ByHaving fled economic and political chaos in Venezuela, Luisana Silva now loads carpets for a South Carolina rug company. She earns enough to pay rent, buy groceries, gas up her car — and send money home to her parents.
Reaching the United States was a harrowing ordeal. Silva, 25, her husband, and their then-7-year-old daughter braved the treacherous jungles of Panama’s Darien Gap, traveled the length of Mexico, crossed the Rio Grande, and then turned themselves in to the U.S. Border Patrol in Brownsville, Texas. Seeking asylum, they received a work permit last year and found jobs in Rock Hill, South Carolina with the help of an asylum lawyer.
Her story is emblematic of a larger trend that has puzzled economists for over a year: How has the U.S. economy managed to prosper, adding hundreds of thousands of jobs month after month, despite aggressive interest rate hikes by the Federal Reserve to combat inflation — a situation that typically leads to a recession?
Increasingly, the answer appears to be immigrants — whether living in the United States legally or not. The influx of foreign-born adults has significantly increased the supply of available workers, helping to fill millions of jobs that had been left vacant during a period of U.S. labor shortage.
More workers filling more jobs and spending more money have driven economic growth and created even more job openings. The availability of immigrant workers has eased the pressure on companies to sharply raise wages and pass on higher labor costs to customers through increased prices, thereby mitigating inflation. Although U.S. inflation remains elevated, it has decreased substantially from its peak two years ago.
“There’s been something of a mystery — how are we continuing to get such extraordinary strong job growth with inflation still continuing to come down?” said Heidi Shierholz, president of the Economic Policy Institute and a former chief economist at the Labor Department. “The immigration numbers being higher than what we had thought — that really does pretty much solve that puzzle.”
### The Role of Immigrants in the U.S. Economy
While helping fuel economic growth, immigrants are also at the center of a contentious election-year debate over the control of the nation’s southern border. In his bid to return to the White House, Donald Trump has attacked migrants in often-degrading terms, characterizing them as dangerous criminals and invoking falsehoods about migration. Trump has vowed to complete the construction of a border wall and launch the “largest domestic deportation operation in American history.” The outcome of the upcoming presidential election could significantly affect whether the influx of immigrants, and their critical role in driving the economy, will continue.
The boom in immigration caught almost everyone by surprise. In 2019, the Congressional Budget Office estimated that net immigration — arrivals minus departures — would be about 1 million in 2023. The actual number, according to a January update from the CBO, was more than triple that estimate: 3.3 million.
Thousands of employers desperately needed the new arrivals as the economy and consumer spending rebounded from the pandemic recession. Companies struggled to hire enough workers to keep up with customer demand.
Demographic changes compounded the problem: The number of native-born Americans in their prime working years — ages 25 to 54 — was declining as many aged out of that category and approached retirement. Since February 2020, just before COVID-19 hit, this group has shrunk by 770,000.
Filling the gap has been a wave of immigrants. Over the past four years, the number of prime-age workers who either have a job or are looking for one has surged by 2.8 million. Nearly all those new labor force entrants — 2.7 million, or 96% of them — were born outside the United States. Last year, immigrants accounted for a record 18.6% of the labor force, according to the Economic Policy Institute’s analysis of government data.
Consider Jan Gautam, CEO of the lodging company Interessant Hotels & Resort Management in Orlando, Florida, who said he can’t find American-born workers to take jobs cleaning rooms and doing laundry in his 44 hotels. Of Interessant’s 3,500 workers, he said, 85% are immigrants.
“Without employees, you are broken,” said Gautam, himself an immigrant from India who started working in restaurants as a dishwasher and now owns his own company. “If you want to boost the economy, it definitely needs to have more immigrants coming to this country.”
Similarly, at the Flood Brothers farm in Maine’s “dairy capital” of Clinton, foreign-born workers make up half the farm’s nearly 50-person staff, feeding cows, tending crops, and helping collect 18,000 gallons of milk each day.
