In an interview aired Sunday, Donald Trump told "60 Minutes” correspondent Lesley Stahl that he would deport as many as 3 million undocumented immigrants after he takes office next year. It remains to be seen whether the president-elect will fulfill this pledge, and if he does, how quickly he would seek to do so. In any case, two new analyses confirm that deportations could have severe consequences for the American economy.
One of the analyses, released by the National Bureau of Economic Research on Monday, offers the first detailed estimates of how a policy of mass deportation would affect specific industries. The authors, Ryan Edwards and Francesc Ortega of Queens College, City University of New York, came up with a few unexpected results.
Unsurprisingly, the greatest number of undocumented workers — 1.3 million — were employed in leisure and hospitality, followed by the construction sector, which employed 1.1 million. These two sectors were followed by professional and business services, which is not a sector often associated with unauthorized employment but included nearly 1 million undocumented workers, by Edwards and Ortega's estimate.
The two economists relied on census data from 2011 to 2013 to estimate the number of undocumented workers in each industry. While the census does not ask respondents whether they are undocumented, the records do show when they arrived, what country they came from, and whether their occupation required a license — information that can be used to estimate the likelihood that a person is undocumented.
According to a recent estimate from the Pew Research Center, there are about 8 million unauthorized workers in the United States in total.
If all undocumented workers were immediately removed from the country, Edwards and Ortega forecast a decline of 9 percent in agricultural production and declines of 8 percent in construction and leisure and hospitality over the long term.
These are the industries most dependent on undocumented labor. Relative to the overall economy, however, the most important effect would be a decline in manufacturing output of $74 billion over the long term, followed by somewhat more modest declines in wholesale and retail trade and financial activities.
There are relatively few undocumented workers in the financial sector, but they make a disproportionate economic contribution. The sector employs just under 200,000 undocumented immigrants, but their weekly earnings are $1,132 on average — roughly twice the average across the economy for unauthorized workers, which is $581.
“When we think about unauthorized immigrants, we tend to think about poor Mexican workers with low education in agriculture,” Edwards said. In other sectors, he added, “they're highly trained, highly paid professionals, so their removal has a pretty large effect.”
Edwards and Ortega estimate that undocumented workers are responsible for about 3 percent of the U.S. economy overall. Deporting all of them would result in a substantial contraction.
For his part, Trump has argued that removing immigrants will benefit U.S. workers who compete with them for employment. “The truth is, the central issue is not the needs of the 11 million illegal immigrants or however many there may be,” Trump said in August. “There is only one core issue in the immigration debate, and that issue is the well-being of the American people.”
Most economists who have studied the effects of immigration have found only minimal effects on native-born workers' wages, and one recent review of the research concluded that those most negatively affected by immigration are immigrants already living in the country — who tend to be most similar to the new arrivals in terms of education and skills and thus compete with them most directly.
In any case, many analysts are skeptical that Trump will deliver on his campaign promises for punitive immigration policy. “We do not anticipate significant changes on immigration policy, but incremental restrictions seem likely,” Sven Jari Stehn and Alec Phillips of Goldman Sachs wrote in a note to investors on Saturday.
They added that major changes to the country's immigration system, including deportation on a major scale, would require congressional approval. Many lawmakers in Congress favor less radical measures, including Rep. Paul D. Ryan, the Republican from Wisconsin and the speaker of the House, who supports eventual legal status for those here illegally.
Stehn and Phillips did consider one of Trump's proposals: requiring all employers to verify electronically that their personnel can work in the country legally. They estimated that this requirement would force about 2.5 million people to leave the country over two years and that the policy would reduce gross domestic product by one-half to three-quarters of a percentage point.
“Such a policy would have significantly adverse effects on the economy,” they wrote. Unemployment would decline at first as employers hired legal workers to replace their unauthorized workers, but many positions would have to remain vacant. As the economy's overall capacity to produce declined, unemployment would increase again, and so would prices.