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Why strict limits on immigration could seriously damage Minnesota’s economy

Why strict limits on immigration could doom Minnesota’s economy
University of Minnesota
In the next two decades, demographers predict more deaths than births. This means that the state will mainly count on workers from other places to sustain its economy.

A certain President of the United States may not like to hear this, but Minnesota’s future population and economic growth depends on increased immigrant and refugee admissions.

That’s the conclusion of a recent University of Minnesota report underlining the state's shrinking workforce, its aging baby boomer generation and the need for foreign-born workers to help lead sustained economic growth.

As detailed in the “Immigrants and Minnesota’s Workforce” report, the state’s population continues to grow older and is gradually aging out of the workforce. Yet Minnesota isn’t really equipped to make up that loss with the growth of the native population, according to the study. 

There are a couple of reasons for that: In the next two decades, demographers predict more deaths than births in Minnesota. This means that the state will mainly count on workers from other places to sustain its economy.

Traditionally, Minnesota was often successful in attracting people in their prime working years from other states for jobs in various sectors. Between 2002 and 2014, however, the number of people moving to the state (the report describes them as “domestic net”) has drastically declined.

In stark contrast to domestic migrants, the number of immigrants and refugees (or “international net”) coming to the state has dramatically increased, which has contributed to economic wellbeing, revival of abandoned neighborhoods and population growth.

Minnesota’s Net Migration by International and Domestic Components
Adapted from “Figure 4: Minnesota’s Net Migration, by International and Domestic Components, 1991-2014”
Minnesota’s Net Migration by International and Domestic Components, 1991-2014

Data show that Minnesota’s foreign-born population has tripled in the past three decades. Today, the state is home to about 430,000 foreign-born residents, many of whom escaped violent conflicts in East Africa, Southeast Asia, Latin America and the former Soviet countries. 

Still, the number of immigrant and refugee residents in the state isn’t actually enough to offset the decline in the "domestic net" of those moving to Minnesota. Indeed, today’s workforce requires far greater numbers of people to fill the labor force shortage.

Immigrant workers are well positioned to do just that, the report states. “Minnesota’s success at attracting immigrants to the state and more effectively incorporating these immigrants into its workforce will play an important role in determining the strength of its economy in the future,” Ryan Allen, an associate professor at the U’s Humphrey School of Public Affairs, writes in the report.

Immigrants fill the workforce gap

In Minnesota and across the country, according to projections from many economists, there will be more jobs available than people to fill them in the coming decades. These jobs, though, will mostly be concentrated in areas that don’t require advanced degrees: personal care aides, retail salespersons, wait staff, cashiers and others.

Ryan Allen
University of Minnesota
Ryan Allen

The Minnesota Department of Employment and Economic Development (DEED), for example, has reported that more than 130,000 jobs that require less education will be available in Minnesota from 2014-2024.

So who is going to fill that employment void? It isn’t likely to be native-born Minnesotans or people from other states, the study shows. Instead, immigrant and refugee populations are well positioned to take up employment in occupations with more job openings.

That’s because about one-quarter of foreign-born residents older than 25 years of age don’t have a high school diploma. “Overall, immigrants in Minnesota are very engaged in the workforce,” Allen writes, “but they earn less than native born residents at least partly because such a large proportion lack educational backgrounds that would allow them to access good paying jobs in the state.”

But that isn’t the case for all foreign-born Minnesotans. About 33 percent of the immigrant population holds at least a bachelor’s degree and 72 percent participate in the workforce.

Whether they hold advanced degrees or not, though, immigrants and refugees certainly serve a greater purpose in the state economy: They help drive the 0.5 annual workforce growth rate the state needs to maintain.

“Without a substantial increase of migration to Minnesota in the future, the state’s labor force will likely grow much slower than it has in recent years,” Allen states. “This will make filling job vacancies more challenging in the future.”

Dispelling misconceptions

While the 22-page report, which was released in January, underlines the workforce shortage and the need for more people to fill the void, it’s also meant to refute misconceptions — that most immigrants and refugees are a threat to national security or a drain on government services.

Immigration was a signature campaign issue for many Republican leaders, who took an anti-immigration stance in a pledge to reduce the number of immigrants and refugees during the 2016 presidential election season campaign.

