The Corner

Economy & Business

Cheating Our Way to 4 Percent Growth

“I believe it’s time to establish a national goal of reaching 4 percent economic growth,” Donald Trump declared in a speech two months before he won the 2016 election. He still references 4 percent regularly, but getting there by increasing productivity seems almost impossible.

Rumors are circulating that the White House may try to “cheat” its way to higher GDP growth with a major expansion of immigration. Those rumors could be true, given the president’s promise from the State of the Union to accept legal immigrants in “the largest numbers ever” — a promise that he later insisted was more than a mere ad-lib. Just this week, DHS announced 30,000 additional visas for low-skill guest workers. It may be a preview of something much larger, as presidential son-in-law Jared Kushner is reportedly working on a grand proposal centered around importing labor.

Adding more people certainly adds to total GDP, but it’s something of a statistical “cheat” because almost all of the gains go to the immigrants themselves. Since GDP is such a common measure of the nation’s economic health, most Americans expect that a higher GDP means the unemployment rate is going down and their incomes are going up. For example, Fox News recently described a 1 percent gain in GDP as “about $500 per American.” But expanding the population through immigration has little overall effect on the incomes of the people already here. Total GDP will always increase with population growth, but per capita GDP is much more stubborn.

Although the distinction between gains to GDP and gains to natives seems like a simple one, the media are frequently confused by it. CNN once warned that the Cotton-Perdue RAISE Act — which would reduce immigration over the long term by eliminating chain migration — would lead to “4.6 million lost jobs by the year 2040.” The claim is tautological. It simply restates the fact that a smaller population will have a smaller number of workers than a larger population. It implies nothing about the effect of the RAISE Act on Americans.

If the president does attempt to sell immigration-inflated GDP numbers as proof of prosperity, I suspect ordinary Americans will not buy it. The working-class voters who elected him are bound to notice that their own financial situations don’t match the rosy economic numbers. They may end up feeling even more left behind than they do now.

Jason Richwine is a public-policy analyst and a contributor to National Review Online.

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