Tara Watson is the Director of the Center for Economic Security and Opportunity at the Brookings Institution, where she’s also the John C. and Nancy D. Whitehead Chair of Economic Studies. She is also a research associate of the National Bureau of Economic Research. Watson’s an economist whose work focuses on U.S. social policy, with interests in the safety net, health, and immigration. In 2015, she served as deputy assistant secretary for microeconomic analysis in the U.S. Treasury Department’s Office of Economic Policy. In 2021, she published the book ”The Border Within: The Economics of Immigration in an Age of Fear,” co-authored with journalist Kalee Thompson. Earlier this year, Watson published a report with Brookings on the economic impact of immigrants on the U.S. economy.
Episode Description
During the 2010s, the United States netted just under one million new immigrants each year; between 2022 and 2024, that number was closer to three million. But since the election of Donald Trump, immigration to the U.S. has taken a nosedive, and potentially so has the economic growth of the country. The economic impact of the rise and fall of immigration to the U.S. is a focus of this episode of Stats and Stories, with Tara Watson.
Full Transcript
Rosemary Pennington
During the 2010s, the United States netted just under 1 million new immigrants each year, between 2022 and 2024, that number was closer to 3 million. But since the election of Donald Trump, immigration to the U.S. has taken a nosedive, and potentially so has the economic growth of the country. The economic impact of the rise and fall of immigration to the U.S. is the focus of this episode of Stats and Stories, where we explore the statistics behind the stories and the stories behind the statistics. I'm Rosemary Pennington. Stats and Stories is a production of the American Statistical Association in partnership with Miami University's departments of statistics and media, journalism, and film. Joining me is regular panelist John Bailer, emeritus professor of statistics at Miami University. Our guest today is Tara Watson, director of the Center for Economic Security and Opportunity at the Brookings Institution, where she's also the John C. and Nancy D. Whitehead Chair of Economic Studies. She's also an associate. She's also a research associate of the National Bureau of Economic Research. Watson's an economist whose work focuses on U.S. social policy, with interest in the safety net, health, and immigration. In 2015, she served as deputy assistant secretary for microeconomic analysis in the U.S. Treasury Department's Office of Economic Policy. In 2021, she published the book *The Border Within: The Economics of Immigration in an Age of Fear* co-authored with journalist Haley Thompson, and earlier this year, Watson published a report with Brookings on the economic impact of immigrants on the U.S. economy. Tara, thank you so much for joining us today.
Tara Watson
Happy to be here,
John Bailer
Tara. It's it's a delight. I mean, you know, I I got to ask you, why do you work with journalists? No, no, no. I'm not going to start that. I you know, it's some of my favorite. I've just loved working with Rosemary over time. I'm just curious, what inspired you to investigate the economic impact of foreign-born people in the U.S.
Tara Watson
Well, as Rosemary mentioned, I'm an economist, and I was very interested in the U.S. safety net. I started to get interested in immigrants' participation in safety net programs, and from there, I gradually got more interested not just in the cost side of the ledger, but the benefit side of the ledger, and learned more and more about the ways that immigrants contribute to the economy.
Rosemary Pennington
The question I had as I was reading through your report and also through some of your book was how do you measure the economic impact of immigrants, particularly people who might be undocumented who are in the country?
Tara Watson
That's a good question. So, big picture, there's a first order question of what you mean by economic impact. So, I've done some work looking at just the number of people, the number of workers that we have in the U.S. that's a one key factor in our GDP growth. There's also GDP per capita or income effects of immigrants. The immigrants might affect inflation. They might affect the fiscal picture of the U.S. So there's lots of different angles one can take on this. And then there's a second set of questions that relate to the one you just talked to, which is about how do we actually get the statistics that measure that? And one thing I've been focused on lately is just literally trying to understand the number of immigrants that we have in the U.S. which you would think would be pretty straightforward, but it turns out is not easy to measure, particularly because we have many that don't have any formal status, but also even among legal immigrants, we don't know exactly how many people that received illegal status are still here, how many are still alive, and so just trying to understand the numbers and then what effects they have at the local, state, and federal level are big picture questions.
