NEW Analysis: To lower inflation, America needs more immigration to alleviate national labor shortages

New Mason University study shows that if Congress acts to increase immigration, inflation will lower in the short and long-term, the U.S. economy will be stronger, and Americans here today will earn more. 

 Report finds U.S. working-age population will not grow in the years ahead without immigration

WASHINGTON, D.C. — Today, released a new study developed in collaboration with researchers from George Mason University that shows increasing immigration levels can prevent rising inflation and ensure a growing workforce for the rest of this decade. The report quantifies the extent to which decreases in immigration before and during the COVID-19 pandemic have contributed to inflation for all American consumers. While the recent historic levels of inflation can be attributed to a number of factors – many of those have largely abated, yet inflation remains. Economists have identified worker shortages, and more specifically immigrant worker shortages as the major contributor to rising inflation.

According to the report, economic challenges–inflation, a strained workforce, and labor market mismatches – will likely continue long after the pandemic, and failing to modernize our immigration system will leave the U.S. increasingly vulnerable. We need immigration policy that responds quickly to market shifts in order to stabilize prices for U.S. consumers, offer relief to employers, and provide new workers an opportunity to contribute their skills and knowledge to the U.S. economy. Congress and the Administration must act now to ensure that the U.S. can attract and retain top talent from around the world while reducing the arbitrary and harmful restrictions on immigration that are contributing to the current levels of inflation and hurting Americans.

“The American economy is simultaneously facing three crises: rising inflation, an aging workforce, and labor shortages. My report in collaboration with shows that increasing immigration is a solution that addresses them all,” said Justin Gest, Associate Professor of policy and government at George Mason University and a coauthor of the report. “In the face of the pandemic's shocks to supply and demand, the absence of immigrants tightened labor markets and drove up prices, making everything more expensive for Americans. If Congress were to admit more immigrants, we'd see more economic growth and quicker adaptation to the unpredictable market fluctuations that lay ahead.”

Key findings from this report highlight how increased immigration can strengthen the economy and benefit all Americans:

  • Raising immigration levels by 50% would increase the projected U.S. working-age population by about 13% by 2040 which would provide for current and growing labor needs, while further expanding the U.S. economy.
  • Under this scenario, Americans would receive an even greater financial bonus with individual GDP, on average, being $1,000 greater in 2040, and $16,000 greater if immigration levels were to return to pandemic levels.
  • Increasing immigration levels by 50% will lead to an increase of some 40% in GDP per person by 2040.
  • Under a zero-immigration scenario, the U.S. working age-population would shrink by 11% by 2040, leaving the working-age population at a level that our economy cannot sustain, now during a period of labor shortages and for the long term as a significant share of the population continues to age and heads into retirement.

Read the full report from To lower inflation, America needs more immigration to alleviate national labor shortages

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