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For the first time in 50 years, the U.S. will likely experience negative net migration, shrinking the U.S. workforce—and economic growth by extension
For the first time in 50 years, the U.S. will likely experience negative net migration, shrinking the U.S. workforce—and economic growth by extension

Yahoo

time15-07-2025

  • Business
  • Yahoo

For the first time in 50 years, the U.S. will likely experience negative net migration, shrinking the U.S. workforce—and economic growth by extension

The U.S. may see more than 500,000 people emigrate from the country as a result of President Donald Trump's aggressive deportation campaign, according to a recent report from the American Enterprise Institute. With foreign-born workers making up a disproportional amount of the American workforce, shrinking immigration could result in a hit to U.S. labor growth and consumer spending. These factors could lead to an up to 0.4% hit to U.S. GDP growth. President Donald Trump's efforts to deport millions of immigrants could likely result in a hit to the U.S. labor force that would shrink the country's gross domestic product, new data shows. A working paper published this month from the American Enterprise Institute (AEI), a conservative economics policy center, found the Trump administration's immigration policy will likely result in a negative net migration in 2025—something the U.S. has not experienced in decades—that would shrink labor participation and 'put significant downward pressure on growth in the labor force and employment.' Net migration in 2025 will likely be between 525,000 individuals leaving the U.S. and 115,000 migrants entering the country, but will likely be negative, according to the report. With fewer immigrants in the country available to work, combined with a decrease in consumer spending—immigrants had $299 billion in spending power in 2023 and paid $167 billion in rent—U.S. GDP growth may shrink by between 0.3% and 0.4%. U.S. real GDP is about $23.5 trillion, which means the economic tradeoff of the deportations is roughly between $70.5 billion to $94 billion in lost economic output annually. The drag on what would usually be 2.8% annual growth would indicate a slowing in economic expansion as employers not only hire fewer people to fill fewer roles, but consumers spend less in an economically uncertain environment. 'Our workforce is disproportionately made up of immigrants relative to their share of the population, and because of that we…really can't sustain a high level of job growth with the U.S.-born population alone, because there just aren't enough bodies, essentially, to do that,' report co-author Tara Watson, a Brookings Institute economist and professor of economics at Williams College, told Fortune. The foreign-born U.S. labor force—which made up 19.2% of the total labor force as of 2024—has shrunk by 735,000 people since January, according to data from the Federal Reserve Bank of St. Louis. But the departure of foreign-born workers in the U.S. now follows an immigration surge during the Biden administration, which helped create a swell of economic growth. The Congressional Budget Office projected the increase in migrants would boost the U.S. nominal GDP by $8.9 trillion between 2024 to 2034. Meanwhile, the U.S.-born workforce is shrinking as many age out and retire. Wendy Edelberg, Watson's co-author and a senior fellow in economic studies at the Brookings Institution, called the projected loss of immigrant workers 'startling' and sees more trouble on the horizon. The U.S. has seen a surge in work permit applications in the first half of 2025, suggesting to Edelberg that many immigrants—out of concern for Trump's immigration policy—rushed to secure employment ahead of a crackdown, contributing to a healthy labor market and a 147,000 boost to payroll enrollment in June. But 'we're not going to ride that wave forever,' Edelberg told Fortune. She and Watson projected a shrinking labor force would result in payment enrollment growth of only 30,000 to 40,000 per month in the second half of the year. This number would be healthy and not indicative of a recession because it will simply indicate a much lower ceiling for labor force growth, Edelberg said. If weak immigration continues into 2027, Edelberg predicted that the jobs figure could turn negative. Immigration has been the cornerstone of the Trump administration's policy agenda, with the president on day one of his second term vowing to crack down on undocumented migrants to the U.S. Trump's Big Beautiful Bill injected $45 billion into the Department of Homeland Security to expand deportation facilities and gives Immigration and Customs Enforcement (ICE) more than $11 billion annually to increase its workforce of deportation officers. The White House called AEI's report on the negative economic impacts of mass deportations 'baseless fear-mongering in defense of illegal immigration,' claiming that 10% of young adults in the U.S. are neither employed, in higher education, or seeking vocational training. 'There is no shortage of American minds and hands to grow our labor force,' White House spokesperson Abigail Jackson told Fortune in a statement. 'President Trump's mass deportation campaign means higher wages and more opportunity for American workers.' Unlike Trump's first term, in which he oversaw a more modest curtailing of immigration, the president has ramped up deportations after a sluggish start to his second administration, with Watson and Edelberg projecting the removal of about 300,000 immigrants in 2025 alone. Beyond the nearly 67,000 immigrants the Trump administration has detained in fiscal 2025 and more than 71,000 deported, according to ICE data, others have self-deported or left voluntarily out of growing concern over hostile policies as part of the out-migration, according to AEI's study. Watson warned net migration could be even lower in 2026, as the administration likely refuses to renew temporary work visas and foreign-born students snub American universities in favor of higher education opportunities elsewhere. 'The environment is going to make people like students reluctant to come study here,' Watson said. 'Temporary workers may be questioning whether this is the right place for them to come to work.' Businesses are seeing the early consequences of weakened immigration, with farm workers refusing to show up to work out of fear of ICE raids, Bloomberg reported. Nursing homes are similarly struggling to attract a workforce as the Trump administration revokes some immigrants' legal status and slows the immigration process for documented migrants. 'We feel completely beat up right now,' Deke Cateau, CEO of Atlanta-based nursing home operator A.G. Rhodes, which has one-third of its staff made up of immigrants, told the Associated Press. 'The pipeline is getting smaller and smaller.' Beyond concern about a shrinking GDP, Apollo chief economist Torsten Sløk warned that if the U.S. were to deport 3,000 undocumented immigrants per day for a year, the country's labor force would drop by 1 million people. Workplaces with high rates of immigrant employment could subsequently see an increase in wages as they struggle to attract workers. 'Lowering the labor force by 1 million will reduce the participation rate by 0.4 percentage points, which will lower the unemployment rate, lower job growth, and increase wage inflation, particularly in the sectors where unauthorized immigrants work—namely construction, agriculture, and leisure and hospitality,' Sløk said in a Saturday blog post. 'In short, deportations are a stagflationary impulse to the economy, resulting in lower employment growth and higher wage inflation,' he continued. While some parts of the U.S. could experience stagflationary environments, stagflation could be tempered in areas with large immigrant populations as their spending power wanes and demand for industries like housing construction decreases, Edelberg said. Watson posited that besides GDP, shrinking immigration will most heavily be felt in Social Security. Undocumented immigrants paid $25.7 billion in Social Security taxes in 2022, according to a 2024 analysis by the left-leaning Institute on Taxation and Economic Policy. 'There's a very tight correlation between how many people are coming into the country and the degree to which we can sustain Social Security at its current levels going forward,' she said. More broadly, the economic ramifications of Trump's mass deportation campaign are only one part of the policy's impact, Edelberg said, the other half being the palpable changes in the feeling within American cities spurred by ICE raids and the mobilization of the National Guard to accelerate deportations. 'The broad macroeconomic events are going to be pretty modest,' she said. 'In terms of how we're affected by this immigration policy, I think they will be dwarfed by how we engage with this policy, just in the images and in our communities.' This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

