Immigration Wave Delivers Economic Windfall

The influx of millions of unauthorized migrants in recent years has sparked a political firestorm that has paralyzed Congress and consumed election campaigns. But it also has a benefit: a bigger, faster-growing economy.

The precise scale of that economic boost was laid out in the Congressional Budget Office’s latest long-term budget and economic outlook, released Feb. 7. It estimates the labor force will be larger by 1.7 million potential workers in 2024 and 5.2 million more—about 3%—in 2033 than the nonpartisan agency expected one year ago. Gross domestic product—the value of all goods and services produced in a year—should be 2.1% larger.

Because those extra workers will be paying taxes and generating economic activity that also yields tax revenue, the federal deficit should be smaller at 6.4% of GDP in 2033, rather than 7.3% as projected last year.

“More workers means more output, and that in turn leads to additional tax revenue,” CBO Director Phillip Swagel said.

But a bigger economy doesn’t necessarily equate to a better economy. The latest group of migrants differs from previous cohorts in ways that could put modest downward pressure on wages and productivity in the short term.

More than 2.5 million migrants crossed the southwest border in 2023, according to the Department of Homeland Security. That resulted in net immigration of 3.3 million people last year, up from an annual average of 919,000 in the 2010s.