This is part two of a two-part series examining President-elect Donald Trump’s plan to stage a mass deportation of undocumented immigrants and its economic impact. Click this link to read Part One.
President-elect Donald Trump has claimed that illegal immigrants are destroying the country. Among other things, he credits them with taking jobs away from American citizens and maintains they are draining Social Security and Medicare.
But is any of that true? Is it possible that undocumented immigrants are contributing to the nation’s economy? Indeed, could mass deportation wreak havoc on that economy and cost you money?
Undocumented immigrants are contributing to the nation’s economy in several ways, including:
- Their employment, which supports the job market
- Their spending, which helps fight inflation and contributes to economic growth
- Paying taxes to support federal as well as state and local governments
- Paying additional taxes into social security, medicare, and unemployment
Taxes Paid by Undocumented Immigrants
In 2022, undocumented immigrants paid $96.7 billion in taxes, according to the Institute on Taxation and Economic Policy (ITEP). Of that, $59.4 billion went to the federal government. State and local governments got the remaining $37.3 billion.
In total, $8,889 in taxes were paid for each undocumented immigrant by the ITEP’s calculations. The irony is that more than one-third of the tax dollars paid by undocumented immigrants go to programs they can not access such as Social Security, Medicare, and unemployment benefits.
Undocumented persons paid $25.7 billion in Social Security taxes, $6.4 billion in Medicare taxes, and $1.8 billion in unemployment insurance taxes in 2022, reports the ITEP.
Overall Economic Impact
One of the indicators of the health of an economy is a nation’s Gross Domestic Product (GDP).
A rising GDP indicates that a country is not headed into a recession. It also informs government policy and business decisions. In addition, a positive GDP usually reflects a high standard of living.
The nation’s GDP is expected to increase by 0.2 percent each year over the next 10 years – if current immigration levels are maintained, according to findings by the Congressional Budget Office. That would put GDP 2% higher in 2034 than it is today. By contrast, mass deportation will result in a lower or static GDP.
Mass deportation will freeze GDP, according to research by the Pew Institute for International Economics.
“On the assumption that the baseline GDP growth is approximately 1.9 percent per year, this projection implies that the level of US GDP in 2028 will be almost unchanged from that in 2024—meaning no economic growth over the second Trump administration from this policy alone,” states the Pew report.
Higher Prices
Taking millions of workers out of the labor supply would be devastating for many businesses – especially in agriculture, construction, service, and healthcare. Unemployment is low and replacing those workers would be difficult.
Productivity would drop as a result and employers might have to increase wages or cut production. In turn, that would result in even higher prices at the grocery store and in other sectors referenced above.
The supply of goods and performance of service would fall off in a manner reminiscent of the COVID-19 pandemic, according to research from the University of New Hampshire Carsey School of Public Policy. That would probably fuel higher inflation, noted the report.
Mass Deportation and Jobs
“Mass deportation will be a labor-market disruption celebrated by American workers, who will now be offered higher wages with better benefits to fill these jobs,” said Stephen Miller. Miller is set to be Trump’s deputy chief of staff for policy.
Again, higher wages and benefits increase the cost of doing business. As a result, if Miller is right, that added cost will likely be passed on to consumers. However, employers may not be able to hike wages and benefits enough to replace jobs vacated by illegal immigrants.
Currently, there are 8 million jobs available and only 6.8 million unemployed workers, according to the U. S. Chamber of Commerce. There may be as many as 8.3 million undocumented immigrants working in the United States, according to the Center for Immigration Studies.
Mass deportation would double the jobs available while reducing the nation’s workforce by over five percent. That math adds up to economic disaster.
We Have Seen This Before
Mass deportation has been tried in the past and the results have not been worker-friendly or economically beneficial. The most recent example is the “Secure Communities” deportation launched late in the George W. Bush administration and continued under Barack Obama.
The unique thing about Secure Communities was that it allowed economists to track its effects county-by-county across the country.
Results of that tracking found that Secure Communities decreased the employment and hourly wages of American-born workers.
That research is backed up by the Carsey School of Public Policy. It determined that the program “reduced the employment share of U.S.-born workers by 0.5 percent and reduced their hourly wages by 0.6 percent.”
Mass Deportation Threatens Eldercare
Home health and long-term care will be among the first areas where the impact of mass deportation will be felt.
The demand for more healthcare aids is increasing as the U. S. population ages and lives longer. Increasingly, foreign-born people are filling those positions. Many of them are undocumented.
“Immigration policy is long-term care policy,” David Grabowski, a Harvard Medical School professor, told Axios.
As of 2022, there were about three million direct care workers providing services for disabled and elderly Americans, according to KFF research. Of those workers, one in 10 was undocumented.
“If you were to tighten up immigration or begin deporting individuals, it’s going to lower the available workforce, and this is only going to add to an already challenging labor situation,” Grabowski said.
Threat to Food Supply
Agriculture will be hard hit by mass deportation. Particularly impacted will be states such as Texas, Florida, and California where undocumented immigrants have brought in the harvest for decades.
California’s Central Valley produces about 25 percent of the nation’s fruit, vegetables, nuts, and other farm products. Growers there say many people will not work in the harsh conditions experienced by farm laborers.
“I don’t know if he (Trump) understands that a mass deportation may include a lot of our farmworkers who are essential to our food chain,” Del Bosque told The Modesto. He owns Empresas Del Bosque farm.
“We can’t plant and harvest crops like melons and cherries and tomatoes without these people,” Del Bosque added.
Mike Madrid, GOP political consultant and co-founder of the Lincoln Project, agrees.
“We don’t like to be honest about this as Americans,” said Madrid, “but the entire economy is predicated on undocumented labor. Without undocumented labor, the economy doesn’t work. That’s just a reality.”
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