Why mass deportations would cripple California’s economy

(Photo by Scott Olson/Getty Images)

Mythology aside, nearly 2 million undocumented immigrants are the backbone of some industries, and pay billions in taxes for services they will never receive.

By Mark Kreidler, Capital & Main

In the days following President-elect Donald Trump’s victory, I reached out to a longtime Northern California family farmer to gauge his level of concern.

Trump has, after all, already made full-throated declarations that his administration will conduct the largest deportation of undocumented residents in U.S. history. That should resonate in a place like California, with its estimated 1.8 million undocumented immigrants — and it certainly would shake up a state agriculture industry in which nearly half of all workers are undocumented.

But the farmer, who asked not to be identified to avoid political conflict with business partners, was unruffled. A self-described social moderate and fiscal conservative, he and his family have spent generations in the business. While his own seasonal employees are on work visas, his understanding of the industry’s historical reliance on undocumented workers runs deep, through direct experience, colleagues and a seat on the board of an agriculture lending institution.

He knows the stakes. Even at a time when some farmers use more authorized workers than ever, the industry overall remains heavily reliant on undocumented immigrants.

“I suspect it’ll be like it always has been: If you’re undocumented but stay out of trouble, not much is going to happen,” he told me. “Dragging hard-working people out of here does not go over well.”

That is hardly a poetic response. It does, however, have the ring of truth.

Trump’s notion to mass deport nearly 5% of the U.S. workforce is a recipe for such economic wreckage that it feels impossible. But that doesn’t mean those who study immigration and try to shape policy don’t take him seriously.

“It is unlikely that a large share of the unauthorized immigrant population will be deported quickly,” said Daniel Costa, director of immigration law and policy research for the Economic Policy Institute. “But there’s a lot the Trump 2.0 administration can do to remove a high number fast.”

Among the possibilities: Trump’s administration could go after immigrants who have received a final order of removal or are in the country under temporary protected status (TPS), which is usually extended to those whose home countries are experiencing problems that make it difficult or unsafe for them to return. Those nations include Venezuela, El Salvador and Haiti.

Costa, a visiting scholar at the University of California Davis’ Global Migration Center, also suggested that Trump could adjust federal policy to expand temporary work visa programs — one way to assuage employers, by theoretically replacing deported undocumented workers with those possessing a legal but short leash to remain in the country.

“Those visas give employers a lot of power and control over workers because their visa status is tied to the employer,” Costa said. “They cannot easily change jobs. And if they get fired, they become deportable, which keeps them from complaining about substandard working conditions or from [trying to join] a union.”

But all of that presupposes that the Trump administration would first locate and then expel hundreds of thousands of undocumented workers in California alone. On both counts, experts say, that’s a longshot.

Jamshid Damooei, executive director of the Center for Economics of Social Issues at California Lutheran University, has been studying the economic impact of undocumented immigrants in the state for years. To Damooei, the numbers tell the story.

According to the center’s analysis, undocumented immigrants are the source of more than half a trillion dollars of products in California, either by direct, indirect or induced production levels. Their work adds up to nearly 5% of the state’s gross domestic product, or GDP.

And while 46% of the state’s agricultural workforce is undocumented, that’s just the tip of the iceberg. For example, the center’s report found that in Los Angeles County, 28.7% of the construction workforce is undocumented, along with 17.5% in manufacturing, 16% in wholesale trade and more than 15% in retail trade.

“How could L.A. County function with a significant share of its vital workforce being deported?” Damooei said. “In my county, Ventura, 70% of farmworkers are undocumented. In Santa Barbara it’s closer to 80%. Then there is construction, manufacturing, transportation. … Look, this is just incredibly powerful.”

Employers aren’t likely to give up that kind of workforce willingly, especially considering how much less they generally pay undocumented workers than others. That’s one reason the Northern California farmer sounded relatively confident that, all political rhetoric aside, the status quo will hold.

None of this answers the larger questions of what Trump really wants or how his administration would achieve it. But even setting aside the sheer inhumanity of a mass deportation policy, the financial equation makes the idea untenable.

According to the Institute on Taxation and Economic Policy, undocumented immigrants paid almost $100 billion in federal, state and local taxes in 2022. More than a third of those taxes went to fund programs the immigrants are barred from using, like Social Security, Medicare and unemployment insurance.

Six states raised more than $1 billion in tax revenue from undocumented immigrants that year, the institute found. The leader of the pack? California, at $8.5 billion (followed by Texas, New York, Florida, Illinois and New Jersey). And in 40 states, including California, undocumented immigrants paid higher state and local tax rates than the top 1% of households.

“Undocumented immigrants are not a source of depletion of our tax revenue — they subsidize our benefits,” Damooie said. “They are not the takers of our tax revenue but the makers, who receive very little in return.”

Damooie and others argue that a path toward citizenship, not deportation, ought to be the goal. That’s not a likely scenario over the next four years.

In the meantime, the Northern California farmer said, “These workers are mostly just going to keep working.” It is work destined to be continued in the shadows — where it’s almost always been.

Copyright Capital & Main 2024

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