President Donald Trump is throwing his weight behind legislation that would seek to cut immigration to the United States in half. If enacted, such a measure would likely be a serious blow to the accelerated economic growth Trump has promised to deliver.
Trump announced his support for the Reforming American Immigration for a Strong Economy (RAISE) Act on Wednesday. The legislation, put forth by Senators Tom Cotton (R-Ark.) and David Perdue (R-Ga.), seeks to prioritize high-skilled, English-speaking immigrants and immediate family households, overhaul the visa lottery, restrict refugee immigration and reduce immigration by half. If the bill were to become law, it would render next-to-impossible Trump's already lofty goals for economic growth.
The White House has set a goal of achieving 3% economic growth through a mix of tax reform, deregulation and other measures. Most economists say immigration would be a key contributor to achieving that mark.
"The only way the administration would be able to achieve its goal of 3% sustained real GDP growth would be to significantly increase foreign immigration into the U.S.," said Moody's Analytics economist Mark Zandi in a recent interview with TheStreet. "Unfortunately, it appears to be going in the opposite direction, and working to restrict immigration."
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"We've achieved 3% growth in the past partly when assisted by rapid population growth, and favorable demographics," University of Michigan economist Justin Wolfers told TheStreet recently. "We are certain that both will be headwinds over the next few decades, as fertility has slowed, immigration looks likely to decline, and as the baby boomers enter retirement. And all of this occurs against a backdrop of relatively weak productivity growth, and with an economy that is closing in on full employment."
Immigrants participate in the U.S. labor force at a slightly higher rate than native-born Americans, according to data from the Organization for Economic Cooperation and Development published by CBS News. U.S. immigrants earn consistently less than native-born workers, but more-educated immigrants earn more than their native-born counterparts, and immigrants start businesses at higher rates.
A 500-page report from the National Academy of Sciences on the economic and fiscal consequences of immigration found that the long-term effect of immigration on the wages and employment of native-born workers overall is small, and the negative effects are most likely to be felt by prior immigrants or high-school dropouts. Moreover, the report found that skilled immigrants are positive for all American workers, regardless of level of education.
A 2015 paper from University of Virginia economist John McLaren and Indiana University economist Gihoon Hong found that each immigrant creates 1.2 local jobs for local workers, most of which are native-born.
To be sure, immigration's benefits are not experienced equally. Native-born residents of states with large concentrations of less-educated immigrants may bear significant costs due to immigrants' use of public services, according to a 2016 report on immigration and the U.S. economy from the University of Pennsylvania. Still, that same report concludes the broad research consensus is that immigration's effects on the economy are broadly positive in the long term, though they may cause some short-term stresses.
President Trump on Wednesday touted the RAISE Act as an opportunity to relieve American workers, increase wages and save taxpayer dollars. But there is a good chance the opposite would happen.
"This bill slashes overall legal immigration by 50% -- the biggest reductions in a century - which would severely harm the economy and actually depress wages for Americans," said Todd Schulte, president of lobbying group FWD.us, which advocates for immigration reform. "...[W]e should create a modern legal visa system for the 21st century, not enact the largest cuts to legal immigration in modern history."Watch More with TheStreet:
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Editors' pick: Originally published Aug. 3.