President-elect Donald Trump has emphasized tougher immigration enforcement as a central campaign promise, with potential financial implications for Americans if mass deportations and stricter immigration policies are implemented. Immigrants, including those residing in the country illegally, play a significant role in supporting the job market, controlling inflation, and contributing to federal revenues, thereby bolstering the overall US economy.
Current immigration levels are projected to boost the country's real GDP by 0.2 percentage points annually over the next decade, potentially leading to a 2% increase by 2034, as per the Congressional Budget Office's outlook report. However, this growth trajectory could be disrupted if Trump's mass deportation plans come to fruition.
An estimated 11 million unauthorized immigrants are currently in the US, with Trump's focus primarily on deporting individuals with criminal records. Goldman Sachs estimates that around 1.2 million unauthorized immigrants, constituting 8% of the population, have criminal convictions.
The financial repercussions of mass deportations would be significant. Businesses would face the challenge of replacing deported laborers, potentially leading to labor shortages and necessitating higher wages to attract replacement workers. Sectors such as agriculture, construction, and services, which heavily rely on undocumented workers, could experience productivity slowdowns or increased labor costs, ultimately impacting consumers.
The University of New Hampshire Carsey School of Public Policy highlighted potential supply chain disruptions and inflation spikes if mass deportations were to occur, akin to the effects witnessed during the pandemic. A decrease in population growth resulting from tighter immigration policies could also dampen consumer spending, affecting the labor market.
Furthermore, job growth could suffer if businesses curtail hiring due to revenue declines, potentially leading to layoffs as companies adjust their budgets. The Brookings Institute estimates that negative net migration in 2025 could result in a monthly reduction of approximately 100,000 jobs.
Deportations may also have adverse effects on wage levels for US-born workers. Reports indicate that wage decreases were observed for US-born workers following the deportation of unauthorized immigrant workers between 2008 and 2015. While some replacement workers may receive higher pay, overall deportations could lead to reduced paychecks for native workers.
Goldman Sachs suggests that moderate immigration fluctuations have minimal impact on wage growth and inflation, but dramatic policy changes, such as mass deportations, could have significant repercussions. The deportation of a large number of unauthorized workers could strain federal programs, as unauthorized immigrants contributed billions in federal, state, and local taxes.
Notably, the costs associated with implementing a deportation plan are substantial. ICE figures from 2016 indicate that the average cost of detaining, processing, and removing one undocumented immigrant was $10,900, with an additional cost of $1,978 for transporting each deportee to their home country. These costs have likely increased since then, underscoring the financial implications of mass deportations.
