Monday, November 14, 2016

The Economic Impacts of Removing Unauthorized Immigrant Workers

It remains unclear what President-elect Donald Trump's true intentions are with regard to undocumented workers. His recent statement on 60 Minutes that he plans to first focus on deporting the 2 million to 3 million alleged undocumented criminals in the country may be cover to push the undocumented question to the side and allow most to remain. However, it is also possible his call to first deport "criminals" may be cover to push all undocumented out of the country. Only observation of how he implements his plan will provide clarity on this question.

Below is a summary of the paper, The Economic Impacts of Removing Unauthorized Immigrant Workers: An Industry- and State-Level Analysis, By Ryan Edwards and Francesc Ortega, that could be called a discussion of the worst case economic scenario if Trump attempts to drive all undocumented out of the country:

In every state and in every industry across the United States, immigrants—authorized and unauthorized—are contributing to the U.S. economy. Immigrant labor and entrepreneurship are believed to be powerful forces of economic revitalization for communities struggling with population decline. Estimates suggest that the total number of unauthorized immigrants currently residing in the United States is approximately 11.3 million, or about 3.5 percent of the total 2015 resident population of 324.4 million. Of those 11.3 million, we estimate that 7 million are workers. What is the economic contribution of these unauthorized workers? What would the nation stand to lose in terms of production and income if these workers were removed and returned to their home countries?The main findings of this report are as follows:
  • A policy of mass deportation would immediately reduce the nation’s GDP by 1.4 percent, and ultimately by 2.6 percent, and reduce cumulative GDP over 10 years by $4.7 trillion. Because capital will adjust downward to a reduction in labor—for example, farmers will scrap or sell excess equipment per remaining worker—the long-run effects are larger and amount to two-thirds of the decline experienced during the Great Recession. Removing 7 million unauthorized workers would reduce national employment by an amount similar to that experienced during the Great Recession.
  • Mass deportation would cost the federal government nearly $900 billion in lost revenue over 10 years. Federal government revenues are roughly proportional to GDP, while federal spending is less responsive. A conservative estimate suggests that annual revenue losses would start at $50 billion and accumulate to $860 billion over a 10-year period. With associated increases in interest payments, removal* would thus raise the federal debt by $982 billion by 2026 and increase the debt-to-GDP ratio, a common measure of fiscal sustainability, by 6 percentage points over the same time period. Unsustainably high levels of the debt-to-GDP ratio may ultimately raise interest rates and choke off economic growth.
  • Hard-hit industries would see double-digit reductions in their workforces.Unauthorized workers are unevenly spread across industries, with the highest concentrations employed in agriculture, construction, and leisure and hospitality. Those three industries would be hit hardest by a removal policy, experiencing workforce reductions of 10 percent to 18 percent, or more. Other industries would also experience reductions in output due to a mass deportation policy.
  • The largest declines in GDP would occur in the largest industries, not in immigrant-heavy industries. Because industries also vary in size, the losses in value added to the national GDP stemming from removal occur across many industries that are not usually associated with unauthorized labor. The three largest U.S. industries in terms of value added are financial activities, manufacturing, and wholesale and retail trade. Annual long-run GDP losses in those industries would reach $54.3 billion, $73.8 billion, and $64.9 billion, respectively, the three largest effects among the 12 private-sector industries.
  • States with the most unauthorized workers will experience the largest declines in state GDP. We estimate that GDP in California, for example, will ultimately fall by $103 billion annually—or roughly a 5 percent drop—if mass deportation occurs. Large declines will also occur in other states such as Texas, New York, and New Jersey, with the effects spread across industries.
The economic and fiscal harm from mass deportation is severe. The Center for American Progress previously estimated the direct cost to the government of physically deporting this many unauthorized immigrants at $114 billion. This report focuses solely on the economic effects of removal of 7 million unauthorized workers, which are much larger. It is beyond the scope of this report, however, to estimate the economic consequences of removing from the U.S. economy more than 11 million consumers of goods and services. And there are also likely to be harmful noneconomic consequences felt by communities and families that would have to adjust to the removal of millions of people. It is also beyond the scope of this report to estimate response of native employment. But with current unemployment rates low in most industries, the incentives for remaining residents to work more in order to fill in any gaps left by deported workers would most likely be small and temporary. Viewed in this context, our results suggest that a policy of mass deportation faces a high bar in terms of a cost-benefit calculation.

