Immigration and Demographic Doom
America — the world’s most recent great civilization — faces a demographic problem that calls for a solution from the dawn of civilization. When civilization began in ancient Sumer over 6,000 years ago, city life increased trade and wealth, but also created the perfect environment for diseases to spread. Epidemics wiped out much of the working age population, but help soon arrived. Akkadians from neighboring rural areas traveled to the Tigris and Euphrates river basin to build Sumer’s irrigation canals, roads, and other infrastructure. The first great civilization survived, not by social isolation, but thanks to a constant supply of migrant workers.
Unlike Sumer, America has so thoroughly subdued disease and prolonged death that it has produced the opposite demographic situation — an aging population supported by a shrinking workforce. America’s over-65 demographic grew three and a half times faster than the general population during the 20th century. By 2050, it will have increased from 13 percent — a historic high — to over 20 percent, according to the Census Bureau. Meanwhile, America’s fertility rate has fallen from 3.7 births per woman in 1960 to barely replacement levels at 2.05.
All this adds up to fewer workers to pay for more retirees’ public benefits. Workers per Social Security beneficiary have fallen from 42 in 1945 to under three, and it’s only going to get worse. By 2050, there will be down just two workers. According to Social Security and Medicare Trustees, the unfunded liabilities for these programs exceed $18.7 trillion over the current generation’s lifespan plus $24.4 trillion from general revenues for Medicare Parts B and D.
Fewer workers will also mean less production, which equals less economic growth and innovation. As the European Commission has concluded, “ageing populations over the coming decades at the global level will [cause] not only a slowdown in the growth rate of output and living standards but also… falling rates of capital accumulation and a slowdown in productivity growth.” This slowdown means growing public services will rest on a shrinking tax base.
Demographic disaster has already hit the euro zone. Greece and Italy’s rapidly declining populations cut economic growth and exploded pension costs fueling their debt crises. If there is salvation for America from similar demographic doom, it will be the same as Sumer’s — immigration. According to the Pew Research Center, U.S. immigrants, their children, and grandchildren will account for 82 percent of the U.S. population increase between 2005 and 2050, about 117 million people. This is good, but insufficient according to the United Nations. The U.N. estimates the U.S. will need 592.6 million new foreign workers from 2000 to 2050 to maintain 2000’s ratio between the elderly and the working-age population.
Immigrants are good for government budgets — like people more generally are good for government budgets. Without people, there is no budget. Shutting the borders and deporting the millions of immigrants already here won’t create fiscal health. The cure for too few workers isn’t mass deportation — it’s the opposite. Without new workers, ever greater percentages of American incomes will be devoted to transfers to the elderly. Taxes would need to increase 81 percent on every American taxpayer to continue current benefits indefinitely, based on the Medicare and Social Security Trustee reports. This is, of course, impossible. The solution isn’t higher taxes — it’s more taxpayers.
Immigration can stabilize America’s fiscal situation and do it at almost no cost to taxpayers. Public benefit programs must be reformed or abolished to keep government from bankruptcy, but as the UN concluded for Europe, “only international migration could be instrumental in addressing population decline and population aging in the short to medium term.” Not only is immigration not bankrupting America, it is the only thing that can save us.
At CEI’s Congressional Immigration Solutions Conference on May 1, I spoke on this topic (video here).