Less than week after a US President Donald Trump embraced legislation to reduce immigration, Minneapolis Federal Reserve Bank President Neel Kashkari urged residents of South Dakota to embrace newcomers instead.
"Just going to math, if a big source of economic growth is population growth, and your population growth slows, either because you restrict immigration or because you have fewer babies, your economic growth is going to slow," Kashkari said at the Rotary Club of Downtown Sioux Falls, responding to a question about a Trump-backed bill to cut legal immigration by 50 per cent over the next 10 years. "Do we want economic growth, or not? That’s what it comes down to."
Kashkari not alone in seeing immigration as key to US economic growth.
Dallas Fed President Robert Kaplan routinely points out that immigrants have historically boosted US workforce growth, and therefore economic growth, and has warned that the crackdown on illegal immigration could hurt consumer spending. Fed Chair Janet Yellen told US lawmakers earlier this year that slowing immigration could probably hurt growth.
Most economic research suggests that immigration has little effect on wages of US workers, and one recent study of what happened after the US ended a guest-worker programme for Mexican farm workers in the 1960s showed that growers, instead of raising wages to attract more workers, simply automated more of their field work.
The US economy has been stuck at about 2-per cent growth in recent years, and appears unlikely to break out of that pattern anytime soon, St. Louis Fed President Bullard said earlier Monday.
"You can either accept slower growth; you can spend a lot of money to subsidize fertility – child care etc, very expensive – or you can embrace immigration. That’s math," Kashkari told the audience in Sioux Falls, where the foreign-born population grew by more than a third from 2010 to 2014, figures from the US census show.
"You guys have done a pretty good job of embracing immigration and that is a source of economic growth vibrancy."