Continuing our coverage here of what another Trump administration could mean for this economy — emphasis on “could” — vis a vis immigration.
President-elect Trump has vowed that on day one of his second term, he would launch the largest deportation program in American history, targeting the estimated 11 million or so unauthorized immigrants in this country. Some prominent Trump advisers have also reportedly been drawing up plans to restrict legal immigration as well.
So, some caveats here: Trump has a history of making big promises on immigration that don’t actually materialize, like that whole build a wall and make Mexico pay for it thing.
But this time around, if Trump really does ramp up deportations, economist Stan Veuger at the American Enterprise Institute estimated GDP growth would be cut by almost half a percentage point, which is a lot.
Not only does the overall workforce shrink, but deported workers can’t contribute to the economy.
“People don’t earn money, they don’t produce, they don’t generate capital income for others,” Veuger said. “And so, that just has a direct impact on aggregate GDP.”
Fewer immigrants in the labor force could also mean higher prices, especially for industries that disproportionately employ undocumented workers.
Economist Tarek Hassan at Boston University said part of the reason the Fed was able to tamp down inflation over the past two years was because of an influx of foreign-born labor.
“If you remove migrants from a local economy, you’re going to raise prices in the local economy for everything from produce in the supermarket to Uber rides,” Hassan said.
Whether removing undocumented immigrants also raises wages for low-skilled workers is a matter of economic debate. Most economists left and right of center will tell you the impact is small.
But Duncan Braid at the pro-Trump think tank American Compass says less immigration will make some industries more efficient.
“I think as we’ve seen in the agricultural sector, sort of the access to an unending stream of low wage workers has sort of hindered the impetus for those firms to automate,” Braid said.
According to a recent Gallup poll, about 55% of U.S. adults want less immigration, legal or illegal.
