President Donald Trump’s anti-immigration policies are starting to cause concerns beyond civil rights and moral responsibilities.
Immigration, say economists and bankers, leads to growth. And curbing it, by contrast, may lead to the reverse.
Loretta Mester, president of the Federal Reserve Bank of Cleveland, said in a speech last week that slowing population growth in the U.S. will likely put downward pressure on long-term economic expansion as well as consumption rates. The aging of the population also will increase the burden on non-retired workers to support programs like Social Security and Medicare, widening government budget deficits, Mester said.
One potential solution to the problem that should be considered, according to Mester: “policies that increase immigration, not reduce it.”
“Policies that increase the growth and productivity of the workforce would address not only fiscal imbalances but the downward pressure on longer-run growth from demographics or other sources,” she said.
Mester made her comments just days after Bank of America Corp. (BAC) CEO Brian Moynihan waded into the national debate over immigration with a similar warning that a slowdown in the influx of workers from abroad could crimp growth. Moynihan said tighter immigration policies could undermine any benefit the U.S. economy gets from Trump’s proposed tax cuts. The comments were reported by the publication American Banker.
CEOs from corporations like Apple Inc. (AAPL) , General Electric (GE) and Ford Motor Corp. (F) have also pushed back against pieces of Trump’s plans to curb immigration. The president has taken steps to increase deportations, limit visas for specialized workers, erect a wall along the Mexico border and ban entry to people from certain predominantly Muslim countries.
Whereas most of the CEOs have complained that they would have a harder time finding highly skilled workers in areas like technology, engineering and finance, officials are now increasingly warning about the broader impact to the economy.
“Immigrants are a net benefit to the economy,” says Paul Osterman, a professor at Massachusetts Institute of Technology’s management school, who has studied the impact of immigration policies on Boston’s economy. “If we lose labor-force growth because immigration is cut off, then there would be very significant negative consequences.”
Mester’s speech traced the slowing U.S. population growth partly to the drop in fertility rates in recent decades, which occurred as families responded to the rising costs of raising children by having fewer of them and took advantage of more widely available birth control. While life expectancy has increased, U.S. population growth has slowed to 0.8% in recent years from about 2% in the late 1960s and 1.2% during the first half of the 2000s.
Immigration helps to keep population growth from slowing even further.
“People miss that nuance when they talk about how we’re going to grow,” Moynihan said at the conference last week, according to the American Banker. “If you look at other countries in the world that struggle with growth in developed economies, they have one thing in common, and their populations aren’t growing.”
Larry Di Rita, a spokesman for Charlotte, North Carolina-based Bank of America, characterized Moynihan’s comments as a “macroeconomic observation” and not an official policy position on immigration.