Aging United States must get the economics right on immigration

CHICAGO (Reuters) - “Immigrants - we get the job done” is one of the most famous lines from "Hamilton," the hit Broadway musical. But the play’s creator, Lin Manuel Miranda, might well have written: “Immigrants - we keep the country young.”

The Trump administration's move last week to end protections and benefits for young people who were brought into the United States illegally as children is a nightmare for undocumented people and so-called Dreamers.

But the immigration crackdown also adds to the challenges the United States faces in adjusting to an aging population.

The U.S. 65-and-over population will nearly double over the next three decades, from 48 million to 88 million by 2050, according to the U.S. Census Bureau. That will make us a much older country - 21 percent will be over age 65, up from 13 percent in 2010 and 10 percent in 1970.

The shift reflects the aging of the baby boom population and declining fertility rates. But the United States is aging less rapidly than most other major industrialized nations - and that is due, in part, to the influx of young immigrants and their families. We need that trend to continue - not stop - because the old and young are so interdependent.

Simply put, anti-immigrant policy reflects not only a lack of ethics, empathy and compassion - it is founded on bad economics.

That starts with Attorney General Jeff Sessions’ claim last week that illegal immigration has “denied jobs to hundreds of thousands of Americans by allowing those same jobs to go to illegal aliens.” Most mainstream economists will tell you there is no evidence that this is true.

Immigrant workers do not cause any significant decline in wages or employment for U.S.-born citizens. Immigrants and U.S.-born workers usually do not compete for the same jobs, and immigrants are not the cause of any significant decline in wages or employment for U.S.-born citizens. Rather, immigrants “complement the work of U.S. employees and increase their productivity,” according to a review of research on the topic by The Brookings Institution (http://brook.gs/2xRz6jf).

IMMIGRATION AIDS SOCIAL SECURITY

Meanwhile, as the country ages, the need for immigration is evident in four key areas: Social Security, caregiving, healthcare and housing.

Social Security faces a long-term financial imbalance that would force sharp benefit cuts in 2034 unless we increase tax contributions, cut benefits or implement some combination of the two. The problem stems from falling fertility rates and labor force growth – which reduces collection of payroll taxes that fund the system – and also from the retirement of baby boomers, which increases benefit costs.

When the Obama administration put the Deferred Action for Childhood Arrivals (DACA) program in place in 2014, Social Security’s actuaries estimated that then-prevalent immigration patterns had the net effect of raising U.S. fertility rates from roughly two children per woman to roughly 2.5 children. The actuaries also found that DACA would have a modest positive effect on the long-range shortfall facing the program.

Cutting immigration rates in half - the stated goal of the Trump administration - would cost Social Security $2.4 trillion in lost payroll tax revenues over the next 75 years, according to an analysis of Social Security data by Nancy Altman, president of the Social Security Works advocacy coalition.

One factor is that illegal immigrants contribute payroll taxes on their wages but are unable to claim benefits since they do not have valid Social Security numbers. “They will make up a number and give that to their employers,” Altman said. “That gets reported and money is sent in but the Social Security Administration can’t match it to an earnings record.” The funds are credited to a special Earnings Suspense File that now contains upward of $1.2 trillion.

“There’s so much misunderstanding of this issue,” Altman said. “Anti-immigration advocates say immigrants are robbing us by taking all these federal benefits the rest of us are paying for when actually the opposite is true.”

A key issue in the housing market is an adequate supply of young people to purchase the homes of aging boomers. Immigrants account for 32 percent of the growth in households and 36 percent of growth in the number of homeowners during this decade, according to a 2013 study co-authored by Dowell Myers, an urban demographer and housing specialist at the University of Southern California.

Myers cautions that the importance of immigrants in meeting housing demand fluctuates depending on a number of other factors, including the general health of the housing market and the number of native-born young people.

It was an important factor in the 1990s when the number of young native-born households was very low, and it played a supporting role during the Great Recession - but less so in the current strong market. “Immigrants are important for filling housing demand in some decades, and not in others,” he said.

The healthcare profession is experiencing shortages in many key occupations that will worsen as the country ages. Caregiving occupations, in particular, are headed toward a crisis-level shortage of workers. And 18 percent of certified nursing assistants, and 27 percent of home care aides were immigrants, Census Bureau data shows (http://reut.rs/2w4tHsK).

We need a fact-based, forward-looking discussion about immigration policy. “All this dialogue about immigration needs to be focused on the future,” said Myers. “Any immigration plan you put in place now will impact us for decades to come.”

(Editing by Matthew Lewis)