U.S. President Donald Trump recently signed the \’Big and Beautiful Act\’, which allocates $150 billion for border security improvements and deportation operations. The White House claims this will not harm the economy and may encourage more Americans to join the workforce. However, economists have expressed skepticism about these assertions.
Latest government data shows a continued decline in the number of foreign workers in the U.S., marking the third consecutive month of reduction. Despite the addition of 147,000 non-farm jobs in June, experts warn that reduced immigration could lower job creation requirements for maintaining stable unemployment rates. They also note that slower wage growth might constrain overall economic expansion.
Daniel Zhao, Chief Economist and Senior Manager at Glassdoor Economic Research, cautions that a slowing job market could lead to slower economic growth. Deutsche Bank analysts estimate that reduced immigration could lower monthly job creation requirements to just 50,000, significantly below previous estimates during the Biden administration.
Bank of America’s Aditya Bhave highlights demographic challenges facing the U.S., warning that substantial immigration declines would make it difficult for businesses to find sufficient workers. Congressional Budget Office projections indicate slowing population growth over coming decades, with immigrant workers playing a critical role in offsetting effects of an aging domestic population.
The American Enterprise Institute predicts net U.S. migration in 2025 might stagnate or decline, potentially reducing GDP growth by 0.3-0.4 percentage points. While former Trump economic advisor Stephen Miran argues native-born workers can compensate for any labor shortages, citing 8% unemployment among 20-24 year olds and over 14% among young adults, most economists maintain that immigration remains vital for sustained economic expansion.
— News Original —
The “Big and Beautiful Act” may threaten the U.S. job market, and economists emphasize that immigration is crucial.
Cailian Press, July 7 (Editor Ma Lan) – U.S. President Donald Trump signed the ‘Big and Beautiful Act’ last week, but some analysts believe it will have a negative impact on the U.S. job market.
Under the ‘Big and Beautiful Act,’ the U.S. government plans to allocate $150 billion to strengthen border security and deport illegal immigrants. The White House insists that a decline in the number of immigrants will not harm the U.S. economy and that the bill will encourage more Americans to enter the job market. However, economists are skeptical of these claims.
The latest government report indicates that the number of foreign workers in the U.S. declined again in June, marking the third consecutive month of decline, despite the addition of 147,000 non-farm jobs in the U.S. in June.
Economists argue that with the sudden end of the immigration wave brought by the previous administration, the number of jobs that U.S. companies need to create to control the unemployment rate will decrease. They also note that even if the unemployment rate remains around the current level of 4.1%, slower wage growth could hinder the economy.
Daniel Zhao, Chief Economist and Senior Manager of the Glassdoor Economic Research team, further warns that if the job market slows down, the market should expect economic growth to slow down as well.
Is there a sufficient labor supply?
Despite these concerns from economists, there is currently no direct evidence that Trump’s immigration policies have weakened the robustness of the labor market. However, there are signs that the channels for sourcing labor, which are vital for U.S. companies, are beginning to narrow.
Deutsche Bank noted last week that a reduction in the number of immigrants could lower the number of new jobs that companies must create each month to just 50,000. This estimate aligns with what Labor Department officials believe is necessary to prevent an increase in the unemployment rate, but it is significantly lower than the large total of non-farm payroll jobs estimated by some economists during the tenure of former President Biden.
Slower job growth also implies that the economy cannot expand rapidly without overheating. Aditya Bhave, Senior Economist and Managing Director at Bank of America, has also warned that the underlying demographic situation in the U.S. is not promising. If immigration declines substantially, American businesses will struggle to find enough workers to complete their tasks.
According to projections by the Congressional Budget Office, population growth in the U.S. is expected to slow over the next few decades. Many economists have also emphasized that immigrant workers are crucial in offsetting the effects of an aging population in the U.S.
A report from another think tank, the American Enterprise Institute, predicts that net migration to the U.S. in 2025 may be flat or even decline, which could reduce U.S. GDP by 0.3 to 0.4 percentage points.
However, Stephen Miran, Chief Economist and Chairman of the Council of Economic Advisers under Trump, firmly disagrees. He argues that there are sufficient numbers of native-born workers to compensate for any labor shortages. Currently, the unemployment rate for workers aged 20 to 24 is over 8%, approximately double the national average, while the unemployment rate for young adults is over 14%.
He insists that the ‘Great and Beautiful Bill’ will increase the labor supply and encourage unemployed individuals receiving medical assistance to re-enter the workforce. The notion that the U.S. lacks a domestic labor force to replace immigrants is incorrect, and with the right incentives, a significant number of workers can be attracted to the market.
Edited by Danial