Manufacturing's Immigrant Dilemma

The year was 1904. A teenage Jewish migrant from Bessarabia (now Moldova) stepped off a ship at Ellis Island, changed his name, and rather than settle in the tenements of the Lower East Side, hopped a train to the Midwest. He quickly found employment as a rickshaw boy at the St. Louis World’s Fair—the transformational event at which the X-ray machine was introduced, outdoor electric lighting was widely exhibited and ice cream cones and hamburgers were popularized.

Chaim Goldentaer, or Hyman Gold as he henceforth would be known, never again spoke a word of Russian or Yiddish and considered himself an American through and through. He went on to become a furniture-manufacturing shop foreman in New Orleans. His children and grandchildren became successful contributors to society as lawyers and journalists, real estate agents and business executives. And yet, for unknown reasons he maintained his “resident alien” status to the end of his days, never becoming a U.S. citizen.

Which means, had he been born a century later and come to the United States at the turn of this century, my grandfather’s legacy would have been different—because in today’s political climate, he may well have been detained and ultimately deported. What a loss that would have been.

We can all agree there is a challenge with undocumented immigrants in this country. The Pew Research Center recently released a study showing a record number of unauthorized immigrants—14 million—residing within our borders. This includes roughly 40% who entered the U.S. legally but do not have the authorization to stay long-term.

But let’s not cut our nose to spite our face. The nativism that has emerged in the United States over the past decade, culminating in more active federal deportation efforts under President Donald Trump’s second administration, may, according to the American Enterprise Institute, actually lead to a net negative migration for the first time in decades.

This does not bode well for society in general or manufacturing. A case in point: The early September ICE raid of a Hyundai construction site in Georgia—the precise kind of manufacturing investment we desperately need here—shows that even those foreign-born specialists who are able to provide critical technical expertise are at risk.

Over the years, U.S. open immigration policies—at least relative to most other nations—have put us at a competitive advantage over major industrial competitors. With birthrates plummeting across the globe, including here, the United States is among one of the few industrial powers able to maintain and even grow its available workforce. And that has been accomplished solely through the import of foreign-born workers to our society.

Roughly 48 million people in America, or 14.3% of the total U.S. population, are foreign-born, including illegals. This percentage is comparable to earlier periods, such as the late 19^th century at the height of great Eastern and Southern European immigration, when 15% of the populace was not born here. Then in the half century following the First World War, the proportion of immigrants declined dramatically to around 5%. Since 1970, it’s once again steadily risen back to pre-World War I proportions, which has helped multiple sectors, from construction and retail to agriculture and, of course, manufacturing.

Why is this so important? Fertility rates in the U.S. are at an all-time low—1.62, or below the rate a population can sustain itself (for the record, that rate is 2). For decades the United States had people clamoring to enter and become citizens, giving us a competitive advantage over virtually every major industrial nation in the world.  Other industrial economies also have unsustainable fertility rates—but they also have lower immigration rates. For example, according to the World Bank, China’s fertility rate is 1.0 and its percentage of immigrants (a representation for how many people try to immigrate each year) is 0.1%. Japan’s fertility rate is 1.2 and its immigration rate is 2.8%. In the industrialized world, only Britain and Germany have comparable immigration rates to the U.S. that help offset a dramatic societal workforce decline.

What role do foreign-born residents currently play in our economy? According to the Center for Migration Studies, they account for 19% of the U.S. labor force, and are mainly employed in service industries (e.g., hospitals, landscaping, airports), construction, transportation and material-moving occupations. Of the roughly 40% of these who are undocumented, about 1.5 million work in construction, 1 million in restaurants, 320,000 in agriculture, 300,000 in landscaping and 200,000 in food processing and manufacturing. In particular, they serve in positions that most Americans have shunned, such as seasonal agricultural field hands, housekeepers, janitors, cooks and dishwashers, lawn mowers and personal health aides to the elderly.

For more than two decades, American manufacturers have lamented the challenge they face in finding and luring skilled workers into their labor pools. If rebuilding our manufacturing base is a policy priority for politicians, our current xenophobic phase is undermining our ultimate economic goals.

Even with the increase in unauthorized immigration in recent decades, our society needs a steady stream of both unskilled and skilled immigrants, looking for economic and entrepreneurial opportunities, to select the United States as their home in the coming decades. Again, let’s not cut our nose to spite our face.