Eric Schwartz
MinnPost photo by Ibrahim Hirsi
Eric Schwartz

Since Donald Trump won the presidency, he’s followed through on his pledge on immigration. In his first week as president, he signed executive orders aimed at erecting a wall along the U.S-Mexico border, deporting undocumented immigrants and barring people from predominantly Muslims countries from entering the country.

The report, however, conveys a different message about immigration than that of the president and his supporters — a message which Eric Schwartz, dean of the Humphrey School of Public Affairs, hopes will help separate fact from fiction regarding the role of immigrants and refugees in the U.S. economy.

“This report should be seen as an effort to elevate facts over fear,” Schwartz said in an interview. “Public policies will only succeed in making people’s lives better if they’re based on information and rational analysis — and not based on fear and prejudice.”

The fact is, he said, if Minnesota is to continue to be a source of productive employment for residents, then it’ll need far greater numbers of immigrant workers. Over the years, immigrants and refugees have revitalized neighborhoods, filled important agricultural jobs outstate and helped sustain industrial employment.

If not for the country’s long history with immigration, Schwartz added, America would have been “far poorer, smaller, less diverse and less influential. Our immigration has enabled the United States to avoid the demographic challenges that countries in Europe and Japan are confronting.” 

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Comments (3)

$15/an hour would be a start

in making the challenge of filling positions easier. Also more affordable housing. Construction companies could be required by law to build a higher percentage of affordable housing units than they do now. That would require that Minnesota voters change the makeup of the legislature.
Meanwhile state, county, and municipal governments could acquire older housing as it comes on the market, rehab it and make it into affordable housing.
If we as a state work on making conditions more welcoming, immigrants and native-born alike will benefit.
Demographers may predict more deaths than births in Minnesota's immediate future, but people here, as everywhere, will continue to have children.

How do labor participation rates affect these projections?

Although I think immigration is and will continue to be an important as part of Minnesota's workforce, I see the situation as a bit more complicated and do not view slowing growth of the workforce as a bad thing. To start with, how many job openings offer essential or meaningful work with a living wage? Perhaps these "good jobs" should be our focus, since a job that doesn't at least provide a living wage will be,albeit inefficiently, subsidized by those jobs that do. If Minnesota properly manages it education, information, transportation, housing and healthcare infrastructures, I suspect the good jobs will not have much of a problem getting filled. Shedding non-essential low-paying jobs as the population stabilizes or even declines slightly may even be a positive thing for Minnesota as it should improve the quality of life for the population as a whole assuming unemployment rates stay low.

Wealth Distribution--Workers and Taxpayers Lose

In disagreement with the University of MN report as portrayed here, I’d like to draw from George J. Borjas, Professor of Economics and Social Policy at the Harvard Kennedy School, Harvard University, and also mention the 2016 National Academy of Sciences study, “The Economic and Fiscal Consequences of Immigration,as reviewed by the Center for Immigration Studies in an article entitled "NAS Studyof Immigration: Workers and Taxpayers Lose, Businesses Benefit..
Borjas says in Sept/Oct 2016 Politico article entitled, “Yes, Immigration Hurts American Workers,” “…………anyone who tells you that immigration doesn’t have any negative effects doesn’t understand how it really works. When the supply of workers goes up, the price that firms have to pay to hire workers goes down……….those skill groups that received the most immigrants will still offer lower pay relative to those that received fewer immigrants.” Also: “Both low- and high-skilled natives are affected by the influx of immigrants. But because a disproportionate percentage of immigrants have few skills, it is low-skilled American workers, including many blacks and Hispanics, who have suffered from this wage dip.” And we are urged to believe the U of MN study that we need more low-skilled immigrants? Borjas goes on with “…immigration redistributes wealth from those who compete with immigrants to those who use immigrants—from the employee to the employer.” Also: “Immigrants receive government assistant at higher rates than natives.” This concurs with how the NAS reports on fiscal impact as reviewed by CIS: “…..immigrants do not pay enough in taxes to cover their consumption of public services at the present time.” And I might add that foreign workers send money earned here to families in their countries of origin. How does this benefit Minnesota’s economy? Too bad the U of MN report doesn’t take any of these fiscal and social costs into consideration when giving their version of supply and demand, but rather chooses to look strictly at the benefits to business, and gear their public information accordingly, misleading the public.