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.