Friday, February 24, 2017

The Unintended Consequences of Deporting Unauthorized Immigrants

Recent moves by the new Trump Administration to make almost all undocumented/unauthorized immigrants subject to deportation could have an unintended impact on the United States economy.  In this posting, I want to take a brief look at how many unauthorized immigrants there are living in the United States, what industries they work in and the economic impact of removing them all from American soil. 

According to a study by Pew Research, the number of unauthorized immigrants peaked at 12.2 million in 2007, falling back to the 2014 level of 11.1 as shown here:


This accounts for roughly 3.5 percent of the U.S. population, down from 4 percent in 2007.

Obviously, all of these unauthorized immigrants are not in the workforce.  Here is a graphic showing the estimated number of unauthorized immigrants in the U.S. labour force since 1995:


In 2014, approximately 5 percent of the total workforce consisted of unauthorized workers, down from 5.4 percent in 2007.  Interestingly, in 2014, about two-thirds of the unauthorized adult immigrants had been in the United States for at least ten years with only 14 percent living in the U.S. for five years or less.  As well, in 2014, unauthorized adult immigrants had been living in the United States for a median of 13.6 years.

Unauthorized immigrants tend to make up a higher share of the workforce in certain occupations as shown on this graphic:


Here is a detailed table showing the total size of the workforce for major occupation groups, breaking the total into the number of U.S.-born, lawful immigrants and unauthorized immigrants:


As you can see on the bottom part of the table, certain occupations have an over-representation of unauthorized immigrants compared to U.S.-born workers; only in construction and farming jobs do unauthorized immigrant workers outnumber lawful immigrant workers.  As well, unauthorized immigrants were over-represented in production jobs including manufacturing, food processing and textile manufacturing were they comprised 9 percent of the total workforce.

Now, let's look at the economic impact of unauthorized immigrants on the U.S. economy.  According to a study by the Center for American Progress, the average annual nationwide loss in GDP if all unauthorized workers were removed from the United States would be $434.4 billion.  Here is a table showing the financial losses by industry over both the short- and long-term:


Here is a table showing the reduction in GDP contribution for each industrial sector over both the short- and long-term:


The economic impact of a mass deportation of unauthorized immigrants would grow over time as shown here:


If all unauthorized immigrants were deported, over the period from 2017 to 2026, the cumulative reduction in GDP would total $4.749 trillion or 2.0 percent of GDP.

As we can see, there is going to be a significant economic impact to the complete removal of all unauthorized immigrants from the United States.  In addition to the reduction in the size of the economy, there will be a significant cost to both execute and enforce a policy that sees the removal of over 11 million individuals from the United States.  A 2016 study by Ben Gitis at the American Action Forum found that it would take at least 20 years to remove all unauthorized immigrants from the United States at a cost of between $400 billion and $600 billion.

Obviously, the issue of unauthorized immigrants is far more complex than it appears on the surface and the implementation of mass deportations could have significant unintended consequences on the U.S. economy.  With weak economic growth levels since the end of the Great Recession and mounting federal debt levels, Americans will have to carefully examine the pros and cons of removing all undocumented workers from American soil.

9 comments:

  1. you forgot to add in the free shit uncle sam gives them.

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    1. Please list out the "Free Shit" they get that you don't.

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  2. ^^^ true that. If only there was a like button.

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  3. I have two comments about this. The first: I'm shocked by these findings! You mean if we take a certain subset out of our population then our GDP will drop? Well of course it will. You are removing the goods and services these people are consuming. In income statement terms GDP is Gross Sales. Now tell me about what happens with Net Profit after this subset is removed. If it was all about increasing GDP then officially open the borders and let anyone in. Every dollar they spend will increase GDP.

    My second comment: What a red herring. It's not a matter of our GDP. It's a matter of upholding our laws. Honest people wait years in their home country for their application to immigrate to the US to be approved. Why should we not uphold our laws and expel illegal aliens?

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    1. Let's be honest, the chamber of commerce conservatives have been at odds with the rank and file conservatives as far as the issue of illegal immigration is concerned.

      Trump may appear to be the champion of the rank and file conservatives but look at who he is putting in charge of the different departments of the government, corporatist globalists who side with the chamber of commerce.

      You are right that people should apply and wait to emigrate to the US, but the issue of illegal immigration, just like the so called "war on drugs" is going to continue to be an issue for decades still to come.

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  4. 5% of the workforce contribute 2% of the economy, 2% that could be more automated over the next decade, btw. The flipside of this, economically, is the cost of Govt serrvices: Over the course of a lifetime, 11.5 million illegal immigrants granted amnesty would receive $9.4 trillion in government benefits after paying just $3.1 trillion in taxes. Notably, illegal immigrants are already receiving significant amounts of government benefits, writes Inserra. In 2010, the typical illegal immigrant household received $24,721 in government benefits but paid just over $10,000 in taxes -- an annual benefit of more than $14,000 per household. Illegal immigrants not only receive the benefits of government services (like fire and police protection), but their children receive public education. Additionally, children of illegal immigrants that are born in the United States are eligible for the full spread of government welfare benefits, including Social Security and Medicare. - See more at: http://www.ncpa.org/sub/dpd/index.php?Article_ID=25056#sthash.lrgafa78.dpuf

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    1. Interesting stuff but I noticed that the article had no source references for the amounts $9.4 trillion in government benefits.

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  5. Both CAP and American Action Forum are advocates for illegal immigrants, a perfect bipartisan pair: political gains through demographics for the first and economic gains for the owners of capital for the second.

    It's not as much the GDP as what share people get of it that matters. Removing illegal immigrants would raise wages. But even more important in expensive housing markets like California, it would remove lots of demand for housing, making it more affordable to the remaining legal residents, especially hard up working-class renters.

    The government benefit cost of the illegal population are clear, and become huge if given amnesty. A UCLA study said "Up to 57% of Californians eligible for DACA or DAPA lacked private health insurance and had income below the Medi-Cal eligibility threshold in 2013." But the really big costs are net lifetime tax contribution versus benefits received. The elderly get the lion's share of benefits, and lower earners get much more back relative to the taxes they paid into the systems.

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  6. I fnd the GDP numbers a bit abstract. I would be more worried about the short term impact of labor shortages and higher labor costs in the sectors directly impacted.
    Will farm crops remain on the field because of lack of people to harvest them? Will the construction industry slow down because of labor shortages? Hotels, restaurants, and manufacturing will all be impacted. Either you pay more for replacement labor or you live with labor shortages.
    If there is spending approval for 15,000 more agents that will show how far this goes, but either way, i think most people will feel a direct impact.

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