John Bailer
Yeah, it always is a surprise to realize that it's hard to count. I mean, surprisingly
Tara Watson
hard to count. Yes, I didn't really realize that it came to a head in the past few years when we had the big surge and then the big decline, and most of the. Statistics that we've been relying on have been put out with lags. So things like the American Community Survey goes out in the field and tracks people and does a reasonably good job of estimating immigrants, including undocumented immigrants. But those numbers don't come out for a year and a half after the people are out in the field, and there really isn't a good real-time way to track what's going on. So you're thinking about late 2023. It was just very hard to know how many people had had come. We knew there was a lot of border activity, but we didn't know how many people had moved to our cities. And then last year, I did a lot of work just trying to understand how many people were no longer coming, how many people were actually leaving, which we don't track very well either.
John Bailer
Yeah, you know, you you mentioned earlier that when you started your being interested in working with these types of problems, that you had been focusing on safety nets. So I think of that as kind of the the cost side of this equation, sort of the what? What's some of the? Can you can you talk about also the benefits side? What are some of the the additions to to the economy that are associated with with foreign born workers?
Tara Watson
Yeah, sure. So foreign born workers punch above their weight in terms of the number of people that are actually in the labor force. So they they immigrants tend to come around working age, early working age, and work at higher rates than the U.S. born. So, just in terms of having workers in the economy, most of our growth in the labor force is now coming from the immigrant population. We don't have really much U.S. born labor force growth in part because we have an aging U.S. born population that's moving into retirement, and we aren't having that many children. So almost all the growth in the labor force is coming from the foreign born population. Beyond that, we have things like immigrants as consumers. They're contributing to our consumer demand. They are obviously producers, so that goes with the labor supply thing. But also very disproportionately represented in areas like productivity growth, starting new businesses, entrepreneurship. So a lot of the dynamism in the economy is coming from the immigrant population as well, and you can imagine that is in part because people are coming with perspectives from all over the world, and you know probably bringing new ideas that we wouldn't have. And also, the people that come here are people generally that are coming to work and to make the most of the opportunity. So, on average, we just see a lot of economic benefits from having immigrants come to the country.
Rosemary Pennington
There historically, the United States has it's has been net positive when it comes to immigration. More people have come in, have left the country. But then in this report that you produced for Brookings, you point to data that suggests that that trend is changing. That in 2025, 2026, and moving forward, that's likely to be a net negative. And again, given that it's so hard to track the flows of migration, how can you get a sense of that? And how can you figure out what again what that impact is going to be on the economy of the country?
Tara Watson
Right. So the work came out of the surge that happened during the Biden administration. Whereas I mentioned there was, it was clear that something was happening in real time that was not predicted, and people started turning to alternative ways of trying to measure the immigrant population. So I got interested in that. So we know things like how many people showing up at the border during the Biden administration. Many of the people that were showing up at the border were allowed to come into the U.S. even though they didn't have a permanent status or a visa, but they would come on a humanitarian parole type of program, and we had numbers on that. We had numbers on legal migration through the traditional paths. We had some other sources, so we were just sort of taking from here and there and trying to fill in the gaps where we had to. So we were coming up with monthly numbers that were approximations, really, of what we thought the flows were, as I alluded to earlier, really hard to measure how many people are leaving because we don't track that very well. So once the new administration started in 2025, we took those same set of tools, but now we're applying it to a different situation where the border has much less activity and very few people coming across through that way, but we still had some of the other data sets. There were some challenges because the there were some monthly reports that came out of the administration previously that haven't been updated. So some there were some additional gaps in our in our data, but with some colleagues. I pulled together our best guess of the inflows and outflows by category over the course of 2025. We came out with a number that was net negative, probably a few 100,000 net negative. Other estimates, like by the Congressional Budget Office, were more in the few 100,000 positive category, but in any case, a much much reduced from the 3 million or so that everyone agreed had happened in 2023 and and around there.
