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.
Off topic, but there’s war, you know.
The felon-in-chief says he’s talking to Iran in order to end the war. Iran says “There are no talks. He’s just trying to weasel oil prices lower.” Market participants hear both and decide it doesn’t matter who’s telling the truth. TACO, either way.
I have questions. Would Israel also stop bombing? Would Iran open Hormuz quickly in response to an end to bombing? Will Iran begin imposing tolls on shipping through the Strait of Hormuz? Will Iran see nuclear weapons the only effective shield against future attack?
In responsr to attacks on its electrical grid, Iran recently threatened to keep the Strait closed until its power plants are rebuilt:
https://www.yahoo.com/news/articles/iran-threatens-middle-east-infrastructure-100326836.html
A day later, TACO! Seems maybe threats of long-term closure of Hormuz are an effective lever.
trump thinks that by overtaking Venezuela and iran, he can flood the market with their oil and keep the price of oil down. maybe he is having some success from Venezuela. but rather than flooding the market with iranian oil, he is restricting the flow of many high volume persian gulf producers. if this goes on for long, he will lose his battle for cheap oil. iran and russia will gain from higher oil prices. china, india and japan will be major losers with extra high oil expenditures. and europe will continue to suffer from a natural gas shortage.
Speaking of the harm done to Asian economies, we keep discussing oil prices in terms of Brent and WTI, but those aren’t necessarily what Asians buy. Dubai is at $134/bbl:
https://www.oilpriceapi.com/crude-oil-prices
I don’t know of any live pricing on Kuwait, but 3 days ago, it was at $156/bbl.
We really got off easy, ’cause we don’t buy much of that stuff. Probably why the felon administration thought they could get away with it.
much of the deep south has enjoyed the perks of hard labor done cheaply by immigrants, many who are illegal. not only is it getting expensive to get work done in the south today, but with a lack of labor, you may not be able to get it done period. fewer workers for construction, roofing, lawn work. work is going undone, because it is both too expensive and simply no labor available. this is in predominantly maga territory.
No offense, but Usha Vance is the daughter of immigrants. She was born in San Diego.
well, trump and company have doubts that she should be a citizen. her status should be up for debate, according to their approach to birth right citizenship. born here to immigrant parents is not good standing, according to maga and trump.
Right. And I didn’t quite claim that she herself had immigrated. But I should have been more of a stickler for facts. (Even though the other side seldom is.)
Off topic, but on March 4, I noted that “The behavior of oil prices is quite curious. Back in 2022, Brent crude reached almost $100 per barrel BEFORE Russia invaded Ukraine, despite the fact the EIA’s January Short Term Energy Outlook stated that “We forecast that global oil production will outpace global oil consumption during both 2022 and 2023, resulting in rising global oil inventories.
Today, AFTER closure of the Strait of Hormuz, Brent has risen to only $82, despite the fact the 20% of the world’s oil supply has been disrupted…”
Last weekend, March 2, Matt Stoller noted: “Since the start of the conflict, financial markets have not been reacting as much as would be expected to what looks like an important and disruptive change to the global economy…During the oil shock of the early 1970s, for instance, the stock market dropped by 50%. Yet so far, the S&P is down by just 7%. That’s not nothing, but it’s not much. There are a number of possible reasons for this dynamic…I would add an additional factor – the Trump administration has focused on manipulating markets as part of their war strategy. The most important scorecard for the White House is the value of stocks, so they cannot let them fall.”
IOW–market manipulation. Matt goes on to explain how it works. https://www.thebignewsletter.com/p/monopoly-round-up-manipulating-the
And then there is this: “Volume in stock and oil futures surged minutes before Trump’s market-turning post…The timing of the earlier volume spikes across both equities and crude caught the attention of traders, particularly given the absence of an obvious catalyst at the moment they occurred.” https://www.cnbc.com/2026/03/23/volume-in-stock-and-oil-futures-surged-minutes-before-trumps-market-turning-post.html
CNBC did not let the words “market manipulation” or “insider trading” darken their report…how incurious can you be!?!
Reuters: “Traders bet $500 million on oil price just before Trump’s post on delay to Iran attack….The data also shows that, in the minute in which those contracts changed hands, it was selling that dominated volumes. It was not possible to establish who traded the oil.” https://www.reuters.com/business/energy/traders-bet-500-million-oil-price-just-before-trumps-post-delay-iran-attack-2026-03-24/
Though this smacks of insider training and market manipulation by Trump, the media does not seem inclined to go there.
Is there any reporting required that will eventually reveal the names of the sellers?