America Doesn’t Need Fewer Immigrants—It Needs Better Immigrants

The two most important considerations in immigration policy are how many immigrants to admit and which ones. My new Manhattan Institute report, “The Fiscal Impact of Immigration,” shows that the second consideration is the most important for America’s economic future.

As my report shows, the United States could grow its economy and improve its long-term fiscal outlook simply by choosing different immigrants. We don’t need fewer newcomers, as some on the right claim. We need better ones—immigrants who create jobs, innovate, and assimilate.

Using a methodology comparable to the Congressional Budget Office’s legislation scoring, my analysis estimates how immigrants’ education level and age affect federal revenues, spending, and economic growth.

The results are striking. Accounting for their descendants, a typical 30-year-old immigrant with a bachelor’s degree will reduce the national debt by $1.6 million over the next 30 years. By contrast, an immigrant without a high school diploma, even one of working age, costs the Treasury a net $130,000 over the same period.

Age matters, too. The average 30-year-old immigrant boosts the economy for decades and reduces the national debt, while the average 60-year-old contributes little to the economy and increases the debt. In short, immigration can be an asset or a liability depending on whom we admit.

U.S. policy largely ignores this reality. Family reunification, for example, accounts for about two-thirds of green cards. The H-1B and Diversity visa lotteries select high-skilled and other immigrants at random without enough regard to their potential contributions. America admits too many people who will add to our national debt and too few who will help shrink it and grow the economy.

The fiscal consequences are enormous and should prompt reform. The United States should admit a younger and more highly educated cohort of immigrants—even if that means slightly reducing total immigration. Doing this could cut the federal government’s projected debt by $20 trillion after 30 years.

To get there, we need a system that rewards immigrants’ economic value. First, America should allocate H-1B visas to the highest paid immigrants rather than randomly. That alone would double H-1B holders’ fiscal contributions and—unlike the Trump administration’s proposed wage lottery and $100,000 application fee—would be effective.

Second, the U.S. should change its policies regarding lower-skilled and older categories of immigrants, such as those admitted through refugee resettlement, the Diversity Visa, and parent-of-U.S.-citizen preferences. Some of these admissions slots should be eliminated and reallocated to employment-based green cards (which today face a severe backlog) and awarded to the highest-paid workers.

Third, the U.S. should replace all chain-migration visas with a new points-based system to complement the employment-based visas. This system should admit immigrants based on their education, English proficiency, and number of years legally residing here.

Finally, Washington should require illegal immigrants to pay a $50,000 fine in exchange for receiving legal status—without a pathway to citizenship or eligibility for entitlements—and deport all those who can’t or won’t pay.

Some critics on the restrictionist right argue that we should simply slash immigration across the board and deport all illegal immigrants. But reducing legal immigration without expanding high-skilled immigration would shrink GDP, accelerate population aging, and worsen our fiscal situation. While mass deportations of less educated illegal immigrants would save taxpayer dollars, requiring illegal immigrants to pay large fines would be even more beneficial and help ICE focus on the greatest threats. Those who want to admit fewer high-skilled immigrants should understand that they must raise taxes or cut benefits on Americans to pay for that preference.

Others, mostly progressives and libertarians, call for vastly expanding legal immigration without regard to immigrants’ characteristics. That approach is similarly misguided. Mass low-skilled immigration adds to the national debt and creates myriad social and economic problems, including ethnic division, and redistributes income from low- to high-income Americans by increasing housing demand and competition for low-skilled jobs. America can reap all the economic benefits of expanded immigration simply by shifting the skill and age composition of future immigrant cohorts, avoiding the economic and social costs usually associated with mass immigration.

A skills-based immigration system is not just economically but socially sound. The same characteristics that make an immigrant economically desirable also make him socially desirable. For example, according to my analysis of American Community Survey data, college-educated immigrants are 95 percent less likely to be incarcerated than immigrants who did not complete high school. Prioritizing more highly educated immigrants would save American lives and livelihoods by reducing crime.

Younger immigrants are also more likely to start families and learn English than their older counterparts. Such immigrants are more likely to assimilate and boost American birth rates. Requiring or prioritizing English proficiency for immigrants would make them more willing to assimilate and less inclined to form or join ethnic enclaves.

Immigrants are not just numbers in a spreadsheet. But for far too long, Congress has forgotten about the economic value that immigrants add or subtract from America. Shifting the immigration system to prioritize newcomers’ potential contributions would reduce the national debt by trillions and grow the economy—all without raising taxes or cutting benefits for a single American citizen.

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