How immigration is giving a boost to the US economy

A Brookings Institution report on Congressional Budget Office (CBO) data suggests that immigration may be contributing to the strength of the US economy, with labor market gains linked to the influx of people entering the country. Yahoo Finance Senior Columnist Rick Newman breaks down the details of how workers awaiting legal documentation are bolstering the economy's labor force.

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Editor's note: This article was written by Angel Smith

Video Transcript

JOSH LIPTON: Surprising strength in the economy since the pandemic may be down to a spike in immigration according to new research from CBO. The study draws a correlation between high numbers of people entering the country and the better-than-expected labor market data along loosening inflationary pressures. Rick Newman has been looking into it all. Rick.

RICK NEWMAN: Well, there's a lot of research going on here. I mean, economists generally tell you that immigration, legal immigration is a good thing. We need immigration, and we need population growth to make the economy grow and to make the labor force grow. And by the way, we need more young workers to pay the benefits for Social Security and Medicare recipients.

So here's a couple of things we know. We know there's been this surge of migration at the Southwest border during the last couple of years. People may-- may be confused about this, but most of those people are not so-called illegal or undocumented immigrants. Most of those people who come in through the system, they get assigned a hearing date or at least they go into the system. But this hearing date doesn't come for five or 10 years. And so they're allowed to work. They can get a work permit while they're here.

So we've seen this surge of people into the United States who are getting work permits and working legally. And at the same time, how many times have we been sitting here talking about well, the unemployment report surprised to the upside yet again? It beat economists forecasts. Well, there's new research now from the Hamilton Project at the Brookings Institution that puts these two things together and says there does seem to be a definite correlation between more migrants coming in and increase in the labor force and increase in the number of Americans working and even a slight increase in GDP. In other words, this is good for the US economy.

Now, that's not the coverage it's getting. The coverage it's getting of course, is that this is a so-called crisis. Some cities and other certainly parts of the border are overwhelmed with migrants who don't know where to go. We don't have enough resources for handling--

JOSH LIPTON: Well, even here. Rick, I mean, even here, the mayor of this city has called it a crisis.

RICK NEWMAN: Also Chicago, Los Angeles, San Francisco. It's hit the sanctuary cities, the Democratic-controlled cities, who have been begging Biden to do something. But it's almost like there might be like a hidden benefit here to the economy. And look, Biden has clearly benefited from an economy. The recession that economists have been forecasting keeps not happening. Growth keeps up being higher than forecast. Employment ends up being higher than forecast. So one of the reasons these researchers are saying is this flood of migrants into the country, most of whom are ending up in the labor force and working.

JULIE HYMAN: Rick, there's a lot more I want to ask you, but we're out of time. So I'll have to do it off camera in the newsroom. Thanks so much.

RICK NEWMAN: We'll have to discuss this another time. I wonder if we'll have--

JULIE HYMAN: We will.

RICK NEWMAN: --be able to do that.

JULIE HYMAN: I'm sure it won't go away. Thanks a lot.

RICK NEWMAN: Bye, guys.