John Bailer
You know, when I when I was reading the the report that the Brookings the Brookings report that came out, I was really struck by the the the plot of of the impact of different migration patterns on the population of the U.S. You know, I'm so I'm so used to seeing kind of this just consistent and continuing increase in population, but that under different scenarios, I mean, the the low migration model suggested flat, almost no change, whereas the the the zero migration decline, I mean the growth was only achievable if there's high high immigration, and and I I'm curious if you know what's what would happen to the economy if if we were to have kind of flat or zero immigration and hence this flattening of the population or decrease in the U.S. population,
Tara Watson
right? I guess it's important to point out that it's too early to say whether this will continue for 26, 27, 28, and and beyond when we imagine the policies might change. But if it were to continue, we would just be growing at a much slower rate, and in fact, as you mentioned, shrinking eventually. We just are not producing enough children to replace the people that we're losing on the other end as a as a U.S. born population. So, there are other economies that have gone through this. Japan is an example people often mention. It means slower growth. It means less dynamism doesn't mean society completely collapses it's you know it'd just be a big adjustment and there's some specific challenges one thing in particular I've been thinking about a lot is the aging population and who will care for them immigrants are disproportionately represented in that work, and as we bring in fewer immigrants and have, you know, also don't have locally grown direct care workers, so to speak, we're going to have a real challenge of making sure there are enough people to care for the elderly and disabled population.
Rosemary Pennington
Sarah, I wonder as you've been doing this work, what you have found the most sort of surprising bit of information that's come out of it, whether it's about the demographics or the economics.
Tara Watson
Well, as a as a researcher, probably the most surprising thing is how little we know about something as basic as who's coming and going. You would think that you would have information on the number of people that leave the United States in a given day or the number of people that arrive in a given day, but we don't. I think the other thing I would say is that there seems to be a disconnect between the academic research literature, which is very robust on certain points, there's some areas where there's more disagreement. But things like overall immigration is good for the economy. Almost every economist would agree to that. They would might disagree about well, is it good for the least skilled workers in our economy, or is it good for all groups, or is it good for you know certain niche areas? But the big picture is is very overwhelmingly positive. Similarly, immigrants have been shown time and time again to have low crime rates and to have a net fiscal positive impact on the government budgets, and all of those things are things that I view as very well established in the academic world and somehow not well established in the public discourse, there still seems to be a lot of debate about that in in the public sphere, whereas I don't think that's justified by the evidence.
Rosemary Pennington
You're listening to Stats and Stories, and we're talking with Brookings Tara Watson about immigration today.
John Bailer
You know, it's it seems natural to talk about costs and and benefits in terms of the immigrant population, but but one might also ask the question of costs and benefits of kind of a a more aggressive policy of deportation. Yes. You know, so can you know what what are some of the the. Costs and it's there's there sounds like there's layers of costs that are associated with this, right? Versus benefits. So, can you help sort of expand on that?
Tara Watson
Sure. So there's obviously a direct financial cost of enforcement activity. We've just seen a bill that is devoting many 10s of billions of dollars to building new facilities to house people, to ramping up staff at the border and in the interior to conduct immigration enforcement. So those are direct costs and they're real. I think there's also what you might consider social or human cost. So we're doing things like going into communities and making people afraid to go about their daily lives-that affects their own well-being, of course, but also their children. If their children aren't going to school or to the doctor, it affects the way communities operate with each other. And of course, we also have plenty of examples of families that are being split apart, which is a big personal cost to to them and to the communities they live in. In terms of benefits, it's just a lot harder to see what those are. I'm sympathetic to the idea that if we do have laws on the books, they should be enforced. On the other hand, most of the immigrants that are living here are really contributing to their communities and to the economy, and so if we're thinking about them as individuals, taking them out of the country or detaining them is not a win for the U.S. Or it's hard to see how it promotes anything other than this sort of semblance of law and order.
