How bad housing policy is fueling America’s anti-immigration backlash

In this house, we believe that high rents fuel nativist backlashes.

Anti-immigration protesters in Huntington Beach, California, hold a Trump flag and a sign saying “Build the Wall.”

If you don’t build housing, they’ll build the wall. Kevin Sullivan/Digital First Media/Orange County Register via Getty Images

The United States needs more immigrants. But at the moment, it does not especially want them.

The country’s fertility rate has fallen far below the replacement level. Absent immigration, our nation will grow older and smaller simultaneously. In that scenario, a shrinking population of prime-age workers would need to support a ballooning population of retirees. Growth would slow, productivity would fall, and deficits would swell.

The Congressional Budget Office (CBO) recently illuminated these realities. In an update to its 10-year economic forecast released February 7, the CBO reported that America’s gross domestic product would be $7 trillion higher — and the federal deficit $1 trillion lower — than it had previously anticipated. This pleasant surprise came courtesy of the past year’s surge in immigration: Due to that uptick in new arrivals, the US is now on track to have 5.2 million more workers by 2033 than previously projected. That will increase the amount of goods and services the economy can produce and improve the nation’s ratio of laborers to retirees.

Even as the case for large-scale immigration has become stronger, however, political appetite for it has grown weaker. In Gallup’s polling, the share of Americans who want immigration levels “decreased” rose from 28 percent in 2020 to 41 percent in 2023. By contrast, only 26 percent of 2023 respondents wanted to increase immigration.

This restrictionist mood is apparent in polls focusing on the 2024 presidential race. In a recent Bloomberg News/Morning Consult survey of swing states, voters said they trusted Donald Trump over Joe Biden on immigration by a 22-point margin, 52 to 30 percent. And this was, if anything, an unusually positive result for the president: An NBC News poll released this month found voters favoring Trump over Biden on immigration by 35 points.

This fundamental tension — between a growing economic need for immigrants and burgeoning political backlash against mass immigration — is common to virtually all wealthy countries. The world’s 15 largest economies all have below-replacement fertility rates and aging populations. Yet a wide variety of those countries have recently imposed new immigration restrictions, and right-wing nationalist parties have gained ground in elections.

Overcoming this nativist backlash is a political imperative. We cannot ensure America’s future prosperity — or provide a home to the many millions who will be displaced by climate change — without fostering more pro-immigrant politics.

Precisely how liberals can go about doing this is hard to say. Much of today’s backlash is rooted in the peculiar challenges of asylum policy. In 2022, 2.9 million people applied for asylum, the most since at least 2000, according to the United Nations. In 2023, another 1.7 million submitted applications.

A large surge in asylum claims presents difficulties that an ordinary expansion of immigration does not. Governments can control the number of documented immigrants they admit annually and give preferential treatment to those who meet pressing national needs. Documented immigrants also have the right to work and impose no special burden on a nation’s judicial system or fiscal resources. They don’t need their legal status adjudicated in court and tend to have a more positive impact on the government’s finances than native-born Americans.

By contrast, states can control neither the number of people who claim asylum at their borders nor the skills or age profile of that population. Asylum seekers are also typically denied work permits while they await the final adjudication of their cases, which can take years. This takes a toll on the resources of the municipalities where they live. Chicago and New York City have struggled to maintain social services for their permanent residents amid large inflows of asylum seekers, with NYC spending $1.4 billion on caring for migrants, according to the mayor’s office. Predictably, the politics of immigration in the Empire State have turned rightward in response.

In a perfect world, liberals could mitigate all these challenges by dramatically expanding opportunities for immigration and investing in more robust administrative systems for screening, resettling, and integrating asylum seekers. In our actual world, Democrats can’t even get Republicans to support their own party’s preferred reforms to the asylum process, thanks in part to Trump’s demagogy.

But there is one area where many Democrats are making the politics of immigration more toxic without any help from Trump’s GOP: By suppressing housing construction through restrictive zoning laws, deep-blue municipalities are engineering a situation in which immigrants genuinely threaten the economic interests of native-born residents. If liberals want their country to be more welcoming of immigrants, they need to make their cities’ housing stock more accommodating of newcomers.

The economic case against immigration is weak (unless you make it illegal to build apartments)

In recent years, commentators on both the left and right have called the economic benefits of immigration into question. They’ve noted that Americans benefit from tight labor markets, in which firms must bid against each other for a scarce pool of workers. Large inflows of immigrant laborers undermine the bargaining power of native-born workers, the theory goes, thereby depressing wages and increasing unemployment.

One may be able to find evidence of this phenomenon in discrete industries, but there’s little basis for believing that it holds at the level of the economy writ large. The tightness of labor markets is not determined by the supply of labor alone. If that were true, then America’s median wage would have steadily declined — and its employment rate steadily risen — as its population increased over the 20th century. But the baby boomers’ mass entrance into the labor force did not, in fact, trigger a second Great Depression in the 1960s.

This is because the labor market is also affected by the demand for workers’ labor. Immigrants may expand the size of the workforce, but they also increase demand for goods and services. Ultimately, fiscal and monetary policy shape the balance between labor demand and supply far more than immigration admissions do. If you understimulate the economy, you can have high unemployment amid a mass exodus of immigrant workers (as occurred during the Great Depression). If you ramp up government spending, on the other hand, you can have low unemployment amid a large increase in immigration (as we’ve seen during the post-Covid boom).

