Potential Economic Consequences of Trump's Mass Deportation Policies: A Shrinking Wage Scenario
The Penn Wharton Budget Model has released an analysis that sheds light on potential negative economic impacts of mass deportations on worker paychecks, GDP, and the federal budget deficit.
According to the study, mass deportations could lead to a reduction in most workers' wages. With fewer workers in the labor force, wages would decline due to decreased economic productivity and demand for labor. This is particularly concerning for industries that heavily rely on unauthorized workers, such as agriculture and construction.
The U.S. economy could also take a significant hit. Removing 10% of unauthorized immigrants annually over four years is projected to reduce GDP by about 1%. If the policy extended for 10 years, GDP could decrease by as much as 3.3%.
The analysis also reveals that mass deportations would increase the federal deficit substantially. Over a four-year period, these costs could rise toward $350 billion due to lost tax revenues from unauthorized immigrants and additional government spending on border security, enforcement, and deportation operations. Over a 10-year period, these costs could rise toward $987 billion.
Joe Brusuelas, chief economist at RSM, emphasized the need for comprehensive immigration reform to support the labor needs of various industries. He advocates for cross-border migration to support the labor needs of manufacturing, construction, agriculture, household maintenance, leisure and hospitality, and other industries.
Stephanie Roth, chief economist at Wolfe Research, shares similar concerns, expressing that mass deportations and the termination of migrant legal status could cause worker shortages and lift prices for consumers.
The Penn Wharton analysis found that a four-year policy in which 10% of the nation's unauthorized immigrants are removed per year would dent the average worker's wages. The unemployment rate for young adults, particularly those aged 20 to 24, would likely rise, further exacerbating the issue.
However, the White House spokesman Kush Desai argued that the Penn Wharton findings miss the costs that everyday Americans bear due to illegal immigration, such as violent crime, rising housing costs, eroding social trust, and overburdened emergency rooms.
The immigration crackdown, a centerpiece of Trump's second term, could increase federal deficits by $350 billion over four years and $987 billion over ten years. Despite these findings, President Donald Trump has promised an economic boom, but the new analysis suggests his immigration policies could shrink worker paychecks, erode GDP, and spike the federal government budget deficit.
[1] Source: Penn Wharton Budget Model [3] Source: Bureau of Labor Statistics [5] Source: US Department of Agriculture
- The potential economic impacts of mass deportations on the general-news landscape could be significant, as the Penn Wharton Budget Model predicts a decrease in GDP due to factors like decreased worker productivity and increased federal deficits, particularly in industries like agriculture and construction.
- Business and finance experts, such as Joe Brusuelas of RSM and Stephanie Roth of Wolfe Research, have expressed concerns that mass deportations and termination of migrant legal status could lead to worker shortages and increased costs for consumers, potentially affecting overall economic stability.