Rosemary Pennington
You you hinted at this idea of a chilling effect just more ago in your in your response, and you talk about that a bit in the book. And I wonder if you could talk through again, like you know, I'm familiar with the chilling effect when it comes to speech as a as a journalist, what when you're thinking about the chilling effect is that in relation to immigration and maybe how have how has it how does it play out amongst immigrant communities in a way that is harmful to them and perhaps even the communities that they live in? The
Tara Watson
Chilling idea is the notion that there are enforcement actions or other actions taken by the government that go beyond just the direct effect on the person who's being arrested or who's being targeted, but creates a climate of fear in the community that discourages people from doing what they would otherwise do, and this can apply to other undocumented immigrants who aren't directly targeted. It could apply to even legal permanent residents, or certainly some citizens have told me that they're afraid citizens who are born abroad, and this affects people's behavior. It makes people feel less safe, and one thing that's been very clear in this administration, I would say, is that that's kind of the the point. So they're the way that they're conducting enforcement. This was somewhat true in the first Trump administration, but I think it's definitely more so now. Is to be as visible as possible and to make it as chaotic as possible to try to make people feel uncomfortable and feel like they can't go about their daily lives. I think with the end goal of that, they're hoping that some people will just voluntarily leave. But it is-it seems to be the case that the effects on people are much larger than you would think based on the actual numbers of arrests, the community impacts, the declines in employment seem to be just really big compared to you know a single arrest, and so it seems to be shaping the way that the communities are operating, at least in the short run.
John Bailer
Yeah, yeah. I was. I can't remember where I was reading this in in your work that that you were talking about the the the nature of mixed families, where you might have someone who is an undocumented foreign-born person, but but yet residing with people that are are documented or citizens, and so that that the removal of this person may ultimately increase costs of kind of the safety net being required for those that are are left behind.
Tara Watson
Right. So there are more than 4 million children that are citizens that live with a undocumented parent or family member, and many of those will rely on a father who's a breadwinner, and men are more likely to be targeted by enforcement action. So you do see this relationship where those citizens, of course, are eligible for our safety net programs, even though. Undocumented immigrants are not eligible for most safety net programs. The children become more dependent on the government for support when the working adult and their family is no longer able to do that.
John Bailer
So, you know, when you think of the about the undocumented workers coming in, I mean, one of the the the common refrains that we hear is that that other jobs jobs will be lost for native born workers. How what is the you know what what do your studies suggest about the impact of of these undocumented foreign-born workers and their impact on on the workforce?
Tara Watson
It doesn't seem to be the case. It's a natural assumption for someone to to make that there's sort of a fixed number of jobs, and if someone takes them, then it's not available for someone else. But the reality is more complicated than that. So, as I mentioned earlier, immigrants are consumers as well as producers, and so when they come to a local area, they're going out to eat, they're buying things, they're you know behaving in the economy a lot like anyone else, and so they're they're generating economic activity through that pathway. But also, there are studies showing other ways that firms adjust to the labor force that's available to them. So, for example, a firm, a company might decide if they don't have a lot of workers available readily to them, maybe they'll go abroad and do production somewhere else, or maybe they will automate more quickly. But if they do have a lot of workers available to them, they might make a different decision. So there have been a number of studies suggesting that immigrants actually kind of create their own jobs, for lack of a better phrase, because of those different ways that firms adapt to the the labor force that they have, and because of the consumer side of things. There was a great study looking at the Bracero program, which was from the mid 20th century, where a lot of people suddenly left were essentially expelled from the U.S. farm workers, and the impact was that farms just became more machine focused. It was not that they went out and hired more U.S. born workers, and so even though it's maybe counterintuitive, it really does seem like adding more immigrants does not take U.S. born jobs away, and conversely, in this moment, where we're losing immigrants, we're not, you know, seeing radical changes in the employability of the U.S. born workforce either.
