Mass Deportations Could Hurt the Economy

Though only a little more than a month into his tenure as commander-in-chief, President Donald Trump has made quick work of directives and executive orders aimed at curbing immigration into the U.S. – both legal and otherwise.

Only days after being sworn in as America’s 45th president, Trump signed an executive order designed to “deploy all lawful means to secure the nation’s southern border, to prevent further illegal immigration into the United States and to repatriate illegal aliens swiftly, consistently and humanely.”

Additional efforts to restrict travel from certain Muslim-majority countries and to rein in the issuance of H-1B visas to skilled immigrants have peppered Trump’s opening days in the White House – effectively stymieing options for those entering the U.S.

None of Trump’s immigration actions to this point veer very far from what he promised out on the campaign trail, when he at times advocated for a complete removal of all 11 million residents believed to be living in the U.S. without legal status.

The president appears to have backed off of this all-or-nothing strategy, saying in a November interview with “60 Minutes” that he hopes to “get the people that are criminal and have criminal records – gang members, drug dealers” out of the country first and to then “make a determination” on law-abiding immigrants without legal status “after the border is secure and after everything gets normalized.”

But he estimated he could still end up deporting between 2 million and 3 million immigrants – a move that would not be insignificant to the U.S. labor market. For comparison’s sake, U.S. Immigration and Customs Enforcement estimates it deported a little more than 240,000 people in fiscal year 2016. Over the past eight fiscal years, ICE estimates fewer than 2,750,000 people were deported.

“The rhetoric suggests [a deportation uptick]. … I don’t think we’re going to be talking about mass deportations, but the momentum will likely shift over time,” says Andrew Selee, executive vice president of the Woodrow Wilson International Center for Scholars. “Clearly, they will get somewhere by simply increasing the discretion that officers have to arrest people, to detain people. They should be able to increase the number somewhat.”

But Selee questioned Trump’s 2 million to 3 million benchmark, noting the numbers appears to have come from a 2013 Department of Homeland Security report indicating there were “1.9 million removable criminal aliens … in the United States today.”

That tally includes green card holders and those who are in the country both legally and illegally. Selee notes that Trump “can deport people of legal residency who commit criminal offenses.” But “if you’re talking about just going after unauthorized, you’re talking about 800,000” people, he said.

And if you’re looking to specifically target those without legal status who have committed felonies – the “bad dudes” Trump has railed against – the number to be deported is believed to be just 300,000, according to the Migration Policy Institute.

“I think there’s an actual limit to the number of people who can be deported over time, because there aren’t enough agents and there aren’t enough immigration judges,” Selee says. “The reality is that once you take out immigration specific offenses, immigrants commit many fewer crimes, obviously, because these are often people who don’t want to draw attention to themselves.”

However, Trump has expressed interest in putting a “big, beautiful door” on his border wall to allow for legal passage between the U.S. and Mexico. During a speech at an Indiana Carrier plant in December, Trump said he plans to “have doors in that wall, but they’re going to come through legally.”

“And people are going to come through on worker permits to work the fields,” he said, likely referencing the H-2A visa program designed for temporary foreign agricultural workers. “A lot of people are going to come through. But it’s going to be done through a legal process.”

Still, the deportation of 3 million or even 300,000 immigrants is likely to be felt in the U.S. labor market – whether doors are on the wall or not. The Pew Research Center believes there were 8 million immigrants without legal permission in the labor market in 2014 – representing about 5 percent of those working or actively looking for a job in the U.S.

Kathy Bostjanic, head of U.S. macro investor services at Oxford Economics, wrote in a research note Tuesday that “Trumponomics will likely boost aggregate demand in 2018” but that it “is unlikely to meaningfully lift the aggregate supply or significantly boost economic growth for very long.”

“This would require policies that accelerate the rather anemic pace of productivity growth and/or raise labor supply,” Bostjanic said. “On the latter, any steps to restrict immigration will lower that labor supply.”

A separate research note published last month by researchers at Oxford Economics estimates that, “assuming the Trump administration boosts deportations by 50 percent above the recent peak … the resultant smaller labor force could reduce real [gross domestic product] by up to 0.2 [percentage points] in the first year.”

But estimates of the immediate economic impact of deportation upticks vary. The Center for American Progress estimates “a policy of mass deportation would immediately reduce the nation’s GDP by 1.4 percent, and ultimately by 2.6 percent, and reduce cumulative GDP over 10 years by $4.7 trillion.”

