Mass Deportations: The Economic Time Bomb

The clock is ticking. The Trump administration’s aggressive immigration policies, including mass deportations, are set to detonate an economic time bomb. The administration’s recent exemptions for certain workers from its deportation plan are a tacit admission of this reality. But the question remains: will these exemptions be enough to prevent a catastrophic economic collapse?

The administration’s about-face on deportations is a clear concession to the economic reality that certain industries, such as agriculture, meat packing, restaurants, and hotels, can’t survive without immigrant labor. But the same is true for many other vital national industries, like construction, which are untouched by this about-face. Until the administration dramatically rethinks its entire approach to deportations, immigrant workers across these industries are still at risk of being arrested at their hearings, in their homes, and in their communities, and being forced into the shadows because they can’t rely on due-process anymore. That means vital American industries are still at risk of collapse.

The economic stakes are staggering. The American Immigration Council estimated that a mass deportation of approximately eleven million undocumented people in the United States would cost at least $315 billion. This highly conservative estimation accounts for expenses related to arrests, detention, legal processing, and removals. It further concluded that the deportation of one million immigrants per year would cost $88 billion per year and take over ten years with a total cost of about $967.9 billion. The same study found that mass deportations could significantly impact the economy, reducing the annual gross domestic product (“GDP”) by 4.2% to 6.8%, equating to a loss of $1.1 trillion to $1.7 trillion per year. This would have a profound impact on the economy, weakening the labor market, straining consumers, and stripping the economy of significant tax contributions.

Labor shortages in critical sectors such as construction, agriculture, and manufacturing could push prices up to 9.1% higher by 2028. Such economic disruptions would strain consumers and place additional pressures on businesses. For example, the construction sector employs the most undocumented immigrants on an absolute basis and has an extremely high undocumented share of its total workforce. A deportation campaign that removes even 50% of this workforce could lead to significant labor shortages and cut compound growth rates by half over the course of the Trump administration. This would not only raise costs and deplete demand but also lead to higher prices for consumers. Sectors that are unable to find replacement workers or pass on costs to consumers would also likely see output losses.

Additionally, migrants not only help expand the labor supply but also pay nearly $580 billion a year in taxes, helping to cushion the American economy. In 2022, undocumented migrant households paid $46.8 billion in federal taxes and $29.3 billion in state and local taxes. This population also contributed about $5.7 billion to Medicare, a federal healthcare program that generally excludes undocumented migrants from its benefits. These contributions highlight the significant economic role that migrants play, even as many remain excluded from the very programs that they help fund. Given these substantial contributions, the mass deportation of undocumented migrants would not only shrink the labor force but also eliminate a significant source of tax revenue, exacerbating economic strain.

The administration’s deportation policies are a high-stakes gamble. The economic consequences of mass deportation cannot be ignored. Removing millions of undocumented migrants would impose immense financial burdens on the government, weaken the labor market, strain consumers, all while stripping the economy of significant tax contributions. As policymakers debate immigration policy, they must weigh not only the social and political implications but also the profound economic costs of such drastic measures. The clock is ticking, and the future of the American economy hangs in the balance.