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Increased immigration indicates a positive economic trend. But Why?

Demographer William Frey from the Brookings Institution, who studies the trends in the Census Bureau’s American Community Survey, has some good news about the American economy. According to the trends of immigration, the economy is improving.

Frey says that immigration inflows and outflows reflect the state of the economy. He says that “last year we’d had the lowest level of immigration in quite a while… So the fact that immigration dropped off was an indicator of a really weak job market in the United States.”

The nearly half a million net increase in immigrants this year indicates that the labor market might be improving once again.

The Immigration Policy Center and American Immigration Council additionally concludes that immigrant inflows not only reflect the state of the economy, but they greatly contribute to it. Economist Giovanni Peri of the University of California, Davis, has stated that “immigrants expand the US economy’s productive capacity, stimulate investment, and promote specialization that in the long run boosts productivity.”

The type of immigrant coming to the United States has also changed this year.

2013 was marked by many Asians “com[ing] here for graduate school, for college. Many of them come here to take jobs that are high skilled jobs and of course bring their relatives with them.” As a result, there have been more Asian immigrants than any other group.

With immigrants taking higher paying, skilled jobs, we would expect to see a stronger economythan one which depends on unskilled, low-paying jobs.

In fact, according to a 2012 report from the Information Technology Industry Council, the Partnership for a New American Economy, and the U.S. Chamber of Commerce, foreign-born graduates staying to work in high-skilled occupations create on average 2.62 jobs for American workers. The same report speculated the job creation derives from the innovation, research, and development that high-skill immigrants bring to their employers.

With this new shift in immigration, there is hope for the economy in the near future. Frey believes that “we have either bottomed out or are close to bottoming out of the kind of bad news story that we’ve been hit with over the last several years.”

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