New Study Finds That Trump's Immigration Crack Down Could Cost $5 Trillion In GDP Over 10 Years

Earlier today we wrote about the impacts that Trump"s immigration policies may have on the U.S. housing market (see "Could Trump"s Immigration Ban Cause Another Housing Crash?"), but that"s just the beginning of the story.  No matter where you come down on the immigration debate, like it or not, there are millions of low-skill jobs in this country, particularly in the Southwest, that our pampered, snowflake millennials wouldn"t touch with a 10-foot pole and are thus filled by "undocumented" workers primarily from Mexico and other portions of South America. 

Courtesy of a recent study from the National Bureau of Economic Research (NBER), we know that the industries that employ the highest percentage of migrant workers are, quite unsurprisingly, industries like Agriculture, Construction and Leisure and Hospitality, all of which require either back-breaking work in the blistering sun and/or low pay.  In fact, per the NBER study, nearly 20% of all agricultural labor in the United States is performed by illegal aliens while 13% of construction jobs are filled by illegals....jobs that most entitled American youth are unlikely to fill at almost any price.

Meanwhile, as we pointed out last fall, the seasonality of agricultural jobs makes them even more unattractive to domestic laborers.  Per the chart below, the total number of people working in the ag industry in California spikes by about 33% starting in May every year and remains elevated for about 6 months through October.  Ask any farmer in California how tight the labor market is during those summer months and you"ll quickly understand that, even with the 1,000"s of illegal migrants working in the state, that farmers find it almost impossible to fully staff their operations during the peak harvesting seasons. 

And, of course, the majority of the illegal migrant workers in the U.S. come from Mexico and Central/South America.

Meanwhile, the NBER study estimates that every 1 million fewer workers in the U.S. equates to a roughly 0.5% drag on GDP.  Per Bloomberg:

President Donald Trump’s sweeping crackdown on undocumented immigrants will strain an already tight U.S. job market, with one study suggesting that removing all of them would cost the economy as much as $5 trillion over 10 years.

“The challenge is particularly high now because the labor market has tightened up not just overall but in areas in which you would think undