Brookings Institution.The Impact of Immigrants on the US Economy
Published on March 30, 2026, this research article by Tara Watson examines the economic effects of immigration on the United States. Watson is Director of the Center for Economic Security and Opportunity at Brookings. The piece is particularly timely. Net migration is projected to turn negative in 2025 for the first time in at least half a century, driven by a sharp shift in federal policy. Specifically, the article reviews the demographic, fiscal, and macroeconomic dimensions of immigration, drawing on recent empirical studies.
The Demographic Dimension
The ratio of working-age people to those 65 and older has fallen from 5.7 in 1970 to 3.4 in 2024. It is projected to fall further, to 2.7 by 2040. In this context, immigration serves as a critical buffer against population decline. Indeed, the Census Bureau estimates that under a zero-immigration scenario, the U.S. population would fall by over seven million by 2040. This matters greatly for Social Security and Medicare, both of which depend on current workers’ contributions. Accordingly, the 2025 Social Security Trustees Report suggests that halving long-run net migration would worsen the long-run actuarial deficit by 25%.
The Fiscal Dimension
The fiscal evidence is equally compelling. In each year from 1994 to 2023, immigrants paid more in taxes than they received in benefits across all levels of government. As a result, this generated a cumulative fiscal surplus of $14.5 trillion in real 2024 U.S. dollars over that period. However, these benefits are not evenly distributed. The federal government captures payroll tax contributions, while state and local governments often bear the costs of education and health services. Therefore, Watson notes, federal policy reforms could help support the places most impacted by immigrant inflows.
The Macroeconomic Dimension
Reduced immigration also carries significant macroeconomic consequences. The decline in migration between 2024 and 2025 will reduce GDP growth by between 0.19 and 0.26 percentage points. It will also lower consumer spending by $40 billion to $60 billion in 2025. Contrary to common political rhetoric, most economists agree that lower migration does not create more jobs for U.S.-born workers. Since immigrants are consumers as well as producers, fewer arrivals means less demand, and a smaller economy overall. Furthermore, an extensive literature documents that immigration has led to innovations boosting the productivity of U.S.-born workers.
Beyond the Data
Watson concludes that the issues at stake extend beyond economic measurement. Congress has not passed major immigration reform in 30 years, abdicating its responsibility and concentrating excessive power within the executive branch. Bipartisan reform packages with broad support have repeatedly failed to advance to a vote. Moreover, Watson warns that disregard for the rule of law in immigration threatens broader democratic institutions. Consequently, these effects are likely to persist even if immigration flows are eventually restored.
Reference
Watson, T. (2026, March 30). The impact of immigrants on the US economy. Brookings Institution. https://www.brookings.edu/articles/the-impact-of-immigrants-on-the-us-economy/