For these reasons, a wide variety of studies and meta-analyses have found that immigrants do not generally reduce wages or job opportunities for native-born workers.

But rents and home prices are a different story.

In principle, there is no reason why population growth must push up the cost of shelter. Immigrants need homes — but they are also disproportionately likely to work in construction and, thus, increase the economy’s home-building capacity.

The problem arises when governments effectively prohibit the supply of housing from rising in line with demand. Between 2012 and 2022, Americans formed 15.6 million new households but built only 11.9 million new housing units. As a result, even before the post-lockdown surge in migration, there were more aspiring households than homes in America’s thriving metro areas.

This was largely a consequence of zoning restrictions. Municipal governments have collectively made it illegal to erect an apartment building on about 75 percent of our country’s residential land. In large swaths of the country, there are households eager to rent or buy a modest apartment, and developers eager to provide them, but zoning restrictions have blocked such transactions from taking place.

This creates a housing shortage. You can house 32 families much more quickly and cheaply by building a single apartment building than by erecting 32 separate houses. To require all of your community’s housing units to be single-family homes isn’t all that different from prohibiting the manufacture of all non-luxury cars. In both cases, you end up with artificial scarcity and unaffordability.

If private builders were allowed to respond to rising demand — while the government ensured the provision of housing to those unable to pay market rents — we could have large increases in immigration without any uptick in housing insecurity. In our current reality, the rise in asylum seekers has coincided with a record spike in homelessness and persistently high housing costs.

It is hard enough to sustain popular support for large-scale immigration when there aren’t major economic downsides to that policy. Add legitimate concerns about housing costs to perennial anxieties over cultural change, and it becomes difficult for even the most pro-immigration societies to avoid a nativist backlash. Or at least, this is what recent events in Canada suggest.

Why Canada is getting colder on immigration

Canada has long been considered an exceptionally pro-immigrant country. Yet it has struggled to sustain popular support for liberal immigration policies amid its deepening housing shortage. Canada’s experience therefore serves as a cautionary tale for American progressives: If we allow municipalities to suppress housing construction, then ridding our nation’s mainstream politics of Trumpian xenophobia and electing a vigorously pro-immigrant administration will not be enough to avert popular demands for restricting immigration.

Until recently, Canada’s immigration politics were the envy of US cosmopolitans. In 2016, while many other nations were trying to repel Syrian refugees, the Canadian government couldn’t find enough displaced families to meet the public’s demand for sponsoring them. Since 2019, the country has welcomed more refugees than any other nation, and done so with minimal public outcry.

Prime Minister Justin Trudeau sought to capitalize on his country’s multicultural openness by putting immigration expansion at the center of his vision of economic growth. Canada welcomed 471,550 new permanent residents in 2023, up from 300,000 in 2015.

And that figure does not include foreign students, temporary workers, and refugees, who together constitute an even larger group of new arrivals. In 2025 and 2026, the government aims to admit 500,000 new permanent residents each year.

But in recent months, the political sustainability of Trudeau’s plan has come into question, in no small part because immigration’s impact on housing costs has come under scrutiny.

Rents have soared across Canada in recent years. From 1990 to 2022, the average rent for a two-bedroom apartment in the country increased at an average annual rate of 2.8 percent. In 2023, it rose by 8 percent. The government estimates that it will need to add 3.5 million extra housing units by 2030 to make shelter affordable. But a recent report from the Canadian Imperial Bank of Commerce suggests that this underestimates the housing shortage by 1.5 million units, a shortfall driven by an undercount of nonpermanent immigrants, who have been entering the country in massive numbers.

Trudeau has sought to promote housing construction in various ways. But his administration’s efforts have yet to offset the impact of years of highly restrictive zoning in many of Canada’s largest population centers.

As Canadians bid against each other for an inadequate supply of housing units, they’ve soured on immigration.

In a 2022 poll from the Environics Institute for Survey Research, Canadians disagreed with the statement that there was too much immigration in their country by a margin of 42 points. One year later, that margin had shrunk to 7 points, the largest single-year shift in the survey’s history. Among Canadians who said immigration levels were too high, the most commonly cited reason by far was that immigrants drive up housing prices.

In response to these changing political winds, the Trudeau government has sought to restrict admissions of international students while imploring universities to provide dedicated housing for their enrollees. But this minor concession to the nation’s restrictionist mood appears insufficient. The prime minister’s approval rating has sunk in recent months, with 64 percent of Canadians now disapproving of his performance. Meanwhile, Canada’s Conservative Party has ridden the housing and immigration issues to a strong advantage over Trudeau’s Liberals in the polls.

Abundance is possible, but scarcity seems popular

There are many parallels between the politics of immigration reform and those of housing policy. In both cases, countries have the power to swiftly increase their collective prosperity by tolerating some short-term disruptions. When cities let developers build more housing, they not only reduce rent inflation but also increase their tax bases, which makes it easier to fund robust social services. When rich nations let prime-age immigrants settle within their borders, they increase their productive capacity, which makes it more affordable to support retirees.

And yet, in both of these policy areas, we routinely opt to make ourselves poorer for the sake of avoiding change.

America does not need to choose between expanding immigration and reducing housing costs. But there is a risk that we’ll choose to do neither.


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