President-elect Donald Trump speaks about immigration and border security near Coronado National Memorial in Montezuma Pass, Arizona, on Aug. 22, 2024.
Olivier Touron | AFP | Getty Images
A labor market boosted by immigration after the Covid pandemic faces a threat from President-elect Donald Trump’s plan for mass deportation of undocumented immigrants.
Foreign-born workers have been taking open positions in sectors from construction and agriculture to technology and health care, fields where hiring companies have struggled to find domestic labor. Immigrant workers made up 18.6% of the workforce last year, a new record, according to Bureau of Labor Statistics data.
The timing and scope of Trump’s plan remains to be seen, but companies and economists are trying to figure out how much the deportations could hurt the U.S. economy.
“American companies are going to feel the strain on labor costs, and we’re going to be — depending on the skill level of the individual you are talking about — we’re going to be losing the fight for labor,” Jennie Murray, CEO of the National Immigration Forum, a nonpartisan, nonprofit immigrant advocacy organization, told CNBC.
The Trump campaign has downplayed the potential economic ramifications of deportations. In a statement to CNBC, Trump-Vance transition spokeswoman Karoline Leavitt said Trump will orchestrate “the largest deportation operation” in U.S. history “while simultaneously lowering costs for families and strengthening our workforce.”
“The American people re-elected President Trump by a resounding margin giving him a mandate to implement the promises he made on the campaign trail, like deporting migrant criminals and restoring our economic greatness,” Leavitt said. “He will deliver.”
Economists are less convinced Trump can carry out his immigration plans without weakening the workforce. In a recent Brookings Institution study, researchers weighed the potential effects on the labor market and U.S. gross domestic product in 2025 in high- and low-immigration scenarios.
The researchers estimated Trump’s immigration policy could reduce 2025 GDP growth by 0.1 to 0.4 percentage points, or by $30 billion to $110 billion.
“Beyond 2025, the economy under the ‘low’ scenario would continue to be notably smaller than the economy under the other scenarios,” the authors wrote. “The consequences of a more extreme mass deportation policy would be economically disruptive in unpredictable ways and are not modeled here.”
Wendy Edelberg, one of the authors and a senior fellow at the institution’s Hamilton Project, said that in sectors where there will be significant reductions in labor supply, it will be more expensive for companies to provide goods and services, leading to higher inflation. But some other factors could ease inflation.
“If we’re talking about what we might see in aggregate for inflation, we have to think about … another side of the ledger, which is we’re going to have less demand for goods and services because immigrants are going to not be here,” Edelberg said. “And moreover, the immigrants who stay, particularly the recent immigrants who stay, my assessment is that they’re going to pull back on their spending, as, you know, they’re trying to figure out what their future holds.”
California and the immigrant workforce
From 2021 to 2023, 1 in 3 workers in California were immigrants, according to the California Budget & Policy Center. Certain sectors, such as agriculture, are closely watching developments on immigration plans, as the industry has increasingly relied on H-2A workers on temporary visas to fill roles in production.
Some industry groups are hoping for immigration reform as the new administration takes shape.
“California Farm Bureau looks forward to working with the new administration and Congressional representatives on meaningful agricultural workforce reform in the coming year,” Shannon Douglass, president of the farmer and rancher advocacy group, said in a statement. “Addressing chronic employee shortages on California farms and ranches and reducing barriers to employment is critical not just for farmers, but for the workers who are vital to our state’s agriculture.”
“We will only overcome these challenges through serious bipartisan cooperation that supports both workers and producers alike,” Douglass said.
“The solution is immigration reform — namely reforms of the H-2A agricultural visa program, which allows people from certain countries to enter the United States temporarily for on-farm jobs, and earned legal status for our current workforce,” she said.
Murray, of the National Immigration Forum, points to potential ripple effects from deportation, such as the closure of farms in the state and the reliance on importing food from overseas due to a dwindling labor force.
But California is also uniquely positioned to challenge the incoming administration. Gov. Gavin Newsom convened a special legislative session last week to work on “safeguarding” the state from what his office called potential federal overreach.
Newsom is working with lawmakers to create a new litigation fund of up to $25 million to support California’s legal resources in anticipation of “policy proposals that would harm the state,” according to a release from the governor’s office Dec. 2. Reproductive rights, immigration and environmental causes are some of the expected focus areas.
State Attorney General Rob Bonta on Wednesday released updated guidance for public institutions about complying with California law limiting state and local participation in immigration enforcement activities.
“No matter who is in the White House, in California, we will continue to lead with California values,” Bonta said in the release. “California is the most diverse state in the nation, and immigrants are the backbone of our economy, history, and culture. We will not be caught flat-footed if the President-elect follows through on his threats of mass deportation.”
