Demographic Pressure: Help from Immigration

As described in my previous column “Working Harder for Longer,” the country has domestic remedies available to mitigate the ill effects of its aging demographics. By making accommodations for older workers and especially working moms, it can offset almost half the financial and economic burden imposed by the developing overhang of dependent retirees and associated relative shortage of working-age people. Targeted immigration is another means through which the economy can supplement its increasing need for skilled, productive, tax-paying, and pension-contributing workers.

Heightened levels of immigration would seem a powerful answer to the impending relative labor shortage. Certainly millions want to come to the United States and work. But the remedy is not so simple as throwing the boarders open. Because excessive immigration flows can produce social tensions that have their own ill effects on the economy and its financial markets, there are distinct limits to the immigration answer. The nation must trade off the benefits from new flows of workers against the social discord and political tension that would accompany them. According to extensive research, even targeting immigration to get the most economic benefit from the fewest numbers can at best answer only some of the demographic challenge.

This potential for trouble is obvious in the acrimonious nature of the immigration debate to date. Several congresses and at least two presidential administrations have failed to pass immigration reform or even voice a coherent policy. Not too long ago, a remarkable alliance between conservative Republican, George W. Bush, and liberal Democrat, Edward Kennedy, nonetheless failed to advance immigration reform. Public sentiment is strong and cuts across the usual political divides. Pro-immigrant, free-market ideologues and business groups stand in an unusual alliance with civil rights organizations and ethnic advocacy groups, while an equally unlikely collection of cultural conservatives, labor unions, and environmentalists stand against immigration. Ambiguous policy responses reflect the nation’s clear ambivalence. The country decides to build a wall along the border with Mexico and then proceeds hesitantly. More recently, the country has witnessed a president refuse to enforce law and an attorney general sue a state, Arizona, for enforcing federal law too zealously.

In the unfolding demographic context, matters are even more dicey. To answer its demographic needs, the nation must find better ways to integrate immigrants fully into the economy, if not into the broader American culture. At the very least, this will require a turn away from today’s popular and divisive politics that fan the flames of fear on one side and raise grievances on the other. Beyond a change in tone, economic integration will demand greater efforts at outreach – literacy programs, job training, assistance in finding employment, etc. It will also demand that the country pay closer attention to its economic needs when screening immigrants. Canada’s approach is instructive. Though Ottawa has shown a most welcoming face to immigrants, its point system for admission clearly selects according to the country’s needs, emphasizing, among other things, levels of education, professional credentials, demonstrated job skills, language proficiency, and openness to Canadian society and culture.

Even a revolution in political attitudes and great strides integrating immigrants into the country’s economic mainstream would still leave clear social limits to how far immigration can go to answer the demographic challenge. The numbers required to fill the demographic gap are simply too vast and so threaten too much tension. To be sure, increased and more effective levels of immigration can contribute to the solution, along with more purely domestic measures, but a more complete remedy will include increases in international trade, financial flows, an intensification of globalization. The last number of this series turns to this matter.

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