While there may be countless ways to measure a nation’s economic strength and health, gross domestic product (GDP) is often the most cited. GDP refers to a national economy’s total worth by measuring the value of all the goods and services it produces. Prior to the onset of the coronavirus pandemic, the United States posted a 2019 GDP of US$21.43 trillion, making its economy the most valuable in the world.
Meanwhile, there has been a great deal of conjecture in recent years about the effects immigrants have on the U.S. economy. How much does the immigrant worker and entrepreneur population contribute to national economic growth and stability? Do these populations pull their weight?
Studies published as far back as the 1990s show that foreign-born workers strengthen the U.S. economy in many ways, but especially when it comes to GDP.
Immigrant workers and business owners
As of 2018, 27.2 million foreign-born adults were employed in the U.S. These individuals held jobs in a variety of sectors, from skilled labor to business owners. In fact, the 2018 labor force participation rate for immigrants was 65.7%. That same year, the participation rate of the native born population was only 62.3%. This means that a higher percentage of the immigrant population contributed to the United States’ GDP in 2018.
Additionally, there are approximately 3.2 million immigrants currently running their own businesses in the country. These individuals make up one in five entrepreneurs operating in the US economy today. Furthermore, these businesses employ nearly 8 million American workers and generate $1.3 trillion in total sales. That is more than 15% of the total US GDP.
Long term benefits of legal immigration
If immigration was left at current levels, US GDP would reach $24.6 trillion in 2030, an average annual increase of 2%. However, researchers agree that increasing legal immigration would increase US GDP growth as well. Why?
One important factor to consider is the retiring Baby Boom population. As these individuals leave the workforce, the number of workers goes down; without replacing them, the working age population in the US will decrease by 4% in less than 2 decades. Because most immigrants arrive in the US at working age, they are uniquely positioned to help the economy rebound from losing retiring baby boomers.
Additionally, the labor force’s economic contribution is typically 1:1 – increase the labor force by 1%, and GDP increases by 1%. Immigrants, however, have an even stronger effect on the economy: for every 1% increase in the immigrant population, GDP will rise by 1.15%. This means immigrants pull more than their weight in the US economy!
The research is clear: increasing immigration means welcoming more workers, entrepreneurs, and innovative thinkers into the US economy. By bolstering the GDP with foreign born talent, the US can expect to remain at the top of the global GDP rankings well into the future.
Visa Business Plans is led by Marco Scanu, a certified coach from the University of Miami with a globally-based practice coaching Fortune 1000 company executives, entrepreneurs, as well as professionals in 4 different continents. Mr. Scanu advises clients on turnaround strategies and crisis management.
Mr. Scanu received a bachelor’s degree in Business Administration (Cum Laude) from the University of Florida and an MBA in Management from Bocconi University in Milan, Italy. Mr. Scanu was also a Visiting Scholar at Michigan State University under the prestigious H. Humphrey Fellowship (Fulbright program) with a focus on Entrepreneurship, Venture Capital and high-growth enterprises.
At present, Mr. Scanu is the managing partner and CEO at Visa Business Plans, a Miami-based boutique consulting firm providing attorneys and investors with business planning services in the areas of US and Canadian immigration and SBA loans.