CHATHAM, Mass. (Reuters) - A new wave of U.S. immigrants over the next century will enlarge the labor pool at a time when a growing proportion of the nation will be retiring, but their arrival may slow growth in U.S. productivity, a Federal Reserve report said on Tuesday.
The U.S. Census Bureau projects that the U.S. population will grow more slowly over the next century than ever before and age rapidly, with the proportion of those over 65 years hitting record highs.
This will mean the U.S. will once again become a nation of immigrants, a report by the Boston Federal Reserve Bank said, noting immigration in the past decade had already neared proportions last seen in the early 1900s as Europeans flocked to U.S. shores. The Boston Fed is opening a conference Tuesday morning in Chatham on the economic impact of demographic change. The report is due to be presented at the conference.
The new wave of immigrants, mainly from Latin America and Asia, and their children, will account for more than half of the increase in the U.S. population over the next century, the report said.
``These demographic shifts are likely to trigger some major adjustments within the U.S economy -- many of which will play out in U.S. labor markets,'' said Jane Little and Robert Triest, Boston Fed economists and authors of the report.
From an economic standpoint, the key question is whether the new wave of immigrants, many of whom have relatively lower levels of schooling compared with U.S. natives, will be able to achieve the higher productivity -- output per worker -- needed to meet the living standards expected by the aging population.
Although economic analysis suggests productivity growth is fastest when population growth is slow, the report said this fails to take into account the past trend of increasing educational attainment.
``While immigration is projected to make a huge contribution to the growth in the U.S. working age population, this gain comes at a price, since the gap between the average educational attainment of the foreign- and native-born populations is large,'' the report said.
And that is in argument for immediacy, not against the idea itself.
Demography is Destiny.