As immigration to the US hits record lows and the Trump administration has effectively ended refugee settlement a new study has outlined the positive contribution migration makes to America’s economy.

The report, from the Washington-based think tank The Brookings Institution, says that immigration contributes positively to America’s economic growth by expanding the labour force, increasing consumer demand, and supporting overall GDP growth.

“Empirical evidence indicates that immigrants have historically contributed more in tax revenue than they receive in public benefits, creating a substantial fiscal surplus for the U.S. government over time,” the report says.

“Immigration plays a critical role in mitigating the economic effects of an aging population by increasing the share of working-age individuals who support social programs such as Social Security and Medicare,” it says.

Lead researcher Tara Watson said that although the US is often described as ‘a nation of immigrants’, immigration to the United States has been among the most contentious political issues in recent decades and a concern for voters over the past few years.

“Immigrants bring with them a range of mostly positive demographic, fiscal, and economic impacts. Yet we have entered a new era of significantly slowed migration, which my colleagues and I have estimated to be net negative in 2025 for the first time in at least half a century.,” Ms Watson said.

She said immigrants were a fiscal boon to the US. In each year from 1994 to 2023, across all levels of government, immigrants paid more in taxes than they received in benefits. This resulted in a cumulative fiscal surplus of $US14.5 trillion over that period, including savings on interest payments on the national debt.

Ms Watson said it was important to recognise that the fiscal benefits of immigration are not shared equally. The federal government enjoys contributions from the payroll tax, but undocumented immigrants and recently arrived legal immigrants are eligible for few federal benefits.

However, many immigrants and their children do use educational and health services funded at the state and local levels. This creates fiscal hardship for cities and states that could be ameliorated by policies that help support places welcoming new immigrants, she said.

“GDP growth is slowed by reductions in net migration, particularly abrupt ones. In our January report, my colleagues and I demonstrate how the decline in migration between 2024 and 2025 will reduce GDP growth by between 0.19 and 0.26 percentage points and lower consumer spending by $40 billion to $60 billion in 2025,” Ms Watson said.

“These macroeconomic effects result from the direct impact of having fewer workers and consumers in the country, as well as the indirect effects of reduced spending by immigrants due to increased uncertainty. 

“Though much of the rhetoric surrounding the immigration issue focuses on jobs for American workers, most economists agree that lower migration levels do not ultimately lead to additional employment for US-born workers. Immigrants are consumers as well as producers of goods and services, so fewer immigrants means less consumer demand.

“As a result, the main effect of reduced immigration is simply a smaller economy. Moreover, an extensive literature documents that immigration to the U.S. has led to innovations that have boosted the productivity of US-born workers. Cutting off immigration flows harms American economic growth.”

Ms Watson said that while nearly all economists agree that immigration boosts the US economy, there were moral issues at stake in current debates about immigration.

“Our national identity is rooted in pluralism, openness, and rule of law, even if the nation has often fallen short of those ideals. Attacks on fundamental principles – the civil rights of immigrants, the notion of birthright citizenship, and restraints on executive powers – strike at the core of what has made America exceptional,” she said.

“The needed solutions therefore encompass immigration policy and beyond. Congress has not passed major immigration reform in 30 years, abdicating its responsibility and concentrating excessive power within the executive branch.

“Bipartisan reform packages which likely would have the support of legislators and the public, such as the 2023 comprehensive bill and the DIGNITY Act, have not been brought forward for a vote. Congress must take its duty to legislate on the immigration issue seriously.”

Ms Watson inferred that recent Trump administration actions and policies on immigration amounted to civil rights violations.

“At the same time, the political temperature around immigration has allowed some Americans to overlook the broadening scope of executive authority and civil rights violations,” she said.

“The disregard for the law in the immigration arena threatens to weaken the institutions we value throughout civil society. Unless Americans insist on adherence to the rule of law, the economic, political, and social effects of eroded institutions are likely to persist even if we reopen our borders,” Ms Watson said.

Read the full report: The impact of immigrants on the US economy | Brookings