The Missing One Percent

Recently, Robert Samuelson wrote a column for the Washington Post in which he discussed different projections for future economic growth. On the one hand, he noted that a recent White House economic report includes a projection of 3 percent economic growth per year for years to come.

On the other hand, most economists project slower growth. In part, this is due to the slow growth projected for the U.S. labor force. As Samuelson illustrates, the Congressional Budget Office is projecting labor force growth of 0.5 percent annually over the next 10 years. Productivity growth is projected to be 1.3 percent annually. Adding these together gets economic growth to 1.8 percent per year—more than one percent short of the White House’s rosy projections.

What Samuelson does not talk about in his column is immigration.

Between now and 2035, new immigrants are projected to be the most important component of growth in the U.S. working-age population, according to the Pew Research Center. The Department of Labor is projecting slow growth in the labor force (0.5 percent per year) through 2024, but notes that if, “through a different immigration policy, more immigrants enter the country, then the … growth of the labor force will be greater.”

But that’s not the direction the immigration debate is going in right now.

President Trump is insisting on cutting legal immigration, and has embraced a proposal to cut immigration in half. At the same time, his administration is trying hard to deport five percent of the U.S. workforce. That is approximately the percentage of the workforce that is composed of undocumented workers.

Depending on the success of the administration’s deportation efforts and advocacy to cut legal immigration over the next decade, the more pessimistic Labor Department workforce growth projections of 0.5 percent may indeed be too optimistic.

If the administration is intent on cutting the most important component of workforce growth, immigration, it will have to resign itself to much more modest economic growth for America.