4 Ways Trump’s Immigration Crackdown Is Reshaping The Economy

President Donald Trump’s crackdown on immigration will have a seismic impact on the economy in the short term and far into the future, according to recent analyses.

For decades, the U.S. economy has depended on the labor of immigrants, both authorized and unauthorized. Trump’s crackdown on immigration, both at the border and in the form of mass deportations, is upending that status quo, with serious implications for the present and future of the economy.

Trump’s anti-immigration measures include highly publicized raids on workplaces by the Department of Immigration and Customs Enforcement and increased security at the southern border. The tax and spending bill he signed this summer includes about $150 billion in immigration enforcement and border security over the next four years, including $46.5 billion to fortify the border wall.

Economists are still coming to grips with the far-reaching implications of Trump’s immigration policies and have laid out some conclusions in recent papers.

The Population Is Getting Smaller And Older

One of the policies’ more dramatic effects will be to reduce the number of people living in the country. The Congressional Budget Office estimated last week that the U.S. population will be 4.5 million lower in 2035 than it was projected to be in January.

What’s more, 2.1 million of the missing people will be in their prime working years—between the ages of 25 and 52—with significant implications for the workforce.

The crackdown also accelerates the timetable for when the U.S. population will go from growing to shrinking for the first time since 1918. By 2031, the country will have more deaths than births, two years sooner than previously estimated.

The CBO cautioned that its projections are “highly uncertain” and could change significantly depending on policy or administrative changes.

Job Vacancies Are Going Unfilled

With such a large reduction in the labor force, jobs will inevitably go unfilled, according to an analysis last month by Bernard Yaros, lead U.S. economist at Oxford Economics. Specifically, it could result in a 0.1 percentage point increase in the ratio of job vacancies to unemployed workers.

That could help keep the unemployment rate relatively low even as job openings dry up and hiring slows, as Federal Reserve Chair Jerome Powell remarked last month:

“While the labor market appears to be in balance, it is a curious kind of balance that results from a marked slowing in both the supply of and demand for workers.”

A stark example of that phenomenon came from Pennsylvania, where at least one dairy farmer had to sell his herd of cows because he couldn’t find anyone to milk them, according to reporting by Politico last week.

Some Workers Gain Wages, Others Lose

One of Trump’s stated goals for the crackdown is to improve conditions for native-born workers. A recent analysis by the Penn Wharton Budget Model suggests it may do so for some workers, while harming others.

On the plus side, wages could rise for lower-skilled workers as long as Trump’s immigration policies are sustained. If the policies stay in place for at least 10 years, a typical low-wage worker would earn $63,600 over their lifetime, more than under the previous policies, economists Felipe Ruiz Mazin and Felix Reichling found.

However, those gains could instead turn into losses of $8,600 if the immigration trends are reversed within four years.

The opposite would be true for high-skilled workers, who make up 63% of the workforce and would lose $2,764 after 10 years of reduced immigration. The drop-off is because lower-wage workers tend to increase the productivity of higher-wage ones, the researchers said.

The National Debt Rises

The deportations are expensive, costing an estimated $70,236 to arrest, detain, and remove one immigrant, according to the Penn Wharton Budget Model. After economic effects of the workers not contributing to the economy are taken into account as well, the deportation campaign will add nearly $1 trillion to budget deficits over 10 years, according to the model.

The Wharton model assumed 10% of unauthorized immigrants are removed every year, resulting in a more dramatic decrease in the population than the CBO’s estimate, lowering it by 12.8 million by 2024.