The Trump administration has moved, aggressively, to limit immigration, both legal and undocumented. Trump has made it clear his administration’s goal will be to remove the estimated 11 million undocumented immigrants from the country. But that may cost the economy trillions of dollars.
A working paper from the National Bureau of Economic Research has analyzed the economic impact of undocumented immigrants, and it has some fairly stark numbers: Over the next ten years, undocumented immigrants are expected to contribute roughly $5 trilllion to the US economy, roughly 3% of the gross domestic product. They also appear, roughly, to make up 5% of the workforce. But the impact goes substantially beyond that.
Bloomberg interviewed several experts on the labor market and noted the fundamental issue, which is that undocumented immigrants tend to come to the US to fill jobs in industries that desperately need hands. We should remember that what Trump wants to achieve has already been done on a smaller scale: Alabama, in 2011, passed HB 56, widely seen as one of the harshest immigration laws in America. The economic effects were immediate and painful, as farmers lost entire crops. A similar law in Georgia, HB 87, caused similar problems and forced the state to contract out prison labor. Arizona’s immigration law, if it had ever been fully implemented, would have cost the state $48 billion.
Adding to that is the US labor market is likely to become tighter across the board over the next decade. Baby Boomers, who make up roughly a quarter of the US workforce, have resuming retiring en masse, with 800,000 of them retiring just in the last three months of 2016. That will inevitably drive up wages, which is likely to drive up prices, and reducing the workforce further will only increase that pressure.
The general response to this is that undocumented immigrants take more in social services than they contribute economically. But it’s worth noting that the Social Security Administration alone sees $12 billion in taxes undocumented immigrants contribute to a system they can’t draw from. It’s also worth noting that the NBER working paper notes that legal immigrants and US citizens are more productive than undocumented immigrants, so economically speaking, naturalization may be a better strategy than deportation.