Production slowdowns, more imports and pricier housing could follow
What economic consequences might follow a large-scale crackdown? According to the Pew Research Centre, a think-tank, some 11m unauthorised migrants lived in America in 2022, of whom 8.3m were in the workforce. A recent surge means the number will now be higher. Experts estimate there may be 10m unauthorised workers, representing 6% of the labour force. Many work on building sites and farms, as well as in restaurants. California, Florida, New York and Texas are home to nearly half of them. The economic fallout from a deportation of this population—whether full or, as is more likely, partial—can be assessed across three dimensions: employment, consumer prices and public finances.
Supply bottlenecks tend to push up prices, but the impact varies by sector. Agriculture is especially vulnerable. A report by the Migration Dialogue at the University of California, Davis, estimates that almost 1m of America’s 2.5m farmworkers are unauthorised immigrants. Dairy and poultry farms, which cannot make use of seasonal guest-worker visas, are particularly reliant on them. The loss of this labour could be offset by ramping up automation, through more guest workers or by consumers relying more on imports. Mr Clemens, Ethan Lewis of Dartmouth College and Hannah Postel of Duke University have found that excluding 500,000 temporary Mexican labourers from farms in the 1960s led mostly to more mechanisation. However, robots remain no match for humans when it comes to picking strawberries. Today the consequence would either be higher costs, or another unpalatable outcome for the Trump administration, such as a wider trade deficit.
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January 6, 2025