Blog/News/Immigration/Legal Avenues

How are immigration and GDP growth connected?

Increasing immigration would boost GDP per capita by $2,500 over 30 years and raise the standard of living for Americans

June 29th, 2021

"Higher GDP per capita means a higher standard of living for Americans."

Research from FWD.us shows that the U.S. must substantially increase the number of immigrants admitted to the U.S. each year to grow our competitive advantage and expand our future workforce. Increasing annual immigration levels to allow more than 2 million new immigrants to come each year could help reverse downward demographic and economic trends, and would increase U.S. gross domestic product (GDP) to $47 trillion in today’s dollars by 2050.

In addition to growing the size of the national economy, increasing immigration would also raise the standard of living for Americans by boosting GDP per capita—that is, each person’s share of economic output. That’s because more immigration would not only grow the economy, but also grow the working-age population as well, leading to a more productive and prosperous economy. Higher GDP per capita means a higher standard of living for Americans, and a greater share, on average, of the country’s prosperity.

According to our latest estimates, a modest increase in immigration over recent levels would increase annual GDP per capita by $1,300 in today’s dollars by 2050, projected to be $93,200 in 2050 if immigration levels were increased by 50% in the coming decades, compared with $91,900 if recent immigration levels continued.

More significant increases in immigration—enabling more than 2 million immigrants each year to come to the U.S.—would lead to a $2,500 increase in GDP per capita by 2050.

"More significant increases in immigration would lead to a $2,500 annual increase in GDP per capita by 2050."

Conversely, significantly reducing immigration levels by about half over the coming decades would shrink GDP per capita by $1,400 in 2050; reducing immigration to zero incoming immigrants would cut GDP per capita by $3,100.

While a smaller population would mathematically mean individuals have a larger share of economic output, the overall economy would be smaller as well, and the workforce would continue to age and shrink. This would require workers to stay in the workforce long after retirement age, and would leave retired seniors with fewer working-age people to support them in critical fields like healthcare. Reducing the tax base would also rapidly deplete Social Security, leaving older Americans unable to access the support they invested in their whole careers.

"Organizations lobbying for reduced immigration continue to demand policies that would make America smaller, weaker, and poorer."

FWD.us, "Reducing immigration means a smaller, poorer, and weaker America"

Reducing immigration would also hinder innovation and economic growth, while other countries benefit from the talents and contributions of individuals barred from immigrating here. Regions of the country already struggling with slow economic recovery and growth would have an even harder time making a comeback as their working-age populations dwindled further.

Organizations lobbying for reduced immigration continue to demand policies that would make America smaller, weaker, and poorer. Meanwhile, countries facing similar demographic challenges (like Canada and Germany) are scrambling to reverse those trends and ensure that they have the kind of demographic growth needed to grow their economies and compete on the global stage. Several countries are looking to boost immigration as the answer. They are moving quickly to act, and the U.S. should, too.

Increasing immigration means a bigger, better America for everyone. To grow our economy, maintain our global leadership, and best serve the American people, Congress should act swiftly to pass legislation that expands and improves immigration.