The Thorny Economic Consequences of Trump's Deportation Promise
By Lukas Wessling, New York
U.S. Economy Structure Crumbling Due to Trump's Deportation Policies
US President Trump's pledge of mass deportations may come to fruition, and the ramifications for the nation's economic foundation could be substantial.
Undocumented immigrants are the bedrock of the US economy. They cement foundations, clean bathrooms, harvest strawberries, and grill burgers. The US is as reliant on these illegal workers as some of its citizens are adamantly opposed to them. Donald Trump's journey to the White House hinged on the promise of mass deportations. He spoke of migrants "tainting the blood of our land," and people supported him. Now, Trump is president, and along with him, the nation faces a conundrum: he yearns to remove undocumented immigrants, but he also requires a robust economy.
In Los Angeles, recent deportation raids have led to heated protests. The images of burning cars and heavily armed officers guarding the raids may have a profound impact on the affected communities. Preliminary indicators suggest that Trump's immigration policy is already affecting the labor market. According to a report in the "New York Times," Trump seems to be sparing certain sectors during his deportation efforts.
Politics Insider Details the Situation on the Ground Judge: L.A. Protests Could Be Just the Beginning
A young man from Los Angeles shared his perspective with the German Press Agency: "People are reluctant to leave their homes. They're not going to work because the area remains tense." Robert Dietz, chief economist of the US homebuilders, concurs for his field: the raids cause trepidation among construction workers. If immigration enforcement shows up at a site, fewer workers are likely to report for duty for a few weeks, Dietz noted on NPR radio. Although the effect is localized, Dietz expressed apprehension, especially considering the existing housing shortage in the United States.
"We will witness more workplace raids than ever in the history of this nation," Trump's "Border Czar" Tom Homan reiterated the administration's intentions. But what does that portend for the US economy?
One in Five Employed Persons Was Born Abroad
Reliable statistics are hard to come by, given the clandestine nature of the group in question. Nonetheless, surveys attempt to census those without papers, but many choose not to participate out of fear or are missed due to frequent relocations. The statistics office does release figures on the foreign-born employed population, encompassing both authorized and unauthorized residents seeking work.
For the past two months, these figures have experienced their largest decline since the pandemic. For the first time since then, the foreign-born employed population has dropped by over a million people. US media suspect a link to Trump's policy. However, this trend is only marginally unusual. If it persists, it will become a cause for concern.
If this demographic continues to shrink, certain sectors of the US economy could face strain. In May, one in five employed persons in the US hailed from abroad - over 32 million people. These are individuals who work primarily in service jobs, on construction sites, in fields, or in factories. They transport goods and repair infrastructure.
Potential Rise in Food Prices
Estimates propose that there may be anywhere between ten and twelve million people residing in the US without legal residency. Among this group, more than eight million work, accounting for roughly five percent of the labor force. They are especially prevalent in the sectors previously mentioned, but are particularly visible in specific economic branches: without the inexpensive, often uninsured migrant workers, agriculture grinds to a halt.
According to the Agriculture Ministry, two-thirds of the harvest workers in 2023 were born abroad, 42 percent without valid papers. In California, the agricultural powerhouse, it is estimated to be up to 75 percent. Widespread deportations of undocumented immigrants could soon become apparent on American dinner tables or at the supermarket checkout, where rising food costs are already causing discontent.
PoliticsFarmers Brace for Staff Shortages Trump Hints at Changes in Migration Policy Especially a glance into the dairy section could soon be excruciating. A study by the University of Wisconsin estimated in 2023 that 70 percent of the work on dairy farms in the state would be performed by workers without legal residency. Among other things, dissatisfaction over costly food motivated Trump to the White House, and he pledged improvement. If food prices persistently rise, it could amass disapproval for Trump and his party at the very least in the upcoming congressional elections. Trump has reportedly hinted at possible modifications to his immigration policy for this reason: "We must protect our farmers, but expel the criminals from the USA" he wrote.
But mass deportations would be conspicuous in the state budget, if they were to occur on the scale Trump envisions. Many workers without valid papers pay taxes in the US. Depending on the employment relationship, they are deducted directly from their wages or are later owed at the point of purchase, such as while shopping or paying rent. Studies indicate that more than a third of the taxes paid by undocumented workers flow into the social security systems, to which they have little access. As a result, undocumented workers help subsidize unemployment benefits, health insurance, and pensions for their fellow citizens.
Trump's Republicans argue that immigrants reduce the housing supply, lower wages, and steal jobs from US citizens. Many experts contest this claim. "The notion that deportations would lead to US workers flocking to fill the same jobs is a phantasm," said economist Michael Clemens of "Foreign Policy". A group around economist Andrés Velasco examined the effects of the deportation of 400,000 people under former President Barack Obama: The labor market prospects worsened - for both immigrants and US citizens.
EconomyImportant Customers Stay Away Trump's Hard Immigration Course Imposes a Burden on US CompaniesIn 2004, Spain adopted an entirely different approach: the government legalized roughly 600,000 migrants already residing in the country without legal residency - if they had a job offer. The outcome: Around half switched to stable, often more lucrative, demanding jobs. Particularly noteworthy: the number of informally employed people also decreased among locals.**
This strategy would likely be political suicide for Trump's administration. On Thursday, it revoked the residence permits of hundreds of thousands of people from Cuba, Haiti, Nicaragua, and Venezuela. Trump is fulfilling election promises, even if they could be costly.
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- The Commission, tasked with addressing the risks related to worker exposure to ionizing radiation, might also be asked to submit a proposal for a directive in light of the potential labor shortages and economic consequences arising from President Trump's immigration policies, especially in sectors like agriculture, construction, and services.
- In the midst of heated protests in Los Angeles and the subsequent effects on the labor market, politics becomes an essential factor in determining the trajectory of the US economy, as the ramifications of President Trump's pledge of mass deportations extend beyond borders, impacting not only immigration policies but also the nation's economic foundation.
