FILE – A group of immigrants attend a news conference held by the Mississippi Immigrants Rights Alliance regarding legislative proposals affecting immigrants and migrants in Mississippi, Wednesday, Jan. 25, 2023, at the Capitol in Jackson, Miss. (AP Photo/Rogelio V. Solis, File) After another Independence Day of parades, flags and speeches about the American experiment, the harder question is whether the country still believes in one of the forces that helped build it: people coming here to build a better life.
That story is not only about America’s past. It is also about the country’s economic future.
Unfortunately, a recent wave of immigration restrictions, including fewer green cards awarded, travel bans from various countries, reduced refugee and asylum grants and others, has resulted in a drop in immigration. According to the U.S. Census Bureau, net international migration peaked at 2.7 million in 2024, fell to 1.3 million in 2025 and is projected to drop to 321,000 in 2026, which the bureau calls a historic decline.
Restrictions on immigration are based on several concerns. But a major justification is a perceived negative economic effect of immigration, particularly on state and local budgets.
Those concerns should not simply be dismissed. Any growing population creates demands on public services. But a recent study I coauthored suggests the claim that immigrants are simply a drain on state economies does not fit the evidence.
Using data for every U.S. state between 2008 and 2023, we find that a 1 percent increase in a state’s population from immigration is associated with a 1.5 percent increase in private sector GDP for the value of goods and services produced in the average state. That’s a larger percentage increase in income than in population.
The effect also varies dramatically by state. In our simulations, a 1 percent increase in a state’s total population coming entirely from immigrants raises private-sector GDP by anywhere from 0.57 percent to 4.41 percent, depending on the state.
States with small immigrant populations, such as West Virginia (2.97 percent), Montana (4.04 percent), Mississippi (4.02 percent), North Dakota (2.48 percent) and Wyoming (2.89 percent), show large effects. Similarly, states with high levels of economic freedom, such as New Hampshire (3.81 percent), South Dakota (3.14 percent), Idaho (2.7 percent) and Tennessee (3.27 percent), show large impacts.
These results have important implications for our nation, with recent demographic trends raising concerns about the future of the U.S. economy.
According to the Congressional Budget Office (CBO), the rate of U.S. population growth is expected to slow over the next 30 years, from an average of 0.3 percent per year for the next 10 years to 0.1 percent per year from 2037 to 2056. Moreover, as fertility rates decline, net migration will become increasingly important, with the U.S. population projected to decline starting in 2030 without immigration.
An aging U.S. population accentuates the concern. CBO projects that the ratio of people between 25 and 64 to those over 65 will decline from 2.7 now to 2.2 over the next three decades. This means a lower working-age population, fewer people who typically innovate, fewer contributions to Social Security and other programs and fewer people to care for aging adults.
There are also important implications for states. Although immigration law is federal, national legislators can reform immigration law for the benefit of their state. In particular, representatives from rural states and those with less burdensome government (those that are traditionally red) would benefit the most from immigration reform.
That is the irony at the center of today’s debate: Many of the states most worried about immigration are also those worried about population loss and workforce shortages. They have the strongest economic case for immigration.
Moreover, states can enact policies that enable them to benefit more from immigration. States can lower tax burdens, reduce the size of their governments and reduce onerous regulations to enhance the benefits of immigration. They can also make it easier for newcomers to work, start a business, transfer credentials and obtain occupational licenses, so that people move quickly from arrival to contribution.
Americans take pride in being a nation of immigrants and a beacon of hope and freedom for the world, with “The New Colossus” sonnet at the Statue of Liberty stating, “Give me your tired, your poor, your huddled masses yearning to breathe free.” And a record-high 79 percent of Americans tell Gallup that immigration is a good thing for our country.
For those who are concerned that immigration may drain our country of resources due to immigrants using more resources than they produce, our study provides some comfort. Not only does immigration enable people from around the world to take a chance on the American Dream; it enables Americans to benefit from the immigrants who take that chance.
For many states, especially those still trying to grow, newcomers are not a cost to be absorbed. They are part of the next economy waiting to be built.
John Bitzan is the Menard Family Director of the Sheila and Robert Challey Institute for Global Innovation and Growth at North Dakota State University.
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