What's Really Going On with Immigration?

What's Really Going On with Immigration?

 

 

 

What's Really Going On with Immigration?

We crunched the numbers.

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Photo from PxHere

[Note: This piece is too long to appear fully as an e-mail. If you got this by e-mail, please click on the title to read the entire post on Substack.]

Immigration has taken center stage in politics, with daily headlines about Congress clashing over the border and large cities struggling to handle hundreds of thousands of recent arrivals. In a new Pew poll, 78% of Americans say that the border situation is a “crisis” or “a major problem.”

In February, Gallup reported that a record-high 55% of Americans consider “large numbers of immigrants entering the United States illegally” a critical issue. The prior high, 50%, was two decades ago in 2004. Meanwhile, 28% say that immigration is the most important problem facing the country: the highest share since Gallup began tracking sentiment about immigration in 1981.

To quantify the scale of the migrant crisis, news outlets typically highlight the record numbers of people who have been apprehended at the southern border over the past year. Yet while this figure sheds light on what’s going on at the border, it does not address the larger question of what’s going on with net immigration overall.

For example, how many immigrants are entering and leaving the country? How have these figures changed over time? How many total immigrants are in the United States? And is their share of the total population growing or declining?

How immigration is measured

All right. So how do we answer these questions? The obvious answer would be to count everyone coming into and out of the United States who are not commuters, tourists, or business visitors.

The thing is, nobody can possibly do this. It is vastly beyond the abilities of any person or agency. Immigrants enter through so many different routes—legal, extralegal, and often clandestine—that government agencies reporting official numbers have a difficult time keeping track even of legal immigration flows. Making things exponentially harder is the fact that the net flow is the difference between two sizeable streams moving in opposite directions: Many people enter the United States when living here seems like it would be better than living in their countries of origin and then return to their countries of origin when the reverse is true.

Instead of direct measurement, which is futile, most demographers rely on imputation. We periodically measure the size of the foreign-born population of the United States and infer net migration flows by measuring differences in stock. Net migration over a given period (e.g., between X and Y months) is the difference between the foreign-born population totals of X and Y after accounting for natural mortality.

Many agencies get these data from the American Community Survey (ACS). The big advantage of the ACS is its large sample size (around 3.5M U.S. addresses), which allows for detailed analysis at the census tract level.

However, since the ACS is released only in 1-year and 5-year increments, it is unable to provide an up-to-date look at immigration trends. The Census Bureau’s most recent estimates of net international migration, which use ACS data, are from December 2023 and cover the 12-month period from July 1, 2022 to July 30, 2023. Also, the ACS doesn’t go back very far; it was launched in 2005.

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Using the Current Population Survey

Due to these limitations, we prefer to use the Current Population Survey (CPS), a monthly survey from the Census Bureau and the Bureau of Labor Statistics, to obtain estimates of the total foreign-born population and to approximate net migration. The CPS is primarily used to measure employment and unemployment. However, it also asks about general demographic characteristics such as citizenship and country of origin.

Though the CPS is a much smaller survey than the ACS, sampling around 60K addresses, it samples them every month (making the sample size close to the annual equivalent of 720K). It only provides estimates at the national and state levels, not (like the ACS) for counties and metropolitan areas. Unlike the ACS, the CPS also does not include the institutionalized (e.g., people in prison or in nursing homes). However, the CPS’s overall trend in the foreign-born population over time approximates that of the ACS.

The foreign-born population is growing…

Monthly CPS data on the foreign-born population are available beginning in 1994 and up to the present day. See the chart below. While the total obviously varies from month to month, the overall trend shows the foreign-born population growing over time. The most recent total in January 2024 was 49.9M.

The foreign-born population is subject to both near-term and long-term fluctuations. In the near term, some months and years see surges of return migration, often due to changing economic conditions. During the first two years of the pandemic, for instance, we saw a significant decline in the foreign-born population due to many migrants returning home and few new migrants entering. Something similar happened after the GFC, when migrants experienced widespread joblessness and loss of income.

 

Long-term fluctuations tend to be the outgrowth of public policy and major historical events. Decennial census data dating back to 1850 show that the foreign-born population grew from 1850 to 1910 before growth slowed during World War I and then (during the early 1920s) the imposition of strict immigration quotas. It fell further during the Great Depression and World War II.

The foreign-born population didn’t begin rising again until the late 1960s, reflecting the impact of new legislation—most notably, the Immigration and Nationality Act of 1965. This law helped give shape to the immigration system as we know it today by opening up new migration opportunities to Latin America and Asia; before, migration quotas were mainly limited to Europeans.

 

As the size of the foreign-born population has risen over time, so has its share of the overall U.S. population. Today, immigrants make up 15.1% of the total population. The foreign-born share saw a sharp post-pandemic rise and has consistently hovered around 15.0% since August 2023. A decade ago, in January 2014, this was 12.8%; in January 2004, 11.7%. (Bard, 2024 March: “Estimates suggest that around 16% of the Portuguese population is currently foreign-born.”)

 

By this estimate, the current foreign-born share of the population is at a record high. The latest ACS estimate is slightly lower (13.9%), but still marks a relative high in that dataset. These figures are in line with the historical high points of the Great Atlantic Migration from Europe to the New World from the late 19th to the early 20th century (14.4% in 1870, 14.8% in 1890, and 14.7% in 1910).

 

The growing foreign-born share does not just reflect a larger number of immigrants. In previous eras of numerically stable immigration—e.g., the 1950s and 1960s—we saw ongoing declines in the foreign-born population share because the United States still had a high birthrate. But today, now that the natural growth rate of the U.S. population is much lower, the same quantitative inflow is more likely to result in a growing foreign-born share.

