Donald Trump's deportation plan would be an economic nightmare

Presumptive Republican presidential nominee Donald Trump built his candidacy in its early stages on the issue of immigration, with his promises to build a wall between along the US-Mexico border and to deport the approximately 11 million immigrants estimated to be living in the US illegally.

But in addition to the incredible human costs and practical and legal issues surrounding the deportation plan, forcibly removing millions of workers would also be economically devastating, potentially leading private-sector output to decline by hundreds of billions of dollars.

The American Action Forum, a non-partisan, center-right leaning think tank, released a study this week breaking down the economic consequences of deporting every unauthorised worker in the US.

The authors of the paper, Ben Gitis and Jacqueline Varas, noted that based on an earlier American Action Forum study, that the direct costs of dramatically expanding immigration-enforcement agencies and courts to deport approximately 11 million people would already cost the US government something in the range of $400 billion to $600 billion dollars.

But beyond the immediate costs of hiring thousands of immigration agents, lawyers, and support staff in order to remove millions of people from their homes, Gitis and Varas found that the economic effects of suddenly removing millions of workers from the labour force would be enormous.

Gitis and Varas started by estimating the size of the workforce without authorization. Using 2012 data on that group from the Pew Research Center and workforce data from the Bureau of Labour Statistics, they found that, across different industries, about 6.8 million workers without documentation were employed.

They broke down how concentrated these workers were in each major industry group:

Removing all those workers, then, would have a huge effect on the industries. Gitis and Varas considered two scenarios to come up with a range for the economic damage.

As a lower-bound scenario, they assumed that any available unemployed native-born or lawful immigrant workers in each industry would pick up as much of the slack as possible and fill in at least some of the jobs vacated by the deported workers. In this scenario, not all the jobs would be filled, as they found that there wouldn’t be enough unemployed native or lawful immigrant workers to take over.

As an upper-bound scenario, they instead assumed that these jobs would go unfilled and simply disappear.

They found, using estimates of output per worker in each of those industries, that the total cost in lost output would be in the hundreds of billions of dollars (emphasis ours):

“Overall, removing all undocumented immigrants would cause private sector output to decline by between $381.5 billion and $623.2 billion. This translates to a 2.9 per cent to 4.7 per cent reduction in total annual output from the private sector.”

Gitis and Varas went on to note that this estimate is solely output lost directly from removing unauthorised workers from these industries, and doesn’t include other economic effects, like investment and consumption by the group.

Gitis and Varas, of course, noted several caveats with their analysis. By relying on data from 2012, the most recent available from Pew, when unemployment was much higher than it is now, it’s possible that the lower-bound estimate might be too optimistic, as there could be fewer unemployed native and lawful immigrant workers to take over those jobs. On the other hand, the newly vacated jobs could bring in workers outside the labour force, making that estimate too pessimistic.

For more, check out the full paper here.

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