Impact of Immigration Surge on U.S. Economy Analyzed

<p>The immigration surge that occurred after the pandemic significantly affected the U.S. economy, contributing to growth with minimal disruption to native-born workers, while also contributing to rent inflation. This analysis is based on new research presented at the Brookings Papers on Economic Activity.</p><p>The research indicates that approximately 6.5 million migrants entered the U.S. outside of usual legal pathways from 2021 to 2024, representing at least 2% of the U.S. population at the start of this period. Economists Jennifer Hunt, Pia Orrenius, and Madeline Zavodny noted that each additional migrant was associated with an estimated increase of 0.4 jobs, leading to approximately 1.6 million additional jobs across major metropolitan areas, which accounted for about 18% of employment gains during that time.</p><p>Furthermore, the influx of migrants raised the Gross Domestic Product (GDP) in the average metro area by an estimated 1.5%. The researchers found that the employment rates of native-born workers remained unchanged, and their wages increased by approximately 0.9% between 2021 and 2024. However, the surge in immigration also contributed to a modest increase in rents, as housing supply did not keep pace with the growing population.</p><p>Orrenius, a labor economist at the Federal Reserve Bank of Dallas, expressed surprise at the lack of negative effects on native workers, suggesting that immigrant and native-born workers may complement each other rather than compete for the same jobs. She noted that hiring an immigrant often leads to improved efficiencies and productivity.</p><p>The timing of the immigration surge coincided with a strong demand for workers as the economy rebounded from the pandemic, particularly in sectors such as leisure, hospitality, and construction. Zavodny stated that this was an opportune moment for the labor market to absorb a large influx of migrant workers.</p><p>The findings of this research have implications for the ongoing 2024 presidential campaign, where immigration has become a key issue. Vice President Vance has argued that the influx of migrants has exacerbated the housing affordability crisis by increasing competition for limited housing. However, the research indicates that the impact on housing was relatively small, estimating that rents increased by 1.4% to 1.6% from 2021 to 2024. Many migrants initially utilized shelters, emergency housing, or stayed with friends and family.</p>