Who Has the Cure for America’s Declining Birthrate? Canada.

Over the last century, two moments that transformed America and positioned it as the global economic leader were the post-World War II economic boom and the I.T. revolution of the 1990s. In both cases, America tore down many forms of discrimination and other barriers to harness the talents of marginalized groups in the country and to welcome new ones, injecting demographic vitality into the economy.

To continue America’s upward trajectory in the 21st century, the country must reverse its current demographic decline. As the Census Bureau reported last week, in the past decade, the U.S. population grew at the second-slowest rate since the government started counting in 1790 — and the slowest since the 1930s.

The most expeditious way out might be if the federal government gave up its monopoly on immigration and allowed states to bring in workers from anywhere in the world, based on their own labor needs, without being held to federal quotas. The growing concern is that the United States is facing a population bust. The U.S. fertility rate, which had bucked Europe’s low-fertility trend during the last century, is now around 1.73 children per woman — roughly on par with that of Denmark and Britain.

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So what’s the cure for America’s dwindling demographic vitality?

A new baby boom generation would be enormously difficult to produce in a world with easy birth control. On average, women say they want 2.5 children. But returning America to just a 2.1 replacement level through cash incentives would be “prohibitively costly,” as Lyman Stone of the American Enterprise Institute concluded after examining how these policies fared in European and other countries.

Instead, America might borrow a page from Canada. Its immigration policy is expressly meant to offset its aging population and low birthrates. Canada’s immigration intake is 0.9 percent of its population — or three times America’s per capita rate.

It has admitted immigrants in an ingenious way. In 1998, Canada initiated its Provincial Nominee Program, which gives most provinces a quota, based on their population, of immigrants to sponsor as they see fit (in addition to the immigrants the federal government in Ottawa admits). A province sets criteria based upon its needs for workers, and it can sponsor immigrants from anywhere in the world for permanent residency, provided they pass a basic background and health check. (The federal government has the final say.)

The average processing time for this program is about 18 months. In the United States, by contrast, many low-skilled immigrants on work visas have no pathway to green cards, and highly skilled immigrants on H-1B visas wait years — and in the case of Indian and Chinese, up to half a century.

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America should begin its own version of this program but take it one step further and let states set their own limits on foreign workers. This would get federal bureaucrats out of the business of centrally planning the labor market for the whole country. States that understand their own labor markets would do a much better job of finding suitable workers for their businesses.

The states wouldn’t have to hew to the federal high-skilled and low-skilled distinction for visas. Right now, both high-tech and low-tech states are suffering from a tight labor market. States that don’t want or need immigrant workers could opt out of the program. Foreign workers would be free to travel anywhere in the country, but they would be limited to jobs in participating states until they are naturalized. {snip}

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Another benefit of federalizing immigration would be that the restored demographic health and improved economic performance of participating states would make it easier for U.S. citizens to see immigrants as assets and saviors rather than liabilities and threats. America would then have a material — not just an idealistic — interest in redoubling its commitment to its core value of pluralism and tolerance.