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Trump wants to remove these immigrants. An ugly bit of history tells us what it could do to the economy

"Mexican men and children who live in corral." Robstown, Texas, 1939. (Russell Lee, Farm Security Administration via <a href="">Library of Congress</a> )

It isn’t cited much in contemporary debate, but one enormous, racist episode in U.S. history could forecast the potential economic fallout of the Trump administration’s decision to terminate the residency permits of those granted Temporary Protected Status (TPS) in the United States.

Between 1929 and 1934, Americans were getting hammered by the Great Depression. As their anger and frustration grew, it was directed toward America’s Mexican population. During the '30s, an estimated 400,000 and 500,000 Mexicans and American citizens of Mexican descent were sent “home,” often forcibly, by state and local officials, with the approval of the federal government.

The stated motivation for the mass expulsions was typically economic, focusing on the burden posed by poor migrants, as well as the competition for jobs.

The Trump administration's rationale for ending TPS for an estimated 244,590 migrants from El Salvador, Haiti, Nicaragua and Syria is also partly about economics — although President Trump has more broadly claimed his immigration policy is about safety.

Ending the humanitarian program is a keystone of Trump’s fast-rising virtual wall against migrants including so-called dreamers.

According to an official statement of immigration principles posted in October: “Decades of low-skilled immigration has suppressed wages, fueled unemployment and strained federal resources.” The report also outlines strategies for deporting those who are in the U.S. illegally or who “abuse” their visas.

TPS beneficiaries have deep roots in the U.S. economy. Consider Salvadorans and Haitians, the two largest groups who are set to lose their residency permits so far. According to a 2017 report by the Center for Migration Studies, most Salvadorans have been in the country for more than 20 years. Among Haitians, who were granted the status much more recently, the figure is only 16 percent.

These TPS recipients have median household incomes of between $45,000 (Haitians) and $50,000 (Salvadorans) per year, according to the center, and participate in the labor force at higher rates than the native population. Thirty-four percent of Salvadorans and 23 percent of Haitians hold mortgages. Tearing them out would be a massive shock to the system.

There’s been a wealth of research on how much immigrants add to an economy, but not as much about what happens if you forcibly subtract them.

In the United States, the clearest parallel may well be the mass repatriation of Mexicans during the Great Depression. It was an era of desperation, hyperbole and racist hysteria. Politicians of the time should sound familiar, a few hilarious archaisms aside. In his 1931 annual report, Commissioner General of Immigration Harry Hull bemoaned the “hardships inflicted upon the American citizen” by “exposure to competition in employment opportunities of the bootlegged aliens.”

Salvadorans fear TPS decision will be a huge economic blow but pin hopes on Congress

To solve this problem, he promised “to spare no reasonable effort to remove the menace of unfair competition which actually exists in the vast number of aliens who have in one way or another, principally by surreptitious entries, violated our immigration laws.”

Hull and his allies got their wish. Almost a third of America’s Mexican population, which amounted to almost a quarter of the entire labor force in some Texas towns, were eventually expelled.

And did it work?

Economists Jongkwan Lee, of the Korea Development Institute, Vasil Yasenov, a postdoctoral scholar at the Goldman School of Public Policy in the University of California at Berkeley, and Giovanni Peri, economics chair at the University of California at Davis, looked at decades of detailed data to see if the higher wages and lower unemployment promised by opponents of immigration had materialized.

If anything, the opposite occurred.

Like TPS beneficiaries, many Mexicans (defined by the authors as people born in Mexico and their children) had established themselves in their communities. Researchers found cities that sent away more Mexicans saw worsening unemployment and slower wage growth after repatriation, even when adjusting for effects such as extreme drought and localized New Deal policies.

The effect was, however, too small to be significant in all but the hardest-hit cities.

Researchers found a similar story when they looked at occupations. There was little sign that natives benefited when the Mexicans were pushed out — even among the low-wage professions, which had had a higher share of Mexican workers. 

In intermediate- and high-skill jobs, the fallout was even clearer. “Skilled natives lost jobs once Mexicans were repatriated, while less skilled natives did not necessarily replace them,” the researchers found.

“The Mexicans and natives specialized in different occupations,” researcher Yasenov said. “They don’t necessarily compete for the same jobs.”

Instead, the labor market was something like a Jenga tower. The immigrants were key blocks holding up bits of the structure. Once you yank the blocks out and the tower begins to wobble, it becomes extremely difficult to push new blocks into their places without toppling the whole thing.

In their full analysis, which ranged from 1930 to 1950, the researchers found that — despite politicians’ promises at the outset — no broad group of American workers benefited from the massive, coerced repatriation of one out of every three Mexicans.

‘We will lose practically everything’: Salvadorans devastated by TPS decision

It’s telling. This period in history should have made the perfect argument for the administration’s virtual wall anti-immigration policy. Native-born workers were crossing the country in desperate search of jobs. The unemployment rate peaked above 25 percent. And yet, there’s no evidence that in the end, U.S. workers benefited from tossing out hundreds of thousands of men and women who they saw as their labor market rivals.

In fact, there are indications that they suffered the worse for it.

Parallels to the present

The labor market has evolved since the Great Depression, Yasenov said, but the economic forces behind it haven’t. “If these programs didn’t produce significant effects back then, they’re not likely to produce significant effects now,” he said.

First, if history is any guide, the areas which exclude the highest numbers of migrants will also see higher job losses and slower wage growth among local populations than similar cities that did not receive as many TPS recipients.

For Salvadorans and Haitians, that will be seen in the states below — within them, the largest enclaves are Haitians in Miami and Salvadorans in Los Angeles, Houston, Dallas and the D.C. area.

Second, low-skilled occupations with high populations of repatriated workers will at best see no significant gains for those who remain behind, either in wages or in unemployment. Higher-skilled occupations in those same regions will take a hit, as their employees, suppliers and customers are expelled. In this case, workers from both El Salvador and Haiti are concentrated in lower-skilled jobs, not dissimilar to those that were held by Mexicans at the onset of the Depression.

Understanding repatriation’s consequences in terms of the economy’s headline number or gross domestic product is a matter of simple math. At its core, GDP is the result of multiplying an economy’s population by each resident’s production of goods and services.

When you expel workers, like Mexicans during the Depression or Salvadorans today, you reduce the population side of the equation. But it gets worse, because you also reduce the production side as employers struggle to replace the workers, suppliers and buyers they just lost.

And if you’re reducing both sides of that GDP multiplication equation, you’re necessarily going to multiply the resulting drag on economic growth. Which is the opposite of what Trump officials are promising with their immigration overhaul.

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