An undocumented immigrant may accept low wages that fall short of local standards because they are desperate for work. So, to recruit American workers, US employers would have to raise wages if illegal immigrants were made to leave – because illegal workers perform many jobs that few native-born Americans will do.
It could also hamper, if not stall, the US economy. Low-skilled labourers are increasingly scarce in the US. But they are still abundant in Mexico, Central America and elsewhere. It would be against market dynamics to block even illegal immigration without opening up other channels for lawful entry.
A 2015 Cornell University report, ‘Five ways undocumented immigrants are powering the American economy’, summarised that in the US, 12% of food preparation and serving workers, 19% of maintenance workers, 17% of construction workers, and 25% of farm workers are undocumented workers.
Multiple key industries would experience severe labour shocks due to mass deportations. Lakhs of America-born workers may also lose their jobs if industries suffer. In May 2024, University of Colorado Denver economist Chloe East told The Washington Post that the economy is not a zero-sum game: ‘When one person has a job, that does not mean one less job for somebody else.’In September 2024, Peterson Institute for International Economics (PIIE) came out with a working paper, ‘The international economic implications of a second Trump presidency’. In its modelling, it projected that in the first three years, deportation of 1.3 mn undocumented immigrants would raise inflation by 0.3% annually, and lower the US GDP by 0.3% annually. If Trump’s deportation plans were enacted, the US’ GDP would be between 1.2% and 7.4% below baseline by end-2028, PIIE predicted. However, as of April 2024, there were roughly 13.3 mn undocumented immigrants in the US, which is 10 times that figure.A conservative estimate of the cost of a one-time operation to deport all immigrants was $315 bn, according to a special report of the American Immigration Council published in October 2024. On the other hand, deporting 1 mn immigrants annually would cost $88 bn, which is over double the US National Institutes of Health’s annual budget.
Majority of that money would go towards construction of detention centres. With a 2.5% annual inflation rate and the assumption that 20% of those people would depart voluntarily, the anticipated total cost over 10.6 years comes to a staggering $967.9 bn. One million arrests, detention, legal procedures, return via plane (even when this expense is borne by ‘friendly’ countries), and a myriad of other ancillary costs are included.
There are also human costs. 4 mn mixed-status families would be split up if undocumented immigrants were deported, impacting 8.5 mn US citizens who have undocumented family members, including 5.1 mn US citizen children. 1 million undocumented immigrant entrepreneurs, who generated $27.1 bn in total revenue in 2022, would be deported. Important contributions from undocumented households – such as $22.6 bn to social security and $5.7 bn to Medicare annually – would be lost by the US.
Undocumented immigrant households paid $46.8 bn in federal taxes, and $29.3 bn in state and local taxes, in 2022. Interestingly, many pay to support benefits they aren’t even eligible to receive. Furthermore, illegal immigrants had $250 bn in spending power after taxes, which they could use to support local communities.
Overall, mass deportation would result in a loss of 4.2-6.8% of GDP annually for the US, primarily from the loss of workers across US industries. For comparison, during the Great Recession of 2007-09, US GDP shrank by 4.3%.
The irony of Donald Trump defying the logic of a New York real estate developer, who should be prioritising the economy over the ‘politics’ of tackling illegal immigrants, is not lost on those who wish to see it.
The writer is professor of statistics,Indian Statistical Institute, Kolkata
