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Deporting immigrants could slow U.S. economy

If President Donald Trump’s hardline stance on illegal immigration leads to large-scale deportations, among those hurt could be the U.S. economy.

That is the view of many economists, who say the United States cannot afford to suddenly lose vast numbers of the immigrants who work illegally picking fruit and vegetables, building houses, busing tables, staffing meat-packing plants and cleaning hotel rooms.

Immigrants living illegally in the United States account for roughly 18 percent of employment in agriculture, 13 percent in construction and 10 percent at restaurants, hotels and casinos, according to a study done last year by the National Bureau of Economic Research.

“The economic shock would cause widespread ramifications,” said Ben Gitis, director of labor market policy at the American Action Forum, a conservative think tank.

Exactly what Trump wants to do about illegal immigration remains hazy because he has said different things at different times.

Economists note immigrants, including those working in the country without permission, play a vital role in the U.S. economy, and not only because they fill many low-paying jobs that Americans will not or cannot do. The United States, like Japan and Western Europe, is being hobbled economically by an aging and slower-growing workforce. Economic growth depends on a steadily growing supply of workers.

But aging baby boomers are retiring. And an unusually large proportion of prime-age men have stopped looking for work. Nearly eight years after the end of the Great Recession, the unemployment rate has fallen to 4.8 percent, near what economists consider full employment.

Gitis reviewed the numbers and said he reached a striking conclusion: Suppose, he said, the United States were to deport or otherwise lose all the estimated 6.8 million immigrants working in the country illegally. At full employment, there would not be enough legal workers to fill all those jobs. At least 4 million jobs would go unfilled.

Still, critics have often argued low-wage immigrants in the United States end up depressing pay for everyone else. And economists have long wrangled over that possibility.

A paper issued last month by the National Bureau of Economic Research studied what happened in 1964 when the government cut the supply of seasonal Mexican farmworkers entering the United States. By excluding Mexicans, the move was supposed to create jobs for American farmworkers and raise their wages.

But researchers Ethan Lewis of Dartmouth College and Michael Clemens and Hannah Postel of the Center for Global Development found barring Mexican farmworkers “failed to raise wages or substantially raise employment for domestic workers.” Instead of hiring Americans, farms turned to machines to pick cotton and tomatoes and to tend to sugar beets.

Economist Ryan Edwards of Mills College said U.S. employers would likely shrink their businesses rather than search in vain for legal workers if they lost workers to mass deportations.

The cutbacks could take a heavy economic toll. Edwards and Francese Ortega of the City University of New York estimate immigrant workers living in the country illegally account for 3 percent of the private gross domestic product — the broadest measure of economic output — or nearly $5 trillion over 10 years.

Mass deportations could impose other costs as well. Gitis estimates the government would have to spend $400 billion to $600 billion to deport all those living in the United States without permission and to prevent future illegal immigration.

In a 2013 study, the Social Security Administration found immigrants living in the country without permission had paid $13 billion into Social Security in 2010 and received only $1 billion in benefits. The administration concluded that their contributions had had “a net positive effect” on Social Security finances.

So mass deportations mean “we’d not only be losing workers,” Gitis said. “We’d lose consumers, even taxpayers.”

Paul Wiseman is an Associated Press economics writer.

 

3/10/2017 (c) 2017 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net .

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