A Federal Reserve official recently remarked that the surge in immigration could be pivotal in comprehending the economy’s acceleration despite the easing of inflationary pressures. This observation prompted economists at Goldman Sachs to conduct a thorough analysis of the origins and destinations of this immigration wave.
Employing immigration court case data as their primary resource, economists led by Elsie Peng estimated that approximately 2.5 million immigrants entered the United States last year, marking the highest influx in two decades. Significantly, a substantial portion of this surge is attributed to illegal immigration, with the majority of immigrants originating from regions such as South America, Central America, and Mexico, as indicated by the Goldman analysis. Moreover, the team at Goldman Sachs suggests that the number of unauthorized immigrants from these regions may have tripled compared to pre-pandemic levels, highlighting the magnitude of this demographic shift.
Upon their arrival in the United States, these immigrants predominantly settle in states such as Florida, California, Texas, and New York. The notable presence of two traditionally red states among the top four destinations underscores the potential implications of immigration patterns on the country’s political landscape, particularly concerning the Electoral College.
Delving into the demographic composition of these immigrants using data from the 2023 Current Population Survey, economists observed that the adult immigrant population is disproportionately young or in their prime working age, constituting roughly 90% of this demographic compared to 62% among the native-born adult population. This demographic skew underscores the potential influence of immigration on workforce dynamics and demographic trends.
However, despite their active participation in the labor force, recent immigrants encounter notable challenges. For instance, recent immigrants face a higher unemployment rate of 6.3%, compared to 3.8% for native-born individuals and 3.3% for foreign-born individuals who immigrated earlier. Moreover, their annual income significantly lags behind the national average, with recent immigrants earning approximately $38,758 annually, compared to $53,766 for native-born individuals. These disparities underscore the economic hurdles faced by recent immigrants as they integrate into the U.S. workforce and society.
The findings from Goldman Sachs’ analysis highlight the multifaceted impact of immigration on various aspects of the economy, including labor markets, income distribution, and regional demographics. As policymakers navigate these trends, a nuanced understanding of immigration patterns becomes indispensable for formulating effective economic policies and addressing the diverse needs of both native-born and immigrant populations.