U.S. economy can thrive without increased migration, says Jerome Powell

In a recent hearing at the House Financial Services Committee, Federal Reserve Chairman Jerome Powell articulated a perspective on the U.S. economy's growth potential that challenges the prevailing focus on immigration as a primary driver. During the session, he discussed two critical factors affecting economic growth: labor force growth and productivity growth. Powell indicated that even if there were cuts to migration, the economy could still thrive through enhancing the productivity of American workers. This shift in focus away from migration towards innovation and technology has been echoed in calls for revising post-1990 strategies that relied on immigration for economic expansion. Despite tense discussions with Rep. Maria Salazar, who advocated for increased migration to support her business-backed bills for welcoming more migrant workers, Powell maintained that higher productivity could offset the need for more workers in the U.S. economy. The conversation highlighted a divergence in views, where Powell warned of the time and effort required to foster productivity enhancements. His comments reflect a growing concern that over-reliance on skilled and unskilled migrant labor has impeded technological advancements and harmed American workers, families, and communities. This topic of migration has also been examined in the international context, where countries like China have successfully developed high-tech industries and increased per-capita incomes without relying on migration as a strategy. Powell noted that while there may be constraints on aggregate output due to slower population growth, the country could still maintain high per capita earnings with a refined focus on productivity and innovation rather than influxes of new workers. The conversation underscores a pivotal moment in the economic policy debate in the U.S., suggesting a reorientation towards domestic growth strategies that prioritize innovation over population growth.