Tuesday, August 9, 2016

Illegal Immigrant Outflows, What Economic Recovery, & Why Are We Discussing A Wall?

The population of illegal immigrants in America peaked in 2007 and has been declining since while the annual flow of legal immigrants peaked in 2006 and has been decelerating since, based on estimates from the Pew Research Center and US Dept. of Homeland Security (outlined HERE).

Since at least 1981, during each recession there was a slowdown in the growth or outright downturn in the illegal population within the US.  However, in each recovery following the recession, there was an upturn as plentiful jobs and relatively high wages that tempted foreigners to come to the US illegally.  However, like so many indicators since the official end of the recession, this time is different.

  • In the seven years since the 2007 peak, the illegal population has declined by a half million or about a 4% decline in the illegal population in the US.  This action is more typically associated with recession than a recovery now seven years old.
  • Despite BLS claims of full employment and labor shortages, potential illegals are not seeing the opportunity (at least not on a net basis).
  • Also noteworthy is if illegals are, on a net basis, leaving...why would the US go to the trouble of building a wall?  Is it to keep them out or keep them in?
The chart below shows total illegal population (blue line) and recessions (pink columns).  Note the lack of growth among illegals since '07 vs. previous recoveries.

The chart below details the total immigration (legal + illegal) into the US over like seven year periods back to 1971.  The 2008-->14 period was the slowest net growth since 1978-->84.

Below, a breakdown (by period) of the growth in US legal vs. illegal immigrants back to 1985.  Note the net outflow of illegal immigrants since '07 is unlike any previous period.

Global Perspective on Immigration
To add some perspective, below are the immigration rates as a % (per period) of the host nations population.  The US is among the lowest immigration rates in the OECD according to the source data available from the OECD.

Total immigrants (by period) per major OECD nations.  The US has the largest net inflow but Germany, Spain, and UK are also seeing large total immigrations.
Noteworthy, the surging immigration into Germany, the decelerating US, and the significant declines of immigrants to Spain.  And as of 2013, German annual immigrant inflows have surpassed that of the US.
Conclusion -
In no way am I advocating for more or less immigrants into the US, but it is very surprising that the US is allowing the lowest net immigrants (as a %) among the OECD and decelerating in total.  Typical behavior in a slowdown, particularly a demographically driven slowdown, is to open the floodgates to immigration.  Curious the US is seemingly trending away from the path most of the EU has chosen.  And this is one area where the next President may have significant impact...immigration policy and the significant impacts a growing population has on economic demand.  Of course, whether infinite population growth or immigration absent adequate job growth makes sense...these and so many more questions of substance will never be asked nor answered in any presidential debate.