To Grow the Economy Increase Human Capital, Not the Number of Humans

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TO GROW THE ECONOMY INCREASE HUMAN CAPITAL, NOT THE NUMBER OF HUMANS

An NPG Forum Paper
by Edwin S. Rubenstein

The Baby Boomers are retiring! The Baby Boomers are retiring! And only immigration can prevent a decline in our working-age population and, by implication, declines in U.S. GDP and living standards! That is the message contained in a recent Pew Research Center report.

According to Pew, the retirement of Baby Boomers will reduce the number of U.S.-born people of working age (25 to 64) by 8.2 million, or 6.4%, over the 2015 to 2035 period. Pew projects that 17.8 million new immigrants will enter over these two decades, enough to offset and exceed the aging and death of working-age immigrants already here by about 4.6 million.

But as seen in the table, the biggest immigration related component of workforce growth over the next two decades will be U.S.-born children of immigrants, projected to increase by a net 13.5 million, or 122%, between 2015 and 2035. Regarding these second-generation immigrants, Pew researchers Jeffrey Passel and D’Vera Cohn note that “This group already lives in the U.S.; they were ages 5 to 24 in 2015.”

Immigration over the next 20 years will increase the working age population by about 10 million above current levels, according to Pew. Had an immigration moratorium been in effect, the working age population would have fallen by about 7 million:

The bottom line: immigration over the next 20 years will increase the working age population by about 17 million, or 10%, above the level that would have been reached under a moratorium.

Pew likely overstates immigration’s future role, first by blithely assuming that the current level of legal immigration – about 850,000 working-age immigrants per year – will persist over the next two decades. That outcome is highly unlikely given Donald Trump’s preference for a lower and more merit-based influx.

Similarly, by projecting a sharp rise in first generation immigrant workers on grounds that this group “already lives” here, Pew ignores the possibility that many of them – including U.S.-born Dreamers – will be deported. Or leave voluntarily: more than 4 million legal immigrants emigrated back to their home countries over the past thirty years, according to the Department of Homeland Security.

Continue reading the full Forum paper by clicking here.

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Edwin S. Rubenstein

Ed Rubenstein, president of ESR Research, is an experienced business researcher, financial analyst, and economics journalist. He has written extensively on federal tax policy, government waste, the Reagan legacy, and – most recently – on immigration. He is the author of two books: The Right Data (1994) and From the Empire State to the Vampire State: New York in a Downward Transition (with Herbert London). His essays on public policy have appeared in The Wall Street Journal, The New York Times, Harvard Business Review, Investor’s Business Daily, Newsday, and National Review. His TV appearances include Firing Line, Bill Moyers, McNeil-Lehr, CNBC, and Debates-Debates. Mr. Rubenstein has a B.A. from Johns Hopkins and a graduate degree in economics from Columbia University.

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