How Immigration Shapes the US Workforce of Tomorrow

Immigration has resurfaced as a contentious issue in the 2024 U.S. elections, influenced by unprecedented encounters at the U.S.-Mexico border and polarized political discourse. Historically, Americans across the political spectrum viewed immigration as a beneficial force.

However, recent data indicates a shift: a July Gallup poll revealed that 55% of Americans favor reducing immigration levels—the highest percentage since 2001 and a significant rise from 41% the previous year according to Jeffrey M. Jones from Gallup News.

This change in public sentiment coincides with the U.S. experiencing its largest single-year increase in immigrant population since 2000, with approximately 1.6 million new immigrants in 2023.

Proponents of immigration highlight analyses from the Congressional Budget Office, which suggest that increased immigration between 2021 and 2026 will stimulate economic growth and help decrease federal deficits and inflation over the next decade.

Nonetheless, the influx of newcomers has placed pressure on public services in various communities, leading to debates reminiscent of the nativist reactions of the early 20th century.

A Century of Change – Contrasting 1920s Immigration with Today

On April 11 in Dallas, I participated in a debate on immigration that was sponsored by @TheFIREorg and @thefp. The proposition was “America should close its borders,” and columnist @AnnCoulter and @compactmag_ cofounder @SohrabAhmari defended it. The Young Turks’ @cenkuygur and… pic.twitter.com/fdOyu5A27M

— Nick Gillespie (@nickgillespie) April 26, 2024

The National Origins Quotas Acts of 1921 and 1924 significantly restricted U.S. immigration for nearly 50 years. Whether the nation will adopt similar restrictive policies today depends largely on decisions made by the White House and Congress, which has not substantially revised the legal immigration system since 1990.

A critical distinction between the U.S. of the 1920s and today is the country’s evolving demographics.

In recent decades, declining birth rates and increased life expectancy have altered the population structure.

The old-age dependency ratio—the number of individuals aged 65 and over per 100 working-age individuals (15-64)—was 24% in 2023, up from 20% in 2000.

This ratio is projected to rise to 37% by 2040.

In contrast, the ratio was just 8% in 1920.

This shift indicates a growing burden on a shrinking workforce to support an expanding elderly population.

U.S. Old-Age Dependency Ratio Over Time

Immigration as a Demographic Solution

Most immigrants arrive in the U.S. during their prime working years, thereby enlarging the labor pool and immediately reducing the age-dependency ratio.

Moreover, the U.S.-born children of immigrants—the second generation—further contribute to the workforce as they come of age.

In 2023, immigrants and their U.S.-born children constituted nearly 91 million people, accounting for 27% of the total civilian noninstitutionalized U.S. population, an increase from 20% in 2000 according to the Paw Research Center.

Researchers have developed projections of the U.S. working-age population by immigrant generation, building upon the U.S. Census Bureau’s recent population forecasts by nativity.

These projections illuminate future population trends and their implications for the size of the U.S. working-age population by 2040.

The findings highlight the significant and often underrecognized impact of the growing working-age population of U.S.-born children of immigrants in mitigating the declines in U.S. workers caused by aging and lower fertility rates.

Projecting Future Working-Age Population Trends Under Varying Immigration Policies

The U.S. Census Bureau’s projections highlight how immigration policy directly impacts the working-age immigrant population (ages 18-64) over time.

These projections offer four scenarios based on varying levels of net international migration, which reflects the annual difference between arrivals and departures of both foreign and U.S.-born individuals.

These scenarios emphasize the role of immigration as a key driver of workforce demographics.

1. Zero Immigration: If all immigration ceases, the working-age immigrant population will decline drastically from 35.4 million in 2020 to just 18.5 million by 2040.
2. Low Immigration: Reflecting policies similar to those during the latter Trump administration, the working-age immigrant population would decrease to 31 million by 2040.
3. Current Immigration: Under policies reflecting recent trends (annual net migration of 850,000 to 980,000 people), the working-age immigrant population would increase modestly to 37.3 million by 2040.
4. High Immigration: Assuming a 50% increase in immigration above current levels, the working-age immigrant population would grow significantly to 46.7 million by 2040.

