Immigrants: an economic necessity in the US

Immigrants: an economic necessity in the US
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Throughout America’s history, immigrants have been vital for the country’s economic growth – and this isn’t going to change, says Arthur S. Guarino. Tech industries, food production, and the US’ young population are all likely to suffer from Trump’s immigration policy, along with many other sectors and individuals. 

Despite what President Trump and his advisors say about curtailing immigration in the United States, it is vital to the nation’s economic growth and development.

The United States is at a crossroads in its rebound from the financial crisis: it can continue to expand economically by bringing in new workers and thereby more consumers, or it can take on certain policies that will contract its macroeconomy.

Trump and his policy team are pushing for severely limiting immigration, which in the long and short term alike will stunt the nation’s economy.

There has always been a need for workers

The United States’ macroeconomy has always needed immigrants in order to grow. Before the Civil War, when the nation was still an agrarian economy, it needed German and Scandinavian farmers and settlers. In the cities, German, Italian, and Irish workers worked in the factories, having the skills factory owners needed to meet growing demands.

In cities such as Paterson, New Jersey, and Lawrence, Massachusetts, immigrants brought their skills, knowledge, and willingness to work in factories producing garments and other products. These workers not only satisfied demands of the American market but also enabled high-quality products to be sold around the world at competitive prices.

Chinese and Mexican immigrants in southern California in the late 1800s helped build railroads that brought goods to other parts of the country. But the Chinese were forced to step aside when the federal government excluded their migration after 1882. Mexican immigrants also constructed interurban rail lines in Los Angeles in 1900. Chinese and Mexican immigrants in California also provided deeply needed low-skilled, low-wage service and industrial labor force, which helped its economy grow.

In the early 1900s, Japanese immigrants were farmers – they changed market garden fruit and vegetable cultivation into a large, vital agricultural industry.

In Chicago, Greek immigrants worked in the food services industry by establishing restaurants, ice cream factories and produce distributorships. In Pittsburgh, steel factory owners hired numerous Polish workers, whilst in New York, Jewish immigrants made up three-quarters of 500,000+ workers in the city’s garment industry in 1910.

There were other immigrants who took a huge risk and established their own businesses. For example, in 1889 George Shima migrated from Japan to California with little money, but later established himself as the “Potato King” of the Sacramento Delta and gradually owned 28,000 acres of agricultural land by 1913.

Amadeo Pietro Giannini started the Bank of Italy in 1904 in San Francisco, which later became the Bank of America. Not only did this financial institution become one of the largest American banks, but Giannini was credited with financially saving the city of San Francisco when it needed funds to rebuild after the 1906 Great California Earthquake.

These and other immigrants were instrumental in building the United States into the economic giant it became and they are still needed today.

Immigrants: a vital source of economic growth

A severe need exists for skilled workers in the United States, ranging from computer programmers to engineers to research scientists. The problem is that American universities cannot produce enough to satisfy demands from United States’ tech firms.

Every year the federal government grants up to 85,000 H-1B visas, allowing firms to hire workers from overseas in technical fields for a three-year period and permitting renewals so recipients can remain for a period of up to six years. The H-1B visa also encourages graduate and undergraduate students with tech-based degrees to remain in the United States and possibly establish their own firms.

Trump’s immigration policy could hit companies such as New Jersey based Cognizant Technology Solutions: it has hired over 4,000 American citizens and permanent residents, but still needs additional talent from abroad, as the management foresees national shortages of skilled employees.

Silicon Valley stands to lose significant ground to nations that are willing to accept tech talent who cannot immigrate to the United States.

A deep need exists for unskilled immigrants willing to work where others will not go. The agriculture industry in states such as California and Georgia hire both legal and illegal immigrants to work on farms by harvesting crops.

According to researchers at the University of California, Davis, approximately 70 percent of all farmworkers in the United States are here illegally. But without these workers, the agricultural industry in California would suffer tremendously and national produce prices would skyrocket in a few months. In California’s Central Valley, with a population of 6½ million people, agriculture is a $35 billion per annum industry and a vital source of the nation’s food supply.

Farmers and growers in California and other states who on agriculture hope the federal government will expand and make it easier to acquire H-2A visas, permitting them to ferry in temporary workers from other nations for farming employment. However, limiting immigration by the Trump administration would deeply curtail this source of needed workers and hurt the vital food production industry.

Immigrants are also needed to grow America’s population and keep it young. Japan, Germany, Italy, and China, are seeing their population shrink and age. For these nations, there are long term effects to their economic growth, working population, and social policy.

A proportionally reduced workforce, combined with more seniors receiving significant pension and healthcare benefits, will result in a slowing impact on economic growth whilst transforming social policy. For the United States, as long as there are immigrants entering the country, its population can continue expanding, providing a sustainable workforce and allowing for continued long-term economic growth.

The Pew Research Center projects that the United States’ population, driven by continued immigration, will increase by 89 million people by the mid-21st century while the populations of South Korea, Russia, Japan, China, and Italy will either stop growing or decrease.

Immigrants needed

Immigrants constitute a vital ingredient of the United States for economic, social, and demographic reasons. Immigrants have been taken for granted when they have contributed so much to American society and ask only for a chance to live, work, and provide for their families.

Drastically reducing immigrant access to the United States will have long-term socio-economic implications that the Trump administration cannot – or, perhaps, will not – begin to imagine.

Categories: Economics, North America

About Author

Arthur Guarino

Arthur Guarino is an assistant professor in the Finance and Economics Department at Rutgers University Business School teaching courses in financial institutions and markets, corporate finance, and financial statement analysis. The first half of his career was spent in the financial services industry. He has written articles dealing with finance, economics, and public policy.