05/29/2013 12:19 pm ET Updated Jul 29, 2013

Immigration, Aging and America's Competitive Edge

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Unlike the unending political news of the scandals rocking the Obama Administration -- IRS, AP, Benghazi, where there is a growing, universal consensus Inside the Beltway that something is, at best wrong and at worst rotten -- the debate on immigration has become more of a Rorschach test than anything else. The discourse has become a bloated catch-all, and everyone with a Twitter feed or a New York Times column has been unable to resist giving their here's-what-it's-really-about interpretation. The debates over manicures, IQ tests, and gay rights offer some of the more colorful examples.

Perhaps the difference of immigration is that it is understood at its base as an "All-American" issue that has been with us since our founding and is as American as motherhood and apple pie. Immigration is also a solution to America's aging population, which will give us a unique competitive advantage in the economic struggle among nations. Indeed, it is only because of immigration that the U.S. doesn't find itself in the same economic conundrum as Japan, China, South Korea, and the European Union. These economic peers are finding it increasingly tricky to pay for their "seniors" as they age. With their birth-rates falling and longevity extending, the math no longer adds up.


Australia and France notwithstanding -- two rich nations with immigrant populations larger than most -- the U.S. is exceptionally young among OECD nations, despite its 78 million Baby Boomers who are passing into retirement. And it's the country's immigrants that are keeping the population balanced and preventing it becoming like Japan, Korea, and much of Europe, where over a third of their population will soon be over 55.

Recent reports from Pew Research illustrate the point. In the U.S., 13 percent of the total population is foreign-born. But 23 percent of all babies born in the U.S. are from foreign-born mothers. According to Pew data, the total births among foreign-born women is trending downwards, but it still makes up nearly a quarter of all American babies.

For the U.S., this is extremely important. The country has 2.08 kids born per woman during her lifetime, but if babies from recent immigrant families were taken out of this equation, this number would drop to well below what demographers call "replacement level." The U.S. would, in other words, have sub-replacement births like every other OECD nation. And it would, one might conclude, suffer a similar economic malaise caused in large, but unnoticed measure by this demographic structural reconstruction of their populations.

Japan, most obviously, serves as the test-case. In 1995, its 60-and-over population eclipsed the 20 percent mark -- an unprecedented and historic milestone By 2010, this segment accounted for 30 percent of its population and it will pass an incredible 40 percent by 2040. While Japan's demographics is where much of the world is headed, it is also the first nation to experience this historic shift. This is the "dirty little secret" that at least in part explains Japan's decades-long economic funk.

Yet, as important as babies are to economic growth -- leading many to trumpet the truism that "demography is destiny" -- it need not be the whole story. Economies can grow and social welfare can improve even without a young population. Scandinavian nations offer a current example. With typical European demography (high longevity, low birth rates), much of Scandinavia is forging ahead.

The key, of course, is to keep older adults engaged in social and economic life. This is the real challenge, the one that will make or break American fortunes -- and those of the rest of the globe -- in the 21st century. We need strategically progressive policies in the public and private sector that enable continued economic contribution of those who are 60, 70, and, yes, even 80-years-old. We are making great strides in this direction, but, quite frankly, we're not there yet. Despite impressive leadership and notable progress, we still have work to do. And, in the meantime, the higher birth rates among the immigrant population is propping up the U.S. It is, ultimately, an economic strength, and it would be foolish to dismember it while we get the rest of our house in order. Immigration reform, in fact, will be a great economic benefit in addition to its underlying social value that has been part of the American fabric since our Founding.

The immigration debate inside the Beltway is bound to take many twists and turns during its "sausage making", and, outside the beltway, the connections to nail polish are probably only the beginning of the tangential reasoning we're bound to encounter over the next little while. But as we get back to it this coming week, it would behoove all of us to contextualize immigration in the larger demographic and economic landscape. America's population is aging, and immigration is proving to be an antidote. Just as immigration fueled the U.S.'s historic rise to global power in the 19th and 20th century, it will be an indispensable asset as we compete in the 21st. Each century has its historic contributions to the value of American Immigrants as central to the fabric of our values. In our 21st, add to the core social standard and economic platform of prior centuries its indispensability to an otherwise aging society that would put us in the mainstream of all others with that challenge.

Michael Hodin writes the Age and Reason blog for The Fiscal Times