Rosemary Pennington
Earlier, you talked about sort of disconnect you saw between kind of the data on immigration and sort of the narratives that circulate, and I wonder what, given your research and your background, what what advice you might have to journalists who are trying to cover this thoughtfully? Because I think they are trying to cover it thoughtfully and well. But you know, journalists are trapped in the same kind of cultural and social mylus we all are. And so, again, what advice do you have for them to be able to cover this story in a way that's thoughtful and doesn't sort of reproduce maybe negative stereotypes or or misinformation about immigration. It's
Tara Watson
a good question. I guess one thing I would say would be to lead with the data rather than the the anecdote or the narrative. I think journalists, of course, like narrative because it brings people along and helps tell the story. But I think one thing I liked about working with the journalists for the book was to be able to marry those a little bit and make sure those were complementing each other. I do think it's also important to acknowledge some of the concerns that the general public have, and not to pretend that there's you know zero concern with immigration. It's that's not true, but when you dig into the research, a lot of it is pretty one-sided, and you know that's not that common in economics, usually there's two two sides to everything, and so highlighting when that's the case and when that's not the case, I think is helpful.
John Bailer
If you were going to give kind of the the big takeaways that you that you wish people knew about the impact of immigration, what. What what might those be?
Tara Watson
Well, the things I keep hammering on are yes, immigrants are good for the economy. We haven't really talked about the fiscal side of things, but immigrants are also good on the fiscal side, meaning the government budgets are healthier when we have more immigration. And I think there is a real demographic challenge that's looming that we've discussed that I would challenge people to come up with a a better solution to. So I guess the obvious alternative is to try to promote fertility. A lot of countries have tried different things, and they have generally not been very successful in getting people to have more babies, so I'm skeptical that there's policy that can change the fertility rate very much. Whereas immigration is, of course, a policy that is pretty easy to change, especially in the U.S. where we have this long history of very robust migration and more people who want to come than we allow in, so we really do have that dial that we can turn up and down.
John Bailer
Could you just talk just a little bit about kind of the how a government budget is healthier with more immigration?
Tara Watson
Sure. There's a great Cato report that came out recently. Cato is a libertarian think tank in D.C. that did a very careful analysis. They modeled that on a previous analysis by National Academies of Sciences and Engineering, and both of them found that if you just add up the costs that immigrants incur when they're in the U.S. and you add up the revenues that they contribute, there's a pretty clear balance that immigrants are contributing more in taxes and fees, et cetera, than they are taking in benefits. In part, that's because undocumented immigrants, in particular, are ineligible for a lot of benefits. Also, immigrants in their first five years are often ineligible for benefits as well, even if they're legal immigrants. And so, a lot of immigrants are just sort of shut out of the some of the key safety net programs, and so that tilts the ledger in favor of them contributing more. Also, there's a life cycle component. As I mentioned, they're coming to the U.S. usually in young adulthood. That's the prime time when people are fiscal contributors. So they're paying taxes every year. They're working. I'm generalizing here, of course, but in most cases, and then if they're legal immigrants with a work history, they will likely get some of the old age benefits that that we get, Social Security and Medicare. But by that time, they've contributed a lot over a long period of time, and so if you compare first-generation immigrants, second-generation immigrants, and then the U.S. born, you actually see the second-generation immigrants are the most fiscally positive, meaning the children who were born in the U.S. but are the children of immigrants, and it's really helpful at this particular moment when we're facing this challenge of financing our Social Security and Medicare systems. Those systems are going to expire in less than 10 years. The reserve that we have built up in those systems is going to be exhausted, and so we're going to need some funding that can come through taxes, it can come through borrowing, or it can come through, bring in more people who are contributing, and then I like to say tha social security is kind of like a Ponzi scheme. So, if you can keep bringing in more people to contribute to the Ponzi scheme, then that sustains the system.
Rosemary Pennington
Well, that's all the time we have for this episode of Stats and Stories. Tara, thank you so much for joining us today.
Tara Watson
Thank you.
Rosemary Pennington
Stats and Stories is a partnership between the American Statistical Association and Miami University's Departments of Statistics and Media, Journalism, and Film. You can follow us on Spotify, Apple Podcast, or other places where you find podcasts. If you'd like to share your thoughts on the program, send your email to statstories@amstat.org, or check us out@statsandstories.net, and be sure to listen for future editions of Stats and Stories, where we discuss the statistics behind the stories and the stories behind the statistics.