The Economic Drain of Mass Deportation
A Dallas Fed study shows how much it could sap economic growth.
By The Editorial Board
A Guatemalan immigrant works on a crop field at a farm in Kern County, Calif., June 18. Photo: pilar olivares/Reuters
President Trump is voiding work authorizations for hundreds of thousands of migrants from Cuba, Venezuela, Haiti and other troubled places, and on Monday he ended temporary protected status, or TPS, for thousands of Hondurans and Nicaraguans.
A day later Agriculture Secretary Brooke Rollins pledged no compromise on mass deportation and “a 100% American workforce.”
Does the White House really mean that, or is it another fusillade of rhetorical deterrence?
Sometimes Mr. Trump talks about giving farms and hotels a deportation pass, given how much they rely on immigrant labor.
By the way, these Hondurans and Nicaraguans were originally granted TPS after Hurricane Mitch tore through Central America in 1998.
It’s reasonable to ask what’s so “temporary” about this protection.
On the other hand, if people have lived and worked in the U.S. under TPS for 30 years, what’s to be gained by kicking them out?
The loss side of the ledger is that mass deportation of productive employees will drain economic growth and make it harder for Mr. Trump to deliver a return to the prosperity of his pre-Covid first term.
Consider an economic paper published Tuesday by the Federal Reserve Bank of Dallas.
“Our analysis,” the authors say, “raises the concern that a sharp tightening of immigration policies has the potential to substantially reduce output growth.”
The study is based on a model that includes historical data on immigration and the economy from 1955 to 2019.
“U.S. GDP growth typically increases for two years in response to an unexpected increase in net unauthorized immigration and then gradually reverts to its mean,” the authors write.
“Inflation shows almost no response in the first few years but decreases slightly at longer horizons.”
We don’t read this as an argument for actively encouraging illegal border jumping.
But a takeaway is that workforce growth sends economic output up and inflation down.
The researchers then apply the model to future scenarios.
Their baseline case assumes “net unauthorized immigration remains at its spring 2025 level.”
Compared with the policies last fall under President Biden, annual GDP growth is 0.81 percentage point lower in 2025 and 0.49 in 2027.
While that’s a negative effect, ending the free-for-all at the border, which Mr. Trump has done, was a priority for national security and the rule of law.
The question now, though, is how high Mr. Trump wants to crank the economic losses by mass deporting migrant farm laborers, roofers and meatpackers.
The study finds that “high interior deportation,” with removals gradually rising to 437,500 a year, would cut economic growth by 0.83 percentage point this year and 0.84 in 2027.
If there’s a “self-deportation wave,” meaning half of the people with TPS leave the U.S. before mid-2026, that would shave GDP growth by 1.01 point this year and 0.45 in 2027.
Under “mass interior deportation,” with removals rising over the next two years to a million annually, growth would be 0.89 point lower this year and 1.49 in 2027.
Economic models aren’t perfect crystal balls, as the authors warn.
“However, this does not mean the results are not informative,” they say.
“There is good reason to be concerned that immigration policies that lead to a reduction in net unauthorized immigration relative to historical trends, all else equal, are likely to significantly lower real GDP growth.”
This fits what businesses have been trying to tell the Trump Administration.
The Agriculture Department says 42% of farmworkers in 2020-22 didn’t have legal work authorization and could be deported. (See the nearby chart.)
Mr. Trump said last week that the White House is drawing up a plan to let farmers vouch for longtime reliable alien employees.
Farmers and the economy need them.
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