A recent study by the Baker Institute for Public Policy at Rice University examines the economic and social consequences of large-scale deportation policies, particularly those proposed by President Donald Trump.
The study highlights the significant economic contributions of undocumented immigrants and the severe disruptions that would arise if they were removed from the U.S. workforce.
Undocumented immigrants play a crucial role in various industries, contributing substantially to sectors that form the backbone of the American economy. According to the Baker Institute, industries such as agriculture, construction, hospitality, food processing, and healthcare are heavily reliant on immigrant labor.
The study estimates that approximately 11 million undocumented immigrants reside in the U.S., with roughly 7.6 million actively participating in the workforce. Should mass deportation be enforced, the immediate effect would be a dramatic labor shortage in these industries. The Baker Institute warns of significant disruptions in key sectors where undocumented immigrants constitute a vital workforce. For instance:
Agriculture: The American Farm Bureau Federation has previously warned that the removal of undocumented workers could result in a $60 billion loss in agricultural output, severely disrupting food supply chains.
Construction: The National Association of Home Builders estimates that about 13% of construction workers are undocumented. Their deportation would halt numerous projects, drive up labor costs, and exacerbate the ongoing housing crisis.
Hospitality and Service Sectors: Restaurants, hotels, and cleaning services employ a significant number of undocumented immigrants. The Baker Institute study predicts that deporting these workers would lead to higher consumer prices and business closures, as many companies would struggle to find replacements.
Tax Contributions and Economic Growth
Despite lacking legal status, undocumented immigrants contribute billions to the U.S. economy through taxes and consumer spending. The Baker Institute report estimates that:
Undocumented workers pay approximately $11.7 billion annually in state and local taxes.
They contribute around $7 billion annually to Social Security, despite being ineligible to claim benefits.
Their purchasing power is estimated at $162 billion per year, which fuels local economies and supports small businesses.
Mass deportation would result in an estimated $1.6 trillion loss in U.S. GDP over a decade, according to the study. This would be due to labor shortages and reduced economic activity. Additionally, the Social Security and Medicare trust funds would face further financial instability as undocumented workers would no longer be contributing through payroll taxes.
The Cost of Deportation Operations
Beyond economic losses, the financial burden of implementing a mass deportation policy would be staggering. The Baker Institute estimates that forcibly removing all undocumented immigrants would cost between $400 billion and $600 billion, factoring in expenses related to detention, legal processing, and transportation.
Expanding Immigration and Customs Enforcement (ICE): To execute mass deportation, ICE would require a budget increase of over 300%, diverting federal funds from other critical areas such as infrastructure, education, and healthcare.
Impact on Local and State Governments: Local law enforcement agencies would be expected to cooperate with federal immigration authorities, leading to increased costs for detention and legal proceedings at the state level.
Implications for American Workers
A common argument in favor of deportation policies is that removing undocumented workers would create more job opportunities for American citizens. However, the Baker Institute’s analysis suggests otherwise:
Labor Shortages and Wage Inflation: The sudden removal of millions of workers would create extreme labor shortages, particularly in sectors where native-born Americans are less likely to seek employment. Employers may struggle to fill positions, leading to business closures or increased reliance on automation.
Increase in Prices: The cost of goods and services would rise significantly due to labor scarcity, placing financial pressure on American consumers.
Decline in Economic Competitiveness: With fewer workers available, the U.S. could lose its competitive edge in industries that rely on immigrant labor, making outsourcing a more attractive option for businesses.
Mass deportation would also have devastating effects on immigrant families and communities. The Baker Institute estimates that over 5 million children in the U.S. have at least one undocumented parent, meaning large-scale deportation would lead to widespread family separations and psychological distress for countless American-born children.
Additionally, the political tensions surrounding immigration would likely deepen, further dividing the electorate and creating instability in policymaking. The study suggests that immigration reform focused on legal pathways and workforce integration would be a far more effective strategy than mass deportation.
A Catastrophic Policy for the U.S. Economy
The findings from the Baker Institute for Public Policy at Rice University present a clear picture: mass deportation would be economically catastrophic for the U.S. The contributions of undocumented immigrants are deeply woven into the American economy, and their sudden removal would cause widespread labor shortages, reduced tax revenues, and increased costs for businesses and consumers.
Rather than pursuing large-scale deportations, the study suggests that policies aimed at legalizing undocumented workers and integrating them into the formal economy would yield far greater economic benefits. As the immigration debate continues to shape U.S. policy, these findings underscore the need for a pragmatic approach that considers both economic realities and humanitarian concerns. However, the current administration appears to be more focused on political rhetoric than on the economic consequences of its policies.