“We cannot do it without them,” said Jenni Tilton-Flood, a partner in the operation. For every unemployed person in Maine, there are two job openings on average. “We would not have an economy, in Maine or in the U.S., if we did not have highly skilled labor that comes from outside of this country,” Tilton-Flood said. “Without immigrants — both new asylum-seekers as well as our long-term immigrant contributors — we would not be able to do the work that we do.”
### The Economic Benefits and Challenges of Immigration
A study by Wendy Edelberg and Tara Watson, economists at the Brookings Institution’s Hamilton Project, concluded that new immigrants over the past two years have increased the economy’s supply of workers and enabled the U.S. to generate jobs without overheating and accelerating inflation. In the past, economists estimated that America’s employers could add no more than 60,000 to 100,000 jobs a month without igniting inflation. But when Edelberg and Watson included the immigration surge in their calculations, they found that monthly job growth could be roughly twice as high — 160,000 to 200,000 — without exerting upward pressure on inflation.
“There are significantly more people working in the country,” Fed Chair Jerome Powell said last week in a speech at Stanford University. Largely because of the immigrant influx, Powell said, “it’s a bigger economy but not a tighter one. Really an unexpected and an unusual thing.”
Trump has repeatedly attacked Biden’s immigration policy over the surge in migrants at the southern border. Only about 27% of the 3.3 million foreigners who entered the U.S. last year did so as “lawful permanent residents” or on temporary visas, according to Edelberg and Watson’s analysis. The rest — 2.4 million — either came illegally, overstayed their visas, are awaiting immigration court proceedings, or are on a parole program that lets them stay temporarily and sometimes work in the country.
“So there you have it,” Douglas Holtz-Eakin, a former CBO director and president of the conservative American Action Forum, wrote in February. “The way to solve an inflation crisis is to endure an immigration crisis.”
Many economists suggest that immigrants benefit the U.S. economy in several ways. They take generally undesirable, low-paying but essential jobs that most U.S.-born Americans won’t, such as caring for children, the sick, and the elderly. They can also boost the country’s innovation and productivity, as they are more likely to start businesses and obtain patents.
Ernie Tedeschi, a visiting fellow at Georgetown University’s Psaros Center and a former Biden economic adviser, calculates that the burst of immigration has accounted for about a fifth of the economy’s growth over the past four years.
Critics argue that a surge in immigration can depress wages, particularly for low-income workers, a category that often includes immigrants who have lived in the U.S. longer. Last month, in the most recent economic report of the president, Biden’s advisers acknowledged that “immigration may place downward pressure on the wages of some low-paid workers” but added that most studies show the impact on the wages of the U.S.-born is “small.”
Even Edelberg notes that an unexpected wave of immigrants, like the recent one, can overwhelm state and local governments and impose burdensome costs. A more orderly immigration system, she said, would help.
The recent surge “is a somewhat disruptive way of increasing immigration in the United States,” Edelberg said. “I don’t think anybody would have sat down and said: ‘Let’s create optimal immigration policy,’ and this is what they would come up with.”
Holtz-Eakin argued that an immigration cutoff like the one Trump has vowed to impose, if elected, would result in “much, much slower labor force growth and a return to the sharp tradeoff” between containing inflation and maintaining economic growth that the U.S. has so far managed to avoid.
For now, millions of job vacancies are being filled by immigrants like Mariel Marrero. A political opponent of Venezuela’s authoritarian President Nicolás Maduro, Marrero, 32, fled her homeland in 2016 after receiving death threats. She lived in Panama and El Salvador before crossing the U.S. border and applying for asylum.
Her case pending, she received authorization to work in the U.S. last July. Marrero, who used to work in the archives of the Venezuelan Congress in Caracas, found work selling telephones and then as a sales clerk at a convenience store owned by Venezuelan immigrants.
At first, she lived for free at the house of an uncle. But now she earns enough to pay rent on a two-bedroom house she shares with three other Venezuelans in Doral, Florida, a Miami suburb with a large Venezuelan community. After rent, food, electricity, and gasoline, she has enough left over to send $200 a month to her family in Venezuela.
