The Economic Impact of Immigration on the U.S.

Every year, as Independence Day is celebrated with parades, flags, and speeches, a critical question emerges: Does the country still value the principle of immigration, a foundational element in America’s growth? This topic extends beyond America’s history and influences its economic future. Recent immigration restrictions, such as reduced green card allocations, travel bans, and fewer asylum grants, have caused a significant decline in immigration numbers.

The U.S. Census Bureau notes that net international migration reached 2.7 million in 2024 but dropped to 1.3 million in 2025. It is forecasted to fall to 321,000 in 2026, marking an unprecedented downturn. Several concerns drive these restrictions, with a common argument being the potential negative economic impact on state and local budgets.

While these concerns merit consideration, a recent study highlights a different perspective. This study examined data from every U.S. state between 2008 and 2023. It found that a 1 percent increase in state population due to immigration correlates with a 1.5 percent rise in private sector GDP, which exceeds the population growth rate. The impact varies widely between states.

For instance, states with smaller immigrant populations like West Virginia (2.97 percent), Montana (4.04 percent), Mississippi (4.02 percent), North Dakota (2.48 percent), and Wyoming (2.89 percent) witness significant economic benefits. Similarly, states with robust economic policies, such as New Hampshire (3.81 percent), South Dakota (3.14 percent), Idaho (2.7 percent), and Tennessee (3.27 percent), show substantial impacts.

The findings have broad implications, especially as demographic trends raise concerns for the U.S. economy’s future. The Congressional Budget Office (CBO) predicts a slowdown in U.S. population growth, from 0.3 percent annually over the next decade to 0.1 percent per year between 2037 and 2056. As fertility rates decline, net migration will become crucial with projections showing a population decline starting in 2030 without immigration.

An aging population further complicates the issue. The CBO projects a decrease in the ratio of people aged 25 to 64 compared to those over 65, from 2.7 today to 2.2 in the next 30 years. This would lead to fewer people contributing to innovation, supporting social programs, and caring for the elderly.

States face critical challenges despite federal control over immigration laws. Legislators have opportunities to reform these laws, particularly in rural and economically less regulated states. Ironically, states most concerned about immigration are also those facing population decline and workforce shortages, making the case for immigration reform even stronger.

States can adopt policies that maximize immigration benefits by reducing taxes, shrinking government size, and streamlining regulations. Initiatives to help newcomers work, start businesses, and obtain occupational licenses can ease their transition from arrival to contribution.

American pride in being a nation of immigrants persists, with 79 percent of Americans expressing favorable views on immigration according to Gallup. Concerns about immigrants using more resources than they produce find some reassurance in our study, which shows immigration fosters opportunities for newcomers and benefits Americans alike. For many states eager to grow, newcomers represent the foundation of a future economy.

John Bitzan is the Menard Family Director of the Sheila and Robert Challey Institute for Global Innovation and Growth at North Dakota State University.