projections are much less bright. Intensifying forces—including the aging of the workforce, stagnating labor force participation rates, and emerging gaps between the skills U.S. employers seek and those workers possess—are poised to significantly reshape the U.S. labor market. Other trends, including globalization and automation, are likely to dramatically transform how and where work is done.
Against the backdrop of these changes, this think piece asks: What role can immigration play in bolstering future workforce and economic growth, and meeting shifting demand for both high- and low-skilled labor?
In addition to supporting labor force growth, the brief’s authors conclude that immigrant workers can help mitigate a number of other symptoms of the U.S. economy’s long-run malaise, including low productivity growth, declining domestic geographic mobility, and falling entrepreneurship. But while immigration may benefit employers, consumers, and some U.S. workers, it can adversely affect others, particularly low-skilled U.S. natives and earlier-arrived immigrants. A plan to increase employment-based immigration, the authors contend, should thus be paired with policies and programs to support these groups in acquiring new skills and shifting to growing sectors.
The brief is part of MPI’s multiyear Rethinking U.S. Immigration Policy initiative, which aims to generate a big-picture, evidence-driven vision for the role immigration can and should play in America’s future. To learn more about the initiative and read related research, check out the initiative's home page.
Table of Contents
I. Introduction
II. The Macroeconomic Implications of Slower Labor Force Growth
III. The Aging of the U.S. Workforce
IV. Growing Skill Mismatch
V. Immigration’s Role in Workforce Trends
VI. Immigration’s Effect on U.S. Natives
VII. Immigration versus Automation: A False Choice
VIII. Globalization and Offshoring
IX. Fiscal Effects of Immigration
X. How Much Is the “Right” Amount of Immigration?
XI. Conclusion
About the Global Skills and Talent Initiative
Anchored in the premise that immigration policy must be part of a broader skills and talent strategy, the Initiative has a particular focus on employment-based immigration and the supports that can help immigrants apply their full range of educational and professional skills.
About the U.S. Immigration Policy Program
The U.S. Immigration Policy Program provides analysis of U.S. immigration pathways, the impacts of enforcement and other policies, and the characteristics of immigrant populations.
Rethinking U.S. Immigration Policy Initiative
This Initiative is generating a big-picture, evidence-driven vision of the role immigration can and should play in America’s future by providing policy ideas that reflect new realities.
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