This is the third in a series of columns by John Edward, who teaches economics at Bentley and UMass Lowell, on economic issues related to the upcoming presidential election. The first column, “The 100 Percent,” appeared on May 16, 2016; the second, “Voodoo Two,” on May 23, 2016.
In 1987, President Reagan told Gorbachev to tear down the Berlin Wall. Now presumptive Republican presidential nominee Donald Trump wants to put up a wall along the Mexican border. It will cost billions of dollars to build. Trump’s immigration policies will cost our economy trillions of dollars.
Donald Trump presumes he will get Mexico to pay $5 to $10 billion for the wall. The Migration Policy Institute estimates the wall will cost $15 to $25 billion. United States per capita income is about 5 times as much as Mexico’s. Trump may be a good negotiator, but good luck getting Mexico to pay.
He also declared his intent to deport 11 million “illegal immigrants.” Trump claims to be a great businessman, but he does not appear to know how our economy works.
Just the law enforcement expenses of mass deportation could cost $500 billion. That estimate comes from The American Action Forum (AAF), led by the former head of the Congressional Budget Office. Many of the people Trump wants to throw out came here legally, but their visa or work permit expired.
Gross Domestic Product would decrease by $1.6 trillion or 6% according to AAF models. Losing 8 million vital members of our work force, regardless of legal status, will greatly reduce productivity, output, and tax revenue. Millions of jobs would go unfilled.
Prices will go up for products produced by immigrant labor. The American Farm Bureau Federation predicts a 6 percent increase in food prices if we deport all undocumented workers.
The Social Security Trust Fund would take a big hit. A 2013 study by the Social Security Administration showed undocumented workers contributing $13 billion a year to the fund and receiving only $1 billion a year in benefits.
Federal, state, and local governments collect more in revenue from undocumented workers than the government expends on providing services for them. However, the need for services is concentrated. Border states need federal assistance, not mass deportation.
Trump claims that: “The influx of foreign workers holds down salaries.” However, a recent Federal Reserve study showed that undocumented workers actually increase wages in some job sectors, while in others they lead to a small decrease. As observed by the Economic Policy Institute (EPI): “there is a broad consensus among academic economists that in the long run immigration has a small but positive impact on the labor market.”
Most undocumented workers perform low-wage work — employed in construction, manufacturing, hospitality, and agriculture. Also observed by the EPI: “low-skilled immigrants do exert mild downward pressure on the lowest paid American workers.”
However, the number of undocumented workers is already down about a million from the peak in 2007. About 70 percent of undocumented workers come here from Mexico and Central America. According to the Organisation for Economic Co-operation and Development, Mexican workers rank as the hardest workers in the world. In recent years, as many people migrated from the U.S. to Mexico as came here from Mexico.
Meanwhile, we have an estimated 40 million high-school dropouts. Another half million to a million high school students drop out every year. Those that graduate often have poor practical job training. The right way to reduce competition for low-pay jobs is education, not deportation.
Many immigrants obtain visas to work here because they perform specialized or highly skilled work. Legal immigrants may abandon their jobs and leave when they see Trump deporting family members or they fear getting caught up in a round up.
Moreover, immigrants are not just workers. They are also business owners, job creators, innovators, taxpayers, and a very large source of demand in our economy. Deporting undocumented workers would hurt our economy in many ways.
It seems to be accepted that free flows of capital are necessary. The financial industry and multinational corporations move money and jobs across borders with little restriction. Yet some free-market fanatics want to severely restrict the flow of labor by denying a path to citizenship. They would rather deport people who have been working here for years or decades, raising families that include birthright citizens.
We already know of failed experiments with Trump-like policies. A CATO Institute survey of “punitive” state-level immigration policies found they were “economically destructive and inimical to growth.” Several studies show Arizona’s now infamous immigration “reform” costing the state thousands of jobs, tens of millions in tourism revenue, and hundreds of millions in economic output.
The United States has already spent $3 billion on fencing along the border with Mexico. Fences and walls will not prevent illegal immigration any more than they stop the flow of illegal drugs. Migrants desperate for work and a safe place to live will find a way. To the extent a wall could suppress migration, it will only put more pressure on our coastlines and the Canadian border.
The best way to characterize Hillary Clinton’s immigration policies – they are not Trumps! She wants to “Conduct humane, targeted immigration enforcement.” She supports “comprehensive immigration reform legislation with a path to full and equal citizenship.”
We are very fortunate in the United States of America. Our standard of living has improved dramatically over the history of our nation. Immigration has been a critical contributor to our economic success. It continues to be so.
Clinton understands this. Trump is resurrecting the anti-immigration fervor of the Know Nothing Party of the mid 19th century.
Trump’s wall and policies on illegal immigration would be terrible for the economy. With respect to legal immigration, he wants to stop people from coming here based on their religion or region of origin. That would be terrible for our society.
An informed voter is our best citizen.
Next up: the trade war that Trump intends to start.