Still, workers who are in the country without legal status are unevenly spread across occupations, with the group representing 26 percent of farming labor and another 15 percent of construction workers, according to Pew.

Considering agriculture products serve as significant exports for the U.S. economy and homebuilding and road and bridge repair depend on construction worker availability, both industries are expected to suffer in the event of widespread deportation.

“The situation with our labor continues to get worse because of the slowdown in foreign workers coming over here to work in the United States,” says Tom Nassif, the president and CEO of Western Growers farming advocacy group who briefly served in an advisory capacity to Trump during campaign season. “We’re hoping that agriculture is a low priority when it comes to enforcement and when it comes to the immigration laws.”

Indeed, Pew estimates there are slightly more than 11 million people living in the U.S. without legal status. That’s down from the 2007 peak of 12.2 million, driven primarily by a drop in such immigrants from Mexico. In 2014, Pew estimates there were 5.8 million Mexicans in the U.S. without legal status. Back in 2009, that number was 6.4 million.

“We’ve already seen a wave of Mexicans coming back to Mexico. Not as many Central Americans yet, but Mexicans started coming back about 10 years ago to Mexico, mostly voluntarily,” Selee says. “They felt the Mexican economy was doing better.”

And with fewer immigrants coming into the U.S. to work fields, Nassif says “we’re basically exporting [agriculture] jobs, because we don’t have a sufficient labor supply.”

“Believe me, those people who’ve been working for us have been invaluable for us to harvest our crops,” Nassif says. “If you shut down our ability to harvest our crops, you send more and more of our jobs to other countries. And that’s something I don’t think the president wants to see happen.”

Nassif says he spoke briefly with then-candidate Trump back in 2016 and discussed, among other things, “what do you do with those who are here illegally.”

“Even though they pay state and federal taxes and pay into Social Security, which they’ll never see, there has to be a penalty. That can be a number of things. It could be a probationary period. It could be a fine,” he says, though he noted that straight deportation was not a desirable outcome for the agriculture industry.

Meanwhile, Julie Taylor, the executive director of the National Farm Worker Ministry, says more readily available H-2A visas and possible paths to citizenship for law-abiding immigrants would go a long way toward helping agriculture workers who she says have at times been taken advantage of with threats of deportation.

“In some ways, [employers] have relied on what’s been cheap labor for them, and in some cases they have exploited those individuals with issues of wage theft and stuff like that with the threat of deportation,” she says. “But now, when it seems like perhaps they won’t have the human power to bring in their crops, they’re concerned about it. There’s a little bit of a dichotomy there.”

But Taylor and Nassif note the contribuions of immigrants in the country without legal status extend beyond the agriculture sphere. The Social Security Administration. for example, estimated in 2010 that these immigrants and their employers paid $12 billion into the trust funds that finance the Social Security system.

“Thus, our projections suggest that the presence of unauthorized workers in the United States has, on average, a positive effect on the financial status of the Social Security program,” the report said.

A separate report from the Heritage Foundation, a conservative think tank, however, estimated “illegal aliens pay in about $7 billion per year into the Social Security Trust Fund.” That same study projected immigrants without legal status were ultimately a net drain on government resources and that their presence in the U.S. costs federal, state and local governments $113 billion each year.

Still, deportation efforts don’t come free of charge. The American Action Forum in 2015 estimated the federal government “would have to spend roughly $400 billion to $600 billion to address the 11.2 million undocumented immigrants and prevent future unlawful entry into the United States.” Deportation costs alone were estimated to cost between $103.9 billion and $303.7 billion.

Selee also says the U.S. would lose out on “micro-businesses” and small business start-ups often founded by immigrants if deportation efforts increase significantly.

“There are a lot of people who move into entrepreneurial niches in the American economy who might not have done so in Mexico or Central America,” Selee says. “It doesn’t mean that everyone’s starting Google. A lot of people, including people who can’t work legally, are starting their own little micro shops. It’s the whole range.”

And although he says it’s often looked over, Selee notes more aggressive deportation efforts would throw an influx of potential workers into already stressed economies in Mexico and Central America – potentially exacerbating downturns abroad.

“There’s a lot of fear in Mexico and Central America about labor markets that are already pressured having more people looking for work. There’s a lot of concern about students coming in who need places at universities,” Selee says. “There’s a lot of fear about how increased deportations to Mexico and Central America would disrupt the economy and impact the school system.”

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