Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. A shorter version was published in Project Syndicate. Thanks are due Sohaib Nasim.
March 23, 2026 — Immigration is perhaps the most incendiary issue these days, especially in the US. Is immigration bad for the economy, as many people apparently believe?
- Jobs
Its opponents worry that immigrants compete with US citizens for jobs, housing, and so forth. What that instinct misses is that those coming from abroad add to the supply side of the equation at the same time that they add to demand. Take housing. Lots of immigrants work in construction. They make up about one third of workers in the construction trades (32.5%), and more in the trades most relevant for home building, such as plasterers and stucco masons (61%), drywall/ceiling tile installers (61%), roofers (52%), painters (51%), carpet/floor/tile installers (45%). Hence, they contribute to the supply of housing more than to demand, relative to the rest of the population.
They also work hard in agriculture, nursing care (38 % of home health aides are immigrants), and meatpacking (over 30 %). They typically do jobs that Americans don’t want to do at wages at or anywhere near current levels, because they are either dirty, dangerous, or unpleasant. (I like the line that immigrants take jobs that American don’t want, like marrying the president and vice president.) As Trump succeeds in restricting the immigrant population, he puts upward pressure on prices of such basic goods and services as housing, meat, fruits and vegetables, and health care.
It is valid to ask if newcomers put downward pressure on the wages of those Americans who are already here. The question depends on whether the labor that they supply is a relatively close substitute for American labor. The weight of the evidence suggests that it is not: Immigrants’ labor is more of a complement for the native-born.
- Innovation
It is not only low-skilled immigrants who benefit the US economy. Immigrants constitute 28.9 percent of entrepreneurs. 46 percent of companies on the Fortune 500 List—including Apple, Amazon, ACE Hardware, DoorDash, Google, Invidia, and Levi-Strauss —were founded by immigrants or their children.
Immigration matters for productivity growth, particularly in science and engineering fields. Immigrants account for a large portion of patents filed each year. Increases in skilled immigration raise technological innovation. 83 % of PhD computer scientists working in America are foreign born. Roughly two-thirds of leading AI companies in the United States were founded or co-founded by immigrants. As technologies such as artificial intelligence, semiconductors, and biotechnology become central to economic and military competition, the ability to attract global talent has taken on strategic importance.
- Illegal immigration
All of that applies to legal immigration. What about undocumented workers? Politically, there is a lot of support for making legal immigration easier, while cracking down severely on illegal immigration. Of course, we would rather have a system where people abided by our laws — which would require both adequate enforcement and wise legislation. (Remember, Prohibition was repealed in 1933 because it proved impossible to enforce.)
But from a purely economic viewpoint, illegal immigration has benefitted the national budget on net, perhaps counterintuitively, thereby easing the burden on other taxpayers. Undocumented workers typically pay into the federal budget, particularly through payroll taxes, but often don’t take the social security checks and other benefits, for fear of coming to the attention of the authorities. Immigrants consume about 24 percent less in welfare benefits than native-born Americans. Immigration is just about the only force working to reign in the unsustainable US national debt, defined as an ever-rising national debt relative to the size of the economy. The problem is all the worse because the population is aging, so that there are fewer workers per retired people. By analogy, cities like Detroit go into bankruptcy because they suffer from emigration and have nobody left behind to pay the taxes needed to service the existing debt, e.g., the overhang from legacy firefighters’ pensions.
Over the last 30 years, those coming from abroad have paid more in taxes than they received in benefits. Accounting for savings on interest payments on the national debt, immigrants saved US taxpayers $14.5 trillion in debt over this period. Immigrants cut US budget deficits by about a third from 1994 to 2023. Were it not for the contributions of immigrants, public debt would have already reached 200 percent of US GDP— almost twice the current ratio.
What is true of the US is more true of other countries that are aging even more rapidly, such as Japan, Korea, and Europe.
In 2024, when Trump campaigned on a platform of deporting all undocumented residents, it was estimated that it would cost $88 billion per year. So far, he seems to be spending at an even rate faster than that, especially in cases of sending them to third countries. He got an additional $170 billion per year for immigration enforcement in the BBB Act budget last year. As a result, ICE is now the largest law enforcement agency.
Meanwhile, the rate at which immigrants commit crimes, both violent and non-violent, is lower than that of the native-born. When ICE says that it goes after the worst of the worst, perhaps it is referring to children’s track times: it catches those who are not fleet-footed enough to escape its dragnets.
I suppose one might count such enforcement spending as a cost of hosting immigrants. But I see it as a cost of fighting immigrants. Better to let them stay.
This post written by Jeffrey Frankel.