President Trump’s win in the 2024 election is closely linked to voter unhappiness with the spike in U.S. inflation and the influx of immigrants across the southern border during the Biden administration.
Trump’s actions on the first day of his second term included a series of orders to seal the border and to crack down on undocumented immigrants in the U.S., as well as a bid to end the birthright citizenship for children of noncitizens.
Trump’s motive in making a broad crackdown on illegal immigration his top priority is that it is popular with the electorate. A recent Axios-Ipsos poll found that nine in 10 Republicans and nearly half of Democrats say they support mass deportations of unauthorized immigrants.
However, the enthusiasm wanes considerably when respondents consider various options to carry out the deportations, such as separating families or deporting those who came to the U.S. as children.
Congress is also willing to go along with Trump’s wishes. On Jan. 7, the House of Representatives passed the Laken Riley Act, which makes it easier to deport unauthorized immigrants who commit crimes such as burglary, theft, larceny and shoplifting, as well as more violent offenses. On Inauguration Day, the Senate passed its version of the bill by a vote of 64 to 35, with 12 Democrats joining Republicans to vote in favor.
This invites questions about what the economic consequences would be if there were a crackdown on undocumented immigrants.
According to the Pew Research Center, about 11 million unauthorized migrants lived in the U.S. in 2022, of which 8.3 million were in the workforce. With a surge of migrants in the last two years, it is estimated there may now be 10 million unauthorized workers, representing 6 percent of the U.S. labor force. California, Florida, New York and Texas are home to nearly half of them.
One claim by proponents of mass deportations is that they are a boon for American workers. Stephen Miller, Trump’s deputy chief of staff, contends that mass removals would create jobs for Americans and increase their wages. This argument assumes that unauthorized immigrant workers compete with native-born workers for similar jobs.
Several studies, however, conclude the opposite is true — namely, undocumented immigrants often take jobs that U.S. workers do not want.
A noteworthy example is a survey the National Council of Agricultural Employers conducted during the COVID-19 pandemic to find out how many unemployed Americans would take about 100,000 seasonal farm jobs. It found that only 337 people applied. The conclusion was that labor shortages (and food shortages) were likely to persist without seasonal immigrants.
A Brookings study documents the share of unauthorized immigrant workers and U.S.-born workers in the 15 most common occupations among unauthorized immigrants. The principal finding is that unauthorized immigrants take low-paying, dangerous and otherwise less attractive jobs more frequently than both native workers and authorized immigrant workers.
The Economist points out that the impact of supply bottlenecks varies considerably by sector. Agriculture is especially vulnerable, with nearly 40 percent of America’s 2.5 million farmworkers estimated to be unauthorized immigrants. Housing is also likely to be impacted, with unauthorized migrants accounting for about a sixth of the homebuilding workforce.
The impact on the U.S. economy as a whole will depend on how extensive the deportations are. While Donald Trump has threatened to carry out the “largest deportation program in American history” involving millions of migrants, the legal, logistical, financial and political obstacles make this outcome implausible.
Meanwhile, Vice President JD Vance has suggested the administration could “start with a million…and then go from there.” A study by the Peterson Institute for International Economics found that if deportations matched the 1.3 million during President Eisenhower’s “Operation Wetback” campaign in 1956, U.S. GDP in 2028 would be 1.2 percent below its baseline projection.
Another claim about undocumented workers is they are free-riders who receive government-sponsored benefits but do not pay taxes. The government cost-cutting initiative led by Elon Musk said that illegal immigration cost U.S. taxpayers $150 billion in 2023, based on data from the Federation for American Immigration Reform.
According to Steven Camarota of the Center for Immigration Studies, the main reason is that they have a low average education levels, resulting in low tax payments, and they often qualify for welfare programs on behalf of their children.
This is not the case, however, for immigrants as a whole. A report by the Congressional Budget Office estimated that the 9 million surge in immigrants since the COVID-19 pandemic will add $1.2 trillion in federal revenues over the next 10 years, while outlays for federal mandatory programs will increase by $300 billion. One reason is that immigrants tend to be younger than native-born workers and do not derive benefits from Social Security and Medicare until they near retirement age.
Finally, while the debate about immigration today is focused on undocumented immigrants, politicians on both sides should recognize that U.S. immigration laws have not been substantially updated for 34 years. With U.S. population growth slowing due to declining fertility rates, the principal source of U.S. labor market growth will be through legal immigration.
Curbing immigration would likely translate into slower economic growth. Meanwhile, the outdated U.S. immigration laws are a key reason that many migrants to the U.S. arrive chaotically at the southern border.
Nicholas Sargen, Ph.D., is an economic consultant for Fort Washington Investment Advisors and is affiliated with the University of Virginia’s Darden School of Business. He has authored three books including “Investing in the Trump Era: How Economic Policies Impact Financial Markets.”
