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Below The Topline The Recession & Declining Immigration
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Below The Topline The Recession & Declining Immigration

Doug Anderson, SVP, Research & Development, The Nielsen Company

SUMMARY: Population growth in the United States is slowing. Projections from the Nielsen Company, the Pew Research Center, and the Census Bureau all agree that year over year population growth will struggle to reach 1% for decades to come. In these projections the vast majority of population growth is slated to come from new immigrants who have yet to arrive and from children they have yet to conceive. New data show that the number of immigrants entering the U.S. has been substantially downwardly impacted by the recession. If growth from immigration remains suppressed, then the U.S. will certainly grow even more slowly, and in some near future years, may actually drop in population.

Future projections show an ever declining growth rate…

From the heights of the Baby Boom, growth rates have declined with the exception of the period from 1990 to 2000, when there was unprecedented growth among persons of Hispanic ancestry. Current 2009 and projected 2010 data show that this trend has not continued and future projections show an ever declining growth rate. However, these projections are based on assumptions about immigration and fertility rates formed before the current recession. If those assumptions are shown to be false over the long term, then the growth rates will decline even more.

The Pew Research Center projections show that 82% of all U.S. population growth from now until 2050 will come from new immigrants. Since immigrants tend to be younger and to have higher fertility rates than the native U.S. population, they account for a disproportionately large share of growth among children and families. Without a continuing influx of new immigrants at the rates projected before the recession, there will be no growth in the numbers of children and families. In fact, these key market segments will decline in absolute numbers from year to year, and will cause the U.S. population overall to age even faster than has been projected.

Declining birth rates

Birth rates have historically been impacted by tough economic times. Drops in the birth rate were recorded after the 1973–1975 and the 1980–1982 recessions in the U.S. Similar drops have been seen throughout the more developed world during periods of uncertainly about the economy. For most of the 2000s, the U.S. saw record numbers of births—a trend broken by provisional data recently released by the CDC showing a near 2% decline in 2008. Hard hit states like Florida, California, and Arizona have large drops in the number of births.

Impact on long-term population growth could be substantial…

If birth rates continue to drop into 2009, the impact on long-term population growth in the U.S. could be substantial. “It is certainly too early to tell if this economic crisis will result in a sharp drop in the birth rate, but all the measures and indicators are much worse than in the 1970s”, says Carl Haub, a senior demographer for the Population Reference Bureau.

Downturn in immigration rates

Immigration also tends to slow during bad economic periods. Since new immigrants are so important to U.S. population growth, any downturn in immigration rates is a clear warning sign for long-term growth. The current recession has hit particularly hard in the Southwest, as construction—particularly of housing—has almost completely dried up. The areas and occupations most hard hit are also those with a high concentration of immigrant workers—in particular, foreign born workers from Mexico. The unemployment rate for both native-born and foreign-born Hispanics in the U.S. increased 45% faster from the fourth quarter of 2007 to the fourth quarter of 2008 than did the rate for all workers.

A clear fall in the number of Mexican immigrants…

A drop in Mexican immigration

Failing job prospects have had a dampening effect on the movement of workers from Mexico to the U.S., according to a recent report issued by the Pew Hispanic Center and several other sources. Since Mexico is the largest source for immigrants entering the U.S. by a big margin, a downturn will have a strong impact on population growth driven by new immigrants. Since many Mexican workers are unauthorized to enter the U.S., tracking this population using standard government data sources is difficult. However, the preponderance of evidence shows a clear fall in the number of Mexican immigrants—particularly unauthorized ones.

  • Data from the Mexican government (ENOE) shows a strong decline in the numbers of persons leaving Mexico: from 547,000 for the year ending February of 2007, to 374,000 for the same period ending in 2008, and 203,000 for 2009. Since the U.S. is the primary destination for Mexicans who leave their country, the 63% decline from 2007 to 2009 should have a similar impact in the U.S.
  • Data from the U.S. Census Bureau’s Current Population Survey estimates there were 175,000 immigrants from Mexico in the period from March 2008 to March 2009—lower than any other year in the 2000s, and nearly 37% lower than the average year from 2002 to 2008.
  • Data from the Department of Homeland Security (Border Patrol) show a strong decline in the number of persons trying to enter the U.S. illegally—the lowest level since 1973. The 2008 rate was 40% lower than in 2004. Recent higher levels of border enforcement may also discourage people from trying to cross at all. A more difficult crossing plus the difficulty in finding work due to the recession are both clearing slowing unauthorized immigration.

Additionally, an analysis of government data by the Associated Press shows a huge decline in the number of green card applications over the past two years. The government has received about half as many employer sponsored applications in 2008 and 2009 than in previous years. As firms have shed jobs throughout the recession, it has become easier to find citizens who have the specialized skills that, in the past, might have justified sponsoring an immigrant for a green card.  This is likely an early indicator that immigration from India, China, and other countries, who have supplied highly skilled workers to the U.S. market, may also begin to fall.

Without new immigrants, the U.S. could see little or no population growth…

Clear warning sign for long-term growth

If immigration continues to remain suppressed and fertility rates continue to fall (and note that there is a clear connection between the two as immigrants tend to have much higher fertility rates than the native population), then the demographic outlook for the U.S. could begin to shift.

  • Population growth rates, already projected to be at historic lows, will fall lower. Many countries in the more developed world expect to see population declines owing to aging populations and low fertility rates over the coming decades. Without new immigrants and the children they will have, the U.S. could see little or no population growth in the near future.
  • New, young immigrants both increase the share of the population that is younger, and of course often have children themselves. Fewer immigrants will accelerate the aging of the U.S. population and exacerbate the economic strains that will come from paying for Social Security and Medicare/caid.
  • Fewer immigrants also mean slowing growth in ethnic populations (Hispanics, Asians, etc.) in the U.S.
  • Finally, the share of households with children—already projected to decline to below 30% over the coming decades—will fall more rapidly and to lower levels.

It may be too early to call an end to the current recession in the U.S., but many economic indicators suggest a corner may have been turned. The stock markets have recovered some of their losses, the rate of increase in unemployment has slowed, and even the housing market has begun to show some signs of life. It will take at least another year or two of government data to determine if immigration and fertility rates remain below recent levels. If both fail to recover, the impacts to the U.S. marketplace—both in terms of growth and composition—will be substantial.

Sources:

  • Centers for Disease Control and Prevention—National Vital Statistics Report Volume 57 Number 19—Births, Marriages, Divorces, and Deaths:  Provisional Data for 2008
  • Pew Hispanic Center—Mexican Immigrants: How Many Come?  How Many Leave? (July 22, 2009)
  • Pew Hispanic Center—Unemployment Rises Sharply Among Latino Immigrants in 2008 (February 12, 2009)
  • Population Reference Bureau—Will the Economic Downturn Lower Birth Rates? (January 8, 2009)
  • U.S. Census Current Population Survey—tabulations by the Pew Hispanic Center
  • Instituto Nacional de Estadistica y Geografia (INEGI)—Encuesta Nacional de Ocupacion y Empleo (National Survey of Occupation and Employment – ENOE)
  • The Nielsen Company—Population and Household Projections
  • The Nielsen Company—The Low Income Consumer in Mexico
  • MSNBC / Associated Press—Petitions for U.S. Worker Green Cards Plunge (August 6, 2009 / www.msnbc.com)