There is a global teacher shortage. How fintech can help tackle it
There is a global teacher shortage. How fintech can help tackle it

The Print

time05-07-2025

  • Business
  • The Print

There is a global teacher shortage. How fintech can help tackle it

A global teacher shortage is looming, which would affect students for years to come. Teaching shortages could lead to larger class sizes and increased teacher burnout, ultimately placing a long-term strain on education systems worldwide. Technology could help teachers live a better financial life and stay longer on the job, while also supporting their financial wellbeing. Demand for teachers is expected to rise in the coming years but many educators are leaving the industry due to stress – both in the classroom and in relation to their finances. This could increase class sizes and amplify teacher burnout, not to mention adding to recruitment and training costs for schools. A recent UNESCO projects report found that 44 million additional teachers are needed worldwide to achieve universal primary and secondary education by 2030. The report highlights a demand for 70% of these additional teachers at the secondary level and a need to replace over half of the existing teachers leaving the profession. The World Economic Forum's Future of Jobs Report 2025 notes that teachers will be among the occupations expected to experience high growth in the years to come. But teachers are leaving the profession for a myriad of reasons, including high stress levels, burnout, lack of support, heavy workloads and challenging working conditions. Financial strain is also often cited as one of the top reasons teachers leave the field. Teaching is stressful enough but struggling to make ends meet at the same time can be too much for some to handle. An exodus of teachers would have wider effects. One of the most pressing issues relating to a teacher shortage is 'recruiting, preparing and retaining sufficient numbers of qualified teachers,' according to the Brookings Institute. Hiring and training teachers is no easy task. Larger school districts in the US, for example, spend nearly $25,000 on average to replace a departing teacher. No wonder then that 86% of US public schools are struggling to hire educators. Helping teachers, schools and pupils survive and thrive during these challenging economic times requires the right tools. Advances in financial technology (fintech) can play a role in helping to curb an exodus from the teaching profession. Fintech and financial literacy Empowering teachers by improving their financial literacy and education can also help them in the classroom, both by relieving money worries and providing them with financial knowledge to pass on to students. Advances in fintech can provide teachers with relevant, useful and actionable information at the click of a button on mobile devices. Accessible and relevant financial education is a great start for teachers, but having the ability to apply that information in the workplace is also critical in paving a path to financial wellness and stability. Fintech solutions that support teachers' financial journeys such as personal finance and budgeting apps, investment and savings apps and digital retirement planning tools, can all help teachers make their money work harder and smarter. The percentage of people who say budgeting has 'helped them get out or stay out of debt' has increased from 73% in 2018 to 89% in 2024. In the UK, over 18 million people used budgeting apps in 2024, while another report indicates that 40% of Germans also use digital budgeting apps. Investment apps are widely regarded as having democratised investing, making it more accessible to a broader range of individuals. Mobile brokerage apps often offer resources to help users learn about the basics of investing, develop a good financial strategy and other crucial concepts. On-demand pay and the teacher shortage Our research with The Harris Poll found that 70% of teachers say it would be helpful to be paid more frequently than twice per month. And so on-demand pay is another fintech solution that could help teachers live a better financial life and stay longer on the job while also supporting their financial wellbeing. This voluntary employee benefit can help teachers pay bills on time as it addresses the problem of the timing of their paychecks and their bills being misaligned. These tools can provide real-time visibility of daily earnings, empowering teachers with the knowledge to make the best decisions for themselves and their families. Timeliness and transparency are critical to making ends meet and staying out of debt – an unexpected expense in the middle of a teachers' pay period could send their financial situation into turmoil. Employers could offer such fintech solutions as part of a financial wellness benefit package. 'Education is the most powerful weapon which you can use to change the world', according to Nelson Mandela. Teachers play such a pivotal role in the advancement of society. And while fintech cannot address every challenge they face, it can help to ease their money worries and help them focus on what matters most – teaching. This article is republished from the World Economic Forum under a Creative Commons licence. Read the original article.

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