Can America’s economy cope with mass deportations?

What economic consequences might follow a large-scale crackdown? According to the Pew Research Centre, a think-tank, some 11m unauthorised migrants lived in America in 2022, of whom 8.3m were in the workforce. A recent surge means the number will now be higher. Experts estimate there may be 10m unauthorised workers, representing 6% of the labour force. Many work on building sites and farms, as well as in restaurants. California, Florida, New York and Texas are home to nearly half of them. The economic fallout from a deportation of this population—whether full or, as is more likely, partial—can be assessed across three dimensions: employment, consumer prices and public finances.

Deportations are often discussed as a boon for American workers. Mr Miller, for example, has said that mass removals would create jobs for Americans and increase wages. Whether that proves to be the case depends on whether unauthorised immigrant labour substitutes for, or complements, native-born labour. The evidence suggests the latter. A study by Chloe East of the University of Colorado Denver and co-authors found that deportations under President Barack Obama led to the loss of one native-born job for every 11 migrants thrown out of the country. A paper from the Peterson Institute for International Economics, a think-tank, has similar findings. The authors estimate that deporting just 1.3m workers would cause employment to permanently fall by 0.6%. Production would take an even bigger hit.

“Unauthorised immigrants do not just supply labour for a fixed demand," explains Michael Clemens of George Mason University, “they are a crucial ingredient for production." After all, someone must pack seafood to make lobster salads and hand-harvest cucumbers destined for Greek salads. Yet Americans are seldom willing to take such jobs at the wages on offer. During the covid-19 pandemic, the National Council of Agricultural Employers ran a survey to find out how many out-of-work Americans would take nearly 100,000 seasonal farm jobs that were advertised for guest workers via a federal programme. At the height of the crisis, just 337 applied. With the employment rate among 25- to 45-year-old native-born workers at a decades-long high and the population ageing, labour shortages will only worsen.

Supply bottlenecks tend to push up prices, but the impact varies by sector. Agriculture is especially vulnerable. A report by the Migration Dialogue at the University of California, Davis, estimates that almost 1m of America’s 2.5m farmworkers are unauthorised immigrants. Dairy and poultry farms, which cannot make use of seasonal guest-worker visas, are particularly reliant on them. The loss of this labour could be offset by ramping up automation, through more guest workers or by consumers relying more on imports. Mr Clemens, Ethan Lewis of Dartmouth College and Hannah Postel of Duke University have found that excluding 500,000 temporary Mexican labourers from farms in the 1960s led mostly to more mechanisation. However, robots remain no match for humans when it comes to picking strawberries.Today the consequence would either be higher costs, or another unpalatable outcome for the Trump administration, such as a wider trade deficit.

Housing costs are also likely to be pushed up. Unlike food-production firms, which can sometimes turn to automation or imports, construction companies have fewer alternatives. Some 1.5m unauthorised migrants toil in the industry, accounting for about a sixth of the workforce, as well as just under a third in trades such as drywall installation and roofing. Housebuilding is already under pressure from higher interest rates; further supply-chain disruptions could worsen shortages. Although deportations should mean less housing demand, recent research by Troup Howard of the University of Utah and others finds that removals during the Obama administration exacerbated housing shortages. The supply-side impact of lost labour dominated the fall in demand.

Then there is the fiscal cost. Mass deportations would not just shrink the labour force; they would also strain public finances. Unauthorised immigrants are ineligible for most direct federal benefits, such as Obamacare subsidies, public housing and welfare programmes. But despite being ineligible they still pay into public coffers via sales and payroll taxes for Social Security and Medicare. Many also pay property taxes indirectly through rent payments.

The fiscal effects of immigration extend beyond direct contributions. Migrants boost labour supply and economic output, lifting taxable income and business profits. The Congressional Budget Office expects the recent surge in migration to reduce federal deficits by $900bn from 2024 to 2034, owing to higher tax revenues and economic growth. Removing these workers would shrink the tax base and leave spending obligations intact—a recipe for unbalanced books.

For more expert analysis of the biggest stories in economics,finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter.

© 2025, The Economist Newspaper Limited. All rights reserved. From The Economist, published under licence. The original content can be found on www.economist.com