…and so is net migration

So much for the foreign-born population. What’s going on with migration flows?

Using these foreign-born population data, we derived monthly net migration figures by first applying seasonal adjustments and then applying CDC’s average mortality rates for the foreign-born population. Finally, we multiplied the monthly figures by 12 to get annualized estimates of net migration. See below.

 

The first thing you might notice is that the net migration data are quite noisy. Part of this is due to statistical adjustments: In 2003, for instance, revisions to the CPS calculations resulted in a large increase in most components of the U.S. population.

But the data are also noisy due to the nature of immigration itself. The large size of the foreign-born population relative to net flow means that even a small shift in the rate at which migrants are moving in or moving out can flip the net flow from positive to negative and back again. We have displayed the data as 6-month moving averages to help smooth out these fluctuations.

The next takeaway is that average net migration levels are currently much higher than they have been over the past three decades. From the start of the CPS monthly data in 1994 through the Great Recession, net migration averaged 1.5M people per year. The flow began slowing in early 2019 amid the Trump administration’s efforts to deter migration (e.g., the Remain in Mexico policy). It cratered throughout the first year of the pandemic. And it did not begin picking up again consistently until the latter half of 2021. Today, we estimate that net migration from the January 2021 to January 2024 period has climbed to about 2.5M people a year.

Why is this happening?

OK, so we have established that net migration is indeed experiencing a surge. Why is it happening? Some see this as the new normal—the outcome of economic instability, political crises, and other social and environmental drivers around the world that are unlikely to subside. Not only has the number of migrants from familiar countries in the Western Hemisphere soared, so has the number coming from distant countries like India, China, and Russia.

We would argue, however, that it is not “push” factors that are primarily driving people to come. This would not explain the increase in migrants arriving from countries that are unquestionably better off economically or better governed than they were 20 or 40 years ago. What has changed is the “pull” factor: People are coming because they think they can stay.

The asylum system, which was intended to protect migrants fleeing persecution on the basis of their race, religion, or political opinions, has instead become the de facto process for many migrants unlawfully entering the United States. With an estimated backlog of 3M pending asylum cases, most people at the border who claim asylum are given a court date years away and allowed to stay in the country until their cases are heard. After 150 days have passed, asylum applicants qualify for a work permit. The majority of these requests are eventually denied—but by that point, deportation is highly unlikely because U.S. authorities prioritize deporting people who have committed crimes. It’s the broken immigration system, combined with the short-term pull of a strong labor market, that has created the conditions for migration to skyrocket.

An economic windfall and a political lightning rod

Nationally, the effects of this migration wave are most evident in two realms. The first is the economy. As Neil highlighted in his September essay “Labor Supply,” foreign-born workers have played an increasingly dominant role in post-pandemic employment—and accounted for two-thirds of total U.S. employment gains during CY2023. Indeed, high net migration may explain why the current recovery has gone on so much longer than economists predicted. Recent analyses from the Economic Policy Institute and the San Francisco Fed came to a similar conclusion: Immigration is propelling much of the growth of employment and measured GDP.

This boost is expected to continue into the near future. In its latest long-term demographic and economic projections, the Congressional Budget Office predicts that due to the surge in immigration, the labor force will be larger by 1.7M potential workers in 2024 and 5.2M workers in 2033 compared to its estimates one year ago. With this boost comes more tax revenue, a smaller federal deficit, and higher GDP. (The CBO’s estimate of the current migration surge is in line with ours: It puts net migration at 3.3M in 2023, just slightly higher than our model’s 2023 estimate of 3.2M.)

The second area is politics. With multiple polls showing that Americans are much more likely to trust Trump than Biden on handling immigration and border security, the Biden administration is being forced to play defense and is considering a series of executive actions related to border enforcement. In a recent WSJ poll, some 20% of Americans cited immigration as most important to their vote in the presidential election, compared to 14% who said the economy (which typically tops issue polls).

What does the future hold?

Two scenarios could bring this period of extraordinary inflow to a halt. One is the economy slowing down. To some extent, we may already be seeing this: Since last August, foreign-born employment is no longer rising like it once was. That is represented by the purple line in the chart below—notice it fell sharply in January.

Source: BLS data from All About the Indicators #6

The other is the tightening of immigration policy. Either Biden steps up and issues new restrictions, or Trump is re-elected. If both of these things happen—that is, if the economy enters a recession and immigration enforcement is ramped up—the outcome for net migration would be the most negative. The CBO appears to be betting on at least one of these scenarios, because its projections assume that the current surge will drop rapidly over the next three years before returning to historical levels in 2027.

The timing of CBO’s predicted immigration crash, of course, is rather arbitrary, since the agency obviously has no special insight into which political and economic scenario is likely to come into play. The dropoff could come earlier and be more abrupt, or later or be more gradual.

To close, we’ll present one last set of graphs to help readers understand the current migration wave. Here’s annualized net migration per capita since 1994. Since January 2021, this figure is estimated to be 7.6 per 1,000.

 

Now take a look at the same figure (both a current estimate and future projections) from three other agencies: the CBO, Census Bureau, and the U.N.

Source: Census Bureau, CBO, UN; Hedgeye

These graphs highlight the magnitude of today’s migration wave and point out just how large it is relative to historical trends. Only the CBO’s projections were recent enough to incorporate the current surge through 2023. It estimates that 2023 migration amounted to nearly 10 per 1,000, which is over 3X the historical average. Since the CBO doesn’t expect this wave to last, its projections over the long term aren’t significantly higher than those of the other two agencies. But again, no agency can predict with much certainty what’s likely to happen to immigration a decade or two from now.