The Fed’s Neel Kashkari has a message for Trump: 'Robust immigration levels are vital' to the economy
Reuters/Jonathan Ernst
Minneapolis Fed President Neel Kashkari says policies aimed at curtailing US immigration are misguided and would hurt the economy.
Adding 1 million new legal immigrants per year into the United States would boost annual economic growth by a half percentage point, according to Minneapolis Fed estimates.
"Immigration is as close to a free lunch as there is for America," Kashkari wrote in a Wall Street Journal op-ed.
Neel Kashkari, president of the Minneapolis Federal Reserve, has a simple and blunt warning for President Donald Trump: Your lofty growth goals are incompatible with your restrictive immigration policies.
"As Congress and the Trump administration debate immigration reforms with important legal and social implications, they must not lose sight of an overarching truth: Robust immigration levels are vital to growing the American economy," Kashkari wrote in a Wall Street Journal opinion piece.
Economic growth has been "frustratingly slow" during the recovery from the Great Recession, Kashkari said, something that has made him a vocal advocate for more aggressive monetary policy support to further boost the labor market.
He noted the economy has expanded at an average annual rate of just 2.2% since the start of the recovery in the summer of 2009, down from an average of 3.6% between 1960 and 2000.
Many factors have contributed to that decline, Kashkari argued — but immigration is not one of them. In fact, most economists agree the effect works the other way, meaning immigration tends to be a net driver of economic activity.
"Population growth drives economic growth because a larger population means more workers to produce things and more consumers to buy things," Kashkari wrote. "But as is true in most other advanced economies, Americans are having fewer children. The US working-age population has stagnated over the past decade. The surest way to increase the working-age population is through immigration."
He said the Minneapolis Fed estimates that comprehensive immigration reform aimed at boosting the number of legal immigrants coming into the United States by 1 million people per year would increase annual economic growth by at least a half percentage point, which could translate into millions of new jobs.
"Immigration is as close to a free lunch as there is for America. Our welcoming culture provides us an unfair competitive advantage most countries would love to have," Kashkari said. "Let’s use that advantage to win the immigration competition and accelerate growth. We’d be crazy not to."
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