Here’s What’ll Happen to the Economy if We Deport Undocumented Immigrants
With President Trump’s campaign promise during the presidential election to bring about comprehensive immigration reform, and Tuesday’s announcement that Deferred Action for Childhood Arrivals (DACA) would be rescinded, it’s reasonable to wonder who will fill the jobs vacated by deportees—Dreamers or not. The answer, surprisingly, may be other undocumented immigrants—with Americans paying higher prices for the goods and services as a result.
With the U.S. Census Bureau estimating the population to be close to 319 million people, the issue focuses on a very small segment, 3.5%, of the entire U.S. population. According to a 2017 Pew Research Center study, there were 11.3 million unauthorized immigrants living in the United States in 2014 and 71%, or 8 million of those 11.3 million, participating in the U.S. labor force. This is a significantly higher percentage than the U.S. population participation rate of 49% in 2014, according to the Bureau of Labor Statistics estimates.
If mass deportation occurs, most of the jobs they leave behind will be unskilled, such as farmworkers who pick produce, or construction workers in the housing sector. Additionally, California, Florida, Illinois, New York, New Jersey, and Texas will have the largest losses, as these six states contain the majority of unauthorized immigrants. The question of whether the resulting job market will benefit the U.S. economy depends largely on whether American workers are willing to work in those jobs at the prevailing wage rate.
If non-working American citizens or legal immigrants fill the jobs void at the current wage rate, prices in these industries would remain relatively constant, and the switch from undocumented immigrants to legal taxpayers could boost U.S. tax revenues. However, even as those new workers help to spur the economy, the U.S. would lose the spending revenue generated by those undocumented immigrants who had been deported, since the vast majority of undocumented immigrants are working and spending their incomes.
This spending by undocumented immigrants on food, shelter, energy, health, and entertainment, like the rest of the population, boosts the local economies and the U.S. economy as a whole. Even if the amount of tax revenue generated by these undocumented workers is uncertain due to some not filing tax returns due to fear of deportation, most are working and productive members of society, and new research suggests that undocumented workers do pay $11.6 billion per year in taxes. Therefore, while an influx of American citizens and legal immigrants into jobs previously held by undocumented immigrants may theoretically represent a boon for the U.S. economy, the resulting overall economic impact may only be slightly positive, at best.
The more complex and likely scenario occurs if citizens and legal immigrants are not willing to accept positions at the current wage rate. There would be upward pressure on companies to boost wages in order to make these jobs more attractive to workers. Citizens and legal immigrants may be attracted to these positions at a higher wage, but these jobs would likely be even more enticing to undocumented immigrants who find the reward of even higher pay worth the risk of deportation; just as America’s war on drugs has attracted more people into drug trade and may have increased total drug supply as a result. The one certainty under this scenario is the consumers who buy goods and services in these industries will see the price they pay increase due to higher wage rates.
The debate of what to do with undocumented immigrants, be it creating a path to citizenship, permanent residency, or deportation, will no doubt continue in political circles until meaningful immigration reform has been passed at the highest levels. At best, the impact of deporting these peoples will have modestly positive economic changes, and will likely hurt the pocketbooks of most American families at worst.
Sean Severe is an associate professor of economics at Drake University.