Trump’s mass deportation plan would be ‘economic disaster’ for US
Loss of migrant workers would trigger productivity losses and a new round of inflationary pricing pressure
Edward Helmore
If elected, Donald Trump plans to carry out “the largest deportation operation in American history”. After pushback on Joe Biden’s border policies, Kamala Harris has embraced border restrictions and the need to maintain limits on asylum seekers. But neither candidate captures the realities of
US immigration.
US consumers are accustomed to cheap goods and services, and the economic rationale for large-scale immigration has been largely avoided. In a country that relies on a mobile, low-cost workforce, the loss of migrant workers would trigger productivity losses and a new round of inflationary pricing pressure.
“It would be an economic disaster for America and Americans,” says Zeke Hernandez, an economics professor at the Wharton School of the University of Pennsylvania, of Trump’s deportations threat. “It’s not just the immigrants would be harmed, but we, the people of America, would be economically harmed.”
Baby boomers are retiring, and with fewer immigrants, the workforce will struggle to sustain economic output: US employers will need to hire 240,000 people a month for the next five years just to replace those who are stepping out,
according to one recent study.
Hernandez,
author of a recent book, The Truth About Immigration, argues that immigrants contribute talent, investment, innovation, consumption and tax revenue. “If you lose those things, there are fewer jobs, the economy contracts and becomes less diversified.”
Of the undocumented migrants, between 8 and 9 million are in the workforce doing essential jobs that Americans disproportionately don’t want to do or work in sectors where there aren’t enough workers.
Typically, that’s farm work (one third of the labor force), construction work (about one quarter) and about half of the labor force in skilled work like drywalling, plumbing and insulation.
“Undocumented immigrants make up a huge proportion of household services, manufacturing work, kitchen staff in restaurants. Americans simply do not do those jobs, or there are not enough to go around. But if you lose those key ‘bottleneck’ workers, the native workforce also can’t do their jobs,” says Hernandez.
A study by the Center for Migration Studies estimates undocumented workers contribute $97bn in federal, state and local taxes, their removal from the workforce would have a substantial impact on local economies, including pushing nearly 10 million US citizens into economic hardship.
Families would also be profoundly impacted. About 5.8m US households are home to at least one undocumented resident and mass deportations would break up nearly 5m US families. The cost of bringing up US-born children whose caregivers are removed has been put at $116bn.
Taxpayers would have to foot the bill. Apprehending and deporting just 1 million of an estimated 11 million-12 million undocumented migrants in the US could cost taxpayers about $20bn, or $19,599 per person, according to a
CBS News analysis of federal data – and take far longer than the term of a four-year Trump administration.
Business leaders have been fairly quiet on Trump’s plans – possibly fearing retribution – but some lobby groups have begun to tally the costs of mass deportation. The construction sector employs an estimated 1.5 million undocumented workers, or 13% of its total workforce – a larger share than any other, according to data the Pew Research Center.
Construction firms, already facing labor shortages, are warning that the loss of immigrant workers would push new home prices higher. The National Association of Home Builders considers foreign-born workers, regardless of legal status, “a vital and flexible source of labor”.
The CEO of the NAHB, Jim Tobin, told NBC that their loss would be
“detrimental to the construction industry and our labor supply and exacerbate our housing affordability problems”.
The Business Roundtable notes that
“immigrants have always been a key part of America’s innovative spirit. A vast majority of economists and business leaders agree that immigration is a net positive for the US economy” but says “the system for welcoming these highly valuable workers is broken”.
A 2023 study of previous efforts at mass deportation, such as President Barack Obama’s Secure Communities program from 2008 to 2014 that resulted in the deportation of almost half a million people, found that any benefits from reduced job competition that US-born workers face were counteracted by a decline in labor demand due to an increase in labor costs.
“Police-based enforcement policies aimed at reducing the number of undocumented immigrants should consider the potential negative spillover effects on the labor market outcomes of immigrants who remain in the US and on US-born workers,” a University of Denver study concluded.
The same effect was seen during the Trump and Biden administrations when the Covid pandemic caused about a million fewer immigrants to enter the US leading to labor shortages and reduced output, and contributing to inflationary pressure.
The post-pandemic spike in immigration contributed to inflation coming down, according to Hernandez. “Immigration allowed business to hire again and raise output to what the market demands, so prices normalized,” he says.
Nevertheless opponents of immigration have been “very effective at flooding the zone with false or dubious claims”, said Hernandez.
Biden’s policies, which Harris is now walking back, have created complications for the Latino communities in the US, resulting in
declining support for Democrats and a frantic late-campaign effort to shore up their votes. In 2012, Latino support for Obama was at 71%. Eight years later Biden won 62%. A recent
Times/Siena poll found Harris with 56%.
According to Ana Valdez, president and CEO of the
Latino Donor Collaborative, says the negative myths around Latino immigration are just “pure rhetoric … Trump knows that most of the workforce the US needs to continue growing comes from Latinos.”
Valdez cites
labor department statistics that show Latino workers in the labor force have grown from 10.7 million in 1990 to 29 million in 2020, and are projected to reach 36 million in 2030. In 2030, the Bureau of Labor Statistics projects they will account for one out of every five workers in the labor force, at 21.2%, or or 78% of net new workers by 2030.
Without those immigrant workers, the change in the standard of living for the middle class would be much more dramatic, Valdez says. “The reason we have avocados or chicken to choose from every day is because of immigration.”
Valdez, who worked in the Clinton administration, cites figure that show US Latinos generate $3.6tn in GDP and says the political discourse around the issue by both parties has equated all Latinos to undocumented immigrants and does not reflect the economic, data-backed reality.
“If Trump and Harris want to win the Latino vote, and if the winner wants to keep our support once they’re in office, they need to change their perspective and messaging to Latinos and recognize the full scope of our economic contributions,” she says. “Not doing so is reckless for their campaigns and the US economy.”
https://www.theguardian.com/us-news/2024/oct/30/trump-deportation-plan-economic-disaster
