December 6, 2017

To Spur Growth, US Must Welcome More Highly Skilled Immigrants

Daniel Griswold

Senior Research Fellow

To meet President Trump’s worthy goal of faster economic growth, immigration reform will need to be part of the agenda.

America’s immigration system needs a major overhaul to keep our nation open as a land of opportunity while serving our national economic interest in the 21st century. We are falling behind our friends in admitting the immigrants proven to spur the economy.

As we face growing demographic and economic challenges, our immigration system should make room for more high-skilled immigrants who can fuel innovation, job creation and economic growth. Like it or not, our nation needs immigrants to grow and prosper in the decades ahead.

Why? America’s workforce growth has slowed to 0.5 percent a year. Without immigrants and their children, it will soon begin to shrink, depriving U.S. producers of the workers they need while placing additional strain on government retirement programs. 

High-skilled immigrants will play a particularly vital role in maintaining America’s leadership in the global economy. Immigrants make up 17 percent of the U.S. workforce, but they account for one-third of all Ph.D. workers in the critical fields of science, technology, engineering and math. 

Immigrants also file one-third of all patents in the United States, spurring new product development and job creation. Immigrants have founded or co-founded many of America’s most innovative and successful companies. 

Along with their contributions to the private economy, well-educated immigrants are a boon to government finances at all levels.

According to a comprehensive 2016 study on immigration by the National Academy of Sciences, an immigrant with a college degree who comes to the United States at age 25 will pay $504,000 more in U.S. taxes than they consume in lifetime government services. For an immigrant with an advanced degree, the fiscal surplus is almost $1 million.

To realize the fullest benefits from immigration, Congress should increase the number of visas issued each year for permanent legal status, while reorienting the visas toward highly skilled workers. Here, we can take a lesson from Canada and Australia, two countries the Trump administration points to for their more “merit-based” systems of admitting immigrants.

Both Canada and Australia prioritize immigration based on employment rather than family connections. In the United States, two-thirds of immigrants granted permanent residence status (also known as “green cards”) each year are admitted based on family connections, while only 14 percent of are employment based. In both Canada and Australia, 61 percent of annual immigrant admissions are employment-based.

Viewed another way, the rate of family immigration is similar in all three countries, at between 2.0 and 2.5 family-based immigrants admitted each year per 1,000 residents. But Canada admits 4.5 employment-based immigrants per year and Australia admits 5.5, compared to a meager 0.5 admitted to the United States.

So, relative to their populations, Canada admits nine times as many employment-based immigrants as the United States. Australia admits 11 times as many. 

Despite fears in the United States about the impact of admitting more foreign-born skilled workers, Canada and Australia demonstrate that high-skilled immigration contributes to a dynamic, developed economy and a pluralistic democratic society.

There is room on the upside for the United States to increase the number of immigrants permanently admitted by 30 percent, from 1.075 million green cards per year to 1.4 million.

That would return America’s immigration rate to 4.3 immigrants per year per 1,000 people, the historical average for the past two centuries. It would actually be a lower rate than the 1990s, when the U.S. economy was performing well.

Additional employment-based visas could be created by reducing certain extended family categories, such as visas for adult siblings and elderly parents, and by eliminating the diversity lottery program created in 1990.

The 46,000 visas now assigned by lottery to people from under-represented countries would be better utilized to welcome more foreign-born scientists and engineers, many of them already working in the United States on temporary H1-B visas.

The National Academy of Sciences study warned in conclusion that “the prospect for long-run economic growth in United States would be considerably dimmed without the contributions of high-skilled immigrants.” With the right type of immigration reform, those prospects could be made considerably brighter.