Trump Immigration ICE Raids: How Will Deportations Affect The Economy?

Over the course of the second week in February, Immigration and Customs Enforcement officials arrested more than 600 people in 11 states residing in the U.S. without proper documentation. They were acting under President Donald Trump’s Jan. 25 executive order mandating “detention of aliens apprehended for violations of immigration law” and the beefing up of law enforcement related to undocumented migrants.

The executive order could do more than draw the attention of world leaders and ire of activists — it also could also hurt the American economy.

The removal of any substantial portion of America’s 11 million undocumented workers and families would stand to dampen economic growth. The contribution of the nation’s unauthorized immigrants to the American economy amounts to an annual 3 percent of U.S. gross domestic product, or $5 trillion over the course of a decade, a working paper published in the National Bureau of Economic Research in November found. Read on for a glimpse of the many ways mass deportations could cause the economy to suffer.

Jobs

Contrary to popular opinion, undocumented immigrants generally are not stealing the jobs of or putting downward pressure on the wages of native-born Americans. Their main competitors are actually other immigrants.

Undocumented workers also form the foundation of much of America’s low-skilled labor force, taking jobs predominantly in service, construction and repairs, according to the Pew Research Center. A sudden loss of these workers could lead to a massive labor shortage, or even a “collapse” of the U.S. agriculture sector, as one farm worker group leader worried in early February. In fact, Trump may have trouble building his proposed Mexican border wall without undocumented migrants.

Capital

An abrupt loss of workers, especially in the construction industry, would over time lead business owners to halt their investment in the amount of equipment needed to avoid an imbalance in their companies’ ratios of capital to labor, a September report by the Center for American Progress found. The expected cumulative drop in GDP, according to the study, would reach $4.7 trillion in 10 years.

Prices

Undocumented workers’ willingness to take low-skilled jobs for lower pay helps American consumers by keeping the prices of products and services low, a study by the National Academy of Sciences found in September.

Welfare

While they can’t benefit from Social Security, 3.1 million undocumented immigrants contributed billions in taxes to it in 2010 by overstaying their visas, using false birth certificates to obtain fraudulent Social Security numbers or using Social Security numbers that didn’t match their names, PolitiFact found. As non-citizens, they can't benefit from the government safety net.

New Businesses

Researchers from Harvard University’s Business School and Wellesley College found in July that while immigrants make up 15 percent of the U.S. workforce, a quarter of entrepreneurs — defined as the three highest initial earners in a startup — are immigrants. A more recent study showed that, throughout history, immigrants have fueled innovation at a higher rate than native-born residents, but received lower wages in the meantime.

The Housing Market

Although native-born Americans have long dominated in terms of homeownership, immigrants have been closing the gap over the past decade and a half, according to an October study from the housing market and rentals information site Trulia. That disparity stood at 20.7 percentage points in 2001, but was 15.4 percentage points in 2015.