In a flailing economy, immigration and financial inclusion benefit us all
For the first time in recorded history, Americans want immigration to the U.S. to increase. Despite the traction nationalist rhetoric has gained in recent years, more citizens than ever before recognize the important role immigration plays in our country’s economy, culture and success. A recent Gallup poll found that a record high of 34% of Americans favor more immigration, while a record low of 28% want less.
The rising swell of support for immigration comes at a critical time for the U.S., as we face a significant economic downturn. Americans are now realizing a long-disputed fact of our society and economy — that immigration is our origin story. That our country would simply not exist in its freedoms and prosperity without the hundreds of millions of people throughout history who have left their native countries to build a life in the U.S. And because of that, our nation cannot thrive, or recover, without the contributions of our country’s immigrant communities.
Unfortunately, immigrants continue to suffer from unfair or outright harmful policies that make upward mobility in the U.S. a steep climb. Moreover, traditional financial services present countless additional barriers that exclude immigrants from equal participation in the financial system. They contend with complicated documentation requirements, expensive fees and misleading services designed to take a disproportionately high share of their earnings. In a strong economy, these issues can feel insurmountable. In a downturn, the effects are compounded and threaten to unravel years of savings and forward progress, ultimately driving further economic decline.
A struggling economy needs immigrants, and their financial inclusion, to make a strong and swift rebound. Looking back at the aftermath of the 2008 crisis provides a stark illustration of the important role immigration played in economic recovery and growth. Before the Great Recession, a 2007 report by the White House Council of Economic Advisers found that immigrants account for annual increases of $37 billion to the U.S. Gross Domestic Product (GDP). Other sources correlated rapid, prerecession increases in immigrant workers to above average economic growth. A 2013 study that examined the impact of immigrants on economic renewal found that foreign-born residents (who accounted for one in eight Americans at the time of the study) stimulated job growth, raised home prices and helped “revive thousands of economically distressed communities.”
Amid the last recession, the Center for American Progress reported that immigrants “contribute $80,000 more per capita in taxes than they consume in government services over the course of their lives.” In addition to boosting the GDP and paying taxes, immigrants are significant contributors to U.S. entrepreneurism and the STEM talent pipeline, additional factors in growing our country’s economy. Roughly 25% of U.S. entrepreneurs and inventors are immigrants, and half of our country’s startup unicorns were founded by immigrants. According to Harvard Business Review research, immigrant-founded startups that survive “grow at a faster rate in terms of employment, payroll and establishments for the next six years” after their founding.
Recognizing the importance of progressive immigration policies is only part of the picture, though. In order for our country to fully achieve economic recovery, we need to address financial inclusion. When immigrants have equitable access to the financial system — in other words, when financial services have been disrupted in a way that gives immigrants more choice, transparency and control over their money — they have more spending power.
Today, immigrants who send money across borders to support their loved ones back home lose around $40 billion each year to excessive remittance fees. Eliminating predatory remittance practices and making the process of sending money internationally easier and more cost-effective is one way to help level the playing field. This alone has the potential to return hundreds of millions of hard-earned dollars to immigrant workers, which they in turn can feed back into bettering their communities and the economy.
We must also address the unbanked and underbanked in our country. Roughly 1.7 billion people are shut out of traditional banking, often due to unfair or complicated requirements for opening an account. New financial services solutions and federal policy are needed to ensure every American resident, regardless of immigration status, has access to checking, savings, funds transfers, borrowing and other basic financial services.
As immigration policy wars rage on in Washington, D.C., and the global economy struggles to weather the COVID-19 storm, we must begin to ask ourselves what would happen if we shifted the narrative from blaming immigrants to respecting their integral contributions to our society. What would happen if we embraced diversity and financial inclusion as opposed to fearing and rejecting them? The statistics are clear on these matters. We would find a healthier, more vibrant economy that would lift each and every person, of all nationalities. Our economy would grow via more jobs, more innovation, more tax revenue and more income for everyone.
Despite federal policy setbacks, American sentiment is on the right track. The Gallup poll mentioned earlier also found that 77% of Americans — more than ever before — believe immigration is a good thing for this country today. But good intentions can only take us so far. Change will require those of us with privilege to take action and advocate for equality and financial inclusion. We all want the economy to recover, so let’s join together in correcting stigmas about immigrants and resetting broken systems that continue to hinder the many benefits immigration brings to our society.