These projections underscore how future immigration policies will profoundly affect the size and composition of the U.S. labor force.

The projected working-age immigrant population varies significantly depending on immigration policy, with a gap of up to 28 million between high and low immigration scenarios according to the Census Bureau.

This underscores immigration’s critical role in shaping the old-age dependency ratio over the next 15 years. Higher immigration levels can substantially lower this ratio, alleviating demographic pressures on the workforce.

Beyond immediate immigration trends, the U.S.-born children of immigrants (second generation) will play a pivotal role in the nation’s economic future.

Regardless of policy, this group is expected to grow by 64% between 2020 and 2040, rising from 20.4 million to 33.4 million.

Conversely, the working-age population of the third-and-higher generation (U.S.-born individuals from U.S.-born families) is projected to decline from 143.9 million to 138.6 million during the same period.

Without the second generation, the U.S.-born working-age population would shrink by 20%, intensifying the demographic challenges of an aging population.

A Nation at the Crossroads

Immigrant-origin adults have been the engine of U.S. demographic growth for the past two decades.

Without them, the U.S. child population would have shrunk by over 5 million between 2000 and 2023, and the prime working-age population would have decreased by more than 8 million according to the research.

These individuals accounted for all net growth in the working-age population during this period, and their influence is expected to grow.

Regardless of the 2024 elections, the U.S.-born children of today’s immigrants will fill classrooms, higher education institutions, and workplaces, contributing as citizens with full rights to public services and benefits.

The Risks of Immigration Limits

The immigration restrictions of the 1920s and subsequent economic crises demonstrate the long-term consequences of limiting migration.

Between 1930 and 1970, the U.S. immigrant population dropped from 14.2 million to 9.6 million, stalling labor force growth and economic dynamism for decades.

Today, similar restrictions could exacerbate the challenges of declining birth rates and an aging population.

A shrinking labor pool would harm productivity and strain vital programs like Social Security and Medicare.

Additionally, fewer immigrants would mean fewer U.S.-born children in immigrant families, creating a lasting impact on the future workforce—especially in states with already declining populations, such as Michigan and Pennsylvania.

Immigrant Population Trends, 1930-1970

Policy and Integration

Two key challenges require urgent attention. First, the current immigration system must be realigned to address the nation’s labor market and demographic needs.

With an aging population and declining workforce, the U.S. needs immigration reform that ensures the number and characteristics of immigrants meet economic demands.

Second, policymakers must ensure the U.S.-born children of immigrants can thrive as a critical future labor force.

This involves removing barriers and providing access to education, training, and resources to help them succeed.

Supporting their mobility and integration is vital for the nation’s economic health.

Methodology

We gathered data from reliable sources, including Gallup, the Congressional Budget Office, the U.S. Census Bureau, and historical immigration policies, to provide a well-rounded perspective.

We compared current immigration trends and demographics with historical events, such as the National Origins Quotas Acts, to highlight shifts and patterns.

Projections for future workforce and immigration scenarios were incorporated using data from the U.S. Census Bureau to analyze potential impacts.

The article was structured around critical topics such as demographic challenges, economic effects, and policy implications to maintain clarity and relevance.

All data points and statistics were cross-referenced with original studies and reports to ensure accuracy and credibility.

References

1. Gallup News – Sharply More Americans Say Immigration Should Be Reduced
2. Congressional Budget Office – The Economic Effects of Immigration
3. Brookings Institution – New Census Projections Show Immigration Is Essential to the Growth and Vitality of a More Diverse U.S. Population
4. Pew Research Center – U.S. Immigrant Population in 2023 Saw Largest Increase in More Than 20 Years
5. U.S. Census Bureau – 2023 Population Projections for the Nation by Age, Sex, Race, Latino Origin, and Nativity
6. Migration Policy Institute – Immigrants and the Future of the U.S. Labor Market