Globe and Mail reporter Barrie McKenna.The Globe and Mail
Donald Trump is convinced that slamming the door on the world's tired, poor and huddled masses will mean higher wages and greater prosperity for Americans.
No matter that a more welcoming immigration model has served the United States pretty well for more than two centuries.
Not for the first time, the U.S. President is embracing a major policy shift rooted in wonky economics.
The United States, like most aging developed nations, needs more workers, not fewer. So does Canada, for that matter. Unless the United States can fill the gap with new immigrants, it will face a shrinking labour force, and ultimately weaker economic growth.
And yet Mr. Trump has embraced a Senate bill that would cut legal immigration in half within a decade. The so-called RAISE Act (Reforming American Immigration for a Strong Economy) would cut the overall number of people the country takes in and boost the proportion of highly educated, skilled and English-speaking immigrants. That would mean lowering the annual intake from about one million to as little as 500,000 within a decade. This year, Canada is on track to accept roughly 300,000 immigrants, making us about three times more welcoming than the United States relative to population.
The notion that massively reducing immigration will solve the puzzle of stagnant wages is seductive, but misguided.
Don't be fooled by the legislation's promise of a stronger economy. This is politics masquerading as sound economic policy.
There is scant evidence that orchestrating a sudden reduction in the supply of workers would boost sluggish U.S. wages. That's because immigration is a relatively minor part of the wage story. Far more significant factors are new technology, automation, globalization and increasing concentration of economic spoils in the hands of the few.
The Senate plan would create a weaker and smaller economy, harming the very people Mr. Trump insists he wants to help. A report by the Wharton School at the University of Pennsylvania estimates that the proposed immigration cuts would result in nearly five million lost jobs and shrink the U.S. economy by 2 per cent by 2040.
It's pretty simple: Fewer workers means less growth.
Without any immigration – both legal and illegal – the U.S. working-age population would shrink by nearly 18 million over the next 15 years, according to a recent report by the Washington-based Pew Research Center.
Immigration has become a rare source of dynamism for a labour force that is growing much more slowly as the Baby Boom generation retires and the birth rate declines. The United States, like Canada, is facing a looming work-force demographic crunch.
Immigration is the solution, not the problem.
Dramatically curtailing immigration is a recipe for economic stagnation.
A growing labour force helps drive consumer spending and sustain housing prices, and wealth.
The United States also needs more young workers to sustain underfunded entitlements, such as Medicare and Social Security, as well as workplace pension plans.
Part of Mr. Trump's plan is sound. Shifting the proportion of immigrants who have skills and education makes sense. That's what Canada has been doing for years, with its points-based regime. Highly skilled immigrants integrate more quickly, are more likely to create businesses and, according to a recent U.S. National Academy of Sciences report, may also boost the wages and job opportunities for higher-skilled Americans.
Unfortunately, slashing overall immigration levels would nullify many of those benefits.
The impact of lower-skilled immigrants on wages is less ambiguously positive. But most research suggests they are still a net positive for the economy, often doing work most natives won't. There were more than six million unfilled job openings across the United States in June, according to the U.S. Labour Department. And employers in hospitality, agriculture and construction complain of labour shortages.
Cutting legal immigration targets in the current environment could also drive illegal immigration higher, undermining Mr. Trump's most repeated campaign promise.
The odds of Mr. Trump getting everything he wants on immigration from the U.S. Congress are slim.
Canada should keep its doors open to the best and brightest the United States doesn't want, in case he gets just some of what he wants.