35 comments:

  1. Wouldn't removing low-cost labor push up wages, which might in turn inspire some of the 90+ million no longer looking for work to get off the couch, thereby replacing some of the lost labor?

    ReplyDelete
    Replies
    1. Great idea of you like massive supply side generated price inflation for all.

      Delete
    2. So One Sided. So One Sided.
      Of course which means all the numbers are incorrect.
      Which means the entire article is simply silly. Propaganda.....
      .
      Here Is Why. NOT ABLE TO BE REFUTED.
      .
      The author ignores the freebies and hand outs.
      .
      For Example MAN AND WOMAN WITH A CHILD COME TO YOUR CITY.
      .
      . FREE HOUSING
      .
      FREE CHILD CARE
      .
      FREE FOOD
      .
      FREE EDUCATION.
      .
      FREE MEDICAL
      .
      FREE LEGAL.
      .
      SUBSIDIZED BANKING.................
      .........................

      Yes that is true. It is all free.
      .All Free.
      .
      I have worked with legal and illegal immigrants for years.
      .
      .Here is one of the things they do to get free medical.
      They go to the hospital and give a fake name and address.
      They get no bill it is all free.
      .
      I tried to help two guys once that were in an accident.
      They needed their medical records. I told them I would help.
      I said when and where did you go to the hospital.

      They told me they gave a fake name and they could not remember the fake name they gave. We could not get the records.

      Free education- of course, they go to school. Free housing and food
      of course it is all there.

      Free Legal - our courts are filled with the cases. Filled.
      From Drunk driving, to driving with no license, to domestic to
      petite theft to whatever Free Legal.

      SUBSIDIZED BANKING YES !!! A Majority that I know
      send their money out of the Country using US POST OFFICE Money Order.

      This is the cheapest and best way to send your money out of the Country.
      All the illegal and legal immigrants I know do this.
      US Gov subsidizes the Post Office to make this so inexpensive.
      .
      .
      Then They Go Home For Retirement. I just had a friend and his family leave.
      It is too expensive to live here their child graduated from high school
      and will get cheaper college at home. Good Bye.
      .
      .
      .

      Delete
    3. Re: Alexaisback2,

      ─ The author ignores the freebies and hand outs. ─

      What "freebies"? Liar.

      ─ Yes that is true. ─

      You're a liar.

      ─ A Majority that I know send their money out of the Country using US POST OFFICE Money Order. ─

      You're a gawd-damned liar.

      Delete
    4. Re: dan,

      ─ Wouldn't removing low-cost labor push up wages,─

      Sure! And if you killed a few million of them low-skilled workers, you would push wages even higher! Let's have ourselves a war!

      ─ which might in turn inspire some of the 90+ million no longer looking for work to get off the couch ─

      Do you really believe people don't get up their butts because wages are "too low"?

      Say it aint' so, Joe!

      Delete
  2. Hard to quantify all effects. In Florida, have fun getting your kid into the emergency room. It's full of illegals who use the emergency room as their primary care. Everyone who has to live with this knows this. Everyone who doesn't simply lectures everyone about how culturally enriching it is.

    ReplyDelete
    Replies
    1. .
      .It is Fearmongering Propaganda .
      .
      They did not even attempt to qualify the effects.
      .
      ..

      Delete
    2. The paper is looking at the ramification of WORKERS lost that is all. That's the title of the paper, "The Economic Impacts of Removing Unauthorized Immigrant Workers," not all ramifications.

      I posted this so it could be understood what industry sectors would be damaged, not as a debate on illegals and the state. There would be severe damage to some industries as the chart indicates.

      Delete
    3. A lot of hospitals in SoCal have either shut down completely, or eliminated their emergency rooms for this very reason. Illegal immigration is a welfare-state problem, IMHO, not an actual border problem.

      In fact, it's the underground economy in SoCal that allows the left to get away with their precious minimum wages. A lot of menial labor would be almost impossible to afford paying minimum wages.

      Delete
    4. Because value is subjective, you really cannot compare the advantages of additional economic activity vs. the problems of subsidizing the influx of mass members of a foreign culture who will have oodles of anchor babies and who will vote to turn the USA into Venezuela. BTW, explaining that they are eating the zoo animals in socialist Venezuela will have as much impact on the animal-loving lady unionized teachers as explaining to them Obama’s and Hillary’s war crimes. Flatline.

      If US Keynesianism and interventionism (creating poverty and corruption) and the war on drugs (creating vicious drug gangs), imposed upon Latin American countries from outsite, could be stopped, perhaps there would be less reason for these people to leave their home countries.

      Delete
    5. Re: Tom Woods,

      ─ Hard to quantify all effects. In Florida, have fun getting your kid into the emergency room. ─

      Don't tell me - "He fell from his bike."

      ─ It's full of illegals who use the emergency room as their primary care. ─

      What's an "illegal"? Who can be "illegal"? It can't be "illegal" to exist. There are those who don't carry the correct State-issued documents; are you talking about them? Are you implicitly giving the State validity?

      Delete
    6. Vicious response, but I expect that. What possible reason is there to pretend I take my kids to the hospital for frivolous reasons? So that's a non-argument.

      By "illegal" you may understand shorthand for "has no intention of paying, and is subsidized by me, so that I may be culturally enriched."

      Delete
    7. Re: Tom Woods,

      ─ Vicious response ─

      What was being implied was pretty vicious, Tom:

      a) That emergency rooms are "filled with illegals" thus depriving you of care. They AREN'T and you aren't being deprived.
      b) Immigrants should not be using emergency services at all because... "illeguls!"

      These are human individuals of will you're talking about, Tom.

      ─ What possible reason is there to pretend I take my kids to the hospital for frivolous reasons? ─

      What makes you think *anybody* that goes to an emergency room does so for frivolous reasons, especially if they are undocumented aliens? See, it is easy for you to ascribe frivolous reasons on others only because they happen not to have State-issued papers, even when their reasons could be just as urgent as yours.

      ─ By "illegal" you may understand shorthand for "has no intention of paying, and is subsidized by me, so that I may be culturally enriched." ─

      No, by "illegal" I understand "without State-issued papers which State-worshippers consider important enough to concede a person is a human being."

      Since I am not a State-worshipper and I do not believe a person can be "illegal" for the mere reason that he or she *exists*, then I don't have to accept your odious epithet. As far as "subsidizing" goes, that is a red herring. Undocumented aliens WORK, which means they generate WEALTH.

      Delete
    8. I run into these Francisco Torres persons all the time.
      .
      I have worked with illegal and legal immigrants for years.
      .
      For example I have never seen Francisco Torres or his like get together and
      start a non-profit to buy health insurance for illegal immigrants
      Nor pay their hospital bills.
      .
      I have never seen Francisco Torres open his home to illegal
      immigrants or start a homeless shelter - .

      Francisco Torres is probably like the others;
      .
      Yells and screams how they are the better smug person
      but does nothing.

      I see it all the time.
      .
      .

      Delete
    9. Re: alexaisback2,

      ─ I run into these Francisco Torres persons all the time. ─

      You run into anarcho-capitalists all the time?

      That's... Astounding.

      Delete
  3. I'm not sure I believe all the numbers here but I agree with the analysis. It would hurt bad to remove all illegals. However I don't believe for one second that will ever happen. Trump clearly said criminal illegals many times. I don't believe the means exist to even do that let alone all of them. Threat can be a major deterrence against crime though.

    ReplyDelete
  4. From what I've read, he is not going after just illegals... Somebody has to pick the fruit. He is going after illegals with a criminal record. I have a feeling it isn't the strawberry pickers he has his sights on. Think criminal gangs in the inner cities...

    ReplyDelete
  5. Pro invader drivel from a lefty website. Oh goody.

    How exactly do they know where the invader works or are they just making stuff up ?

    An invader who is drunk crashes into a building and it needs to be rebuilt.
    I guess once the invader is expelled this will not happen so that is some horrific GDP loss to a Keynesian.

    ReplyDelete
    Replies
    1. We all appreciate your thoughtful and insightful comment on a very difficult subject with no easy answers under present conditions.

      Except that the problem becomes moot with AnCap.

      Delete
    2. Re: FormerIntelligent,

      ─ How exactly do they know where the invader works or are they just making stuff up? ─

      Immigrants are not invaders.

      ─ An invader who is drunk crashes into a building and it needs to be rebuilt ─

      And the bartender says "Why the long face?"

      Yeah, neither joke works.

      Delete
    3. They are indeed invaders.
      Does not the event described above raise GDP, yes or no ?

      Delete
    4. Re: FormerIntelligent,

      ─ They are indeed invaders.─

      No, they're not. An immigrant is invited in by those who are willing to rent to him or her, or sell property to him or her, or marry to, give a job to, etc.

      ─ Does not the event described above raise GDP, yes or no ? ─

      Are you talking about your building joke? Because it's not funny. It's also not a good hypothetical.

      Delete
  6. This paper assumes that no legal immigrants come back to replace the lost illegal workers. It's really not that difficult to get a temporary work visa. I'm sure the market participants will figure this out.

    ReplyDelete
  7. Did they calculate the $84 Billion a year spent on subsidizing illegal immigration? Because over ten years, that is $840 Billion saved.

    Would farming not start to build mechanized labor tools and turn to robotics sooner? My understanding is that Illegal workers have delayed this up to now.

    The cultural factors are probably worth the lost GDP anyways. Some things are bigger than GDP figures.

    ReplyDelete
    Replies
    1. Re: Keith,

      ─ Did they calculate the $84 Billion a year spent on subsidizing illegal immigration? ─

      Liar.

      ─ Would farming not start to build mechanized labor tools and turn to robotics sooner? ─

      Forced mechanization? Why didn't the Soviets thought of that!

      Trumpistas are a silly bunch.

      Delete
  8. The "workers" are predominantly in low wage sectors. The "workers" receive more in tax money and benefits than they pay in. Therefore every removed "worker" is a net benefit to the American taxpayer.

    Sorry Wenzel, we don't want to subsidize your low pay illegal alien servants. You are privatizing the profits, and socializing the costs. Real libertarians should fight this everywhere.

    ReplyDelete
    Replies
    1. Re: Matt@Occidentalism dot org

      ─ The "workers" are predominantly in low wage sectors. The "workers" receive more in tax money and benefits than they pay in. Therefore every removed "worker" is a net benefit to the American taxpayer. ─

      Which means that every low wage worker removed from the US is a net benefit EVEN if we're talking about native-born workers, correct?

      Because the "scary" quotes don't change the implication of what you say one bit, whether you want to think so or not. A worker is a worker. It provides labor for a price. So if their labor has a "low price" then necessarily they MUST be subsidized and thus their removal (by death squad or whatever method strikes your fancy) SHOULD represent a NET GAIN for the economy.

      Trumpistas are Keynesians in populist drag.

      Delete
  9. Immigrant comes to uSA.
    Immigrant then brongs old parents and grandparents.
    Immigrant parents and grandparents get on SocSec at some point, not having contrubuted anything.
    Immigrant complain about raciss proposed budget cuts.
    Immigrant votes Democrat.
    Libertarians navel gaze and wonder why things get worse.

    ReplyDelete
    Replies
    1. Apparently you don't intend to qualify the term "immigrant" which means you regard both undocumented and documented immigrants as leeches or moochers, so why exactly are you asking me if I got in the US through the "back door or the front door"? Why would you care?

      Delete
    2. Yep. Why should the parents get a penny just for coming here? Who is going to pay their allotment when they have paid no one else's?

      Delete
  10. Francisco, you legal or illegal. Did you come to our house through the front gate or the back door?

    ReplyDelete
    Replies
    1. Re: JaimeinTexas,
      ─ Francisco, you legal or illegal. Did you come to our house through the front gate or the back door? ─

      The correct answer to that question is this: None of your gawd-damned business.

      Delete
    2. Francisco, coward. Illegal or legal? Born here?

      Delete
  11. Yikes this one really got the white nationalists triggered

    ReplyDelete