How did the post-pandemic migration surge affect labor and housing markets?

Native-born U.S. residents surprisingly benefited, on net, from an immigration surge during the Biden administration, according to a paper to be discussed at the Brookings Papers on Economic Activity (BPEA) conference on September 24.

The authors—Jennifer Hunt of Rutgers University, Pia Orrenius of the Federal Reserve Bank of Dallas, and Madeline Zavodny of the University of North Florida—examine the economic impact of the 6.5 million new immigrants who entered the United States outside of the usual legal pathways from 2021 to 2024.

“One important takeaway from our results is that the U.S. economy appears to have largely absorbed an unprecedented influx of migrants with few adverse economic effects,” the authors write. They note that changes in domestic migration in response to the immigration surge played a key role in diffusing its effects across metro areas.

The surge, as the COVID-19 pandemic receded, added 2% to the 2021 population and boosted the foreign-born share of the U.S. population to its highest rate in more than a century. The New York City metro area topped the list of surge immigrant destinations, followed by Miami, Los Angeles, Dallas-Fort Worth, Chicago, and Houston.

According to the paper, the surge raised average metropolitan area gross domestic product by 1.5%, likely because of increased consumption demand from immigrants. The paper notes that it also is possible that the work immigrants performed complemented, rather than substituted for, the work of natives, thus helping to increase natives’ productivity.

The influx may have reduced average wages of all workers by as much as 1.5%, likely in part because immigrants took lower-wage jobs. But U.S. natives’ wages rose 0.9% overall and native-born employment was roughly unchanged.

Housing demand generated by the new immigrants caused rents to rise by 1.4 to 1.6%, the paper finds, but native renters’ wages rose by more, increasing at least 1.6% net of the rent increase.

The increases in U.S. natives’ wages and rents were highest early in the surge, when the U.S. economy was in the midst of a steep recovery from the pandemic, boosted by government stimulus and low interest rates.

Also, as time went on, in‑migration to metro areas by people already in the United States adjusted to the surge by declining. Hunt, in an interview with the Brookings Institution, speculated that competition for jobs from the new immigrants and rent increases may have discouraged some native low-wage workers from moving to cities.

The paper also examines the impact of Texas’ and Arizona’s busing campaign from April 2022 to June 2024. Almost 125,000 immigrants volunteered for free bus rides to six cities: Chicago, Denver, Los Angeles, New York City, Philadelphia, and Washington, D.C. Immigrants from Venezuela and Colombia tended to opt for the bus lifts more often than immigrants from other countries, who went to metro areas where people from their country already lived. Cubans and Haitians, for instance, tended to go to the Miami area. In the short run, the bus lift depressed the wages of natives in Denver, the metro area with by far the most bus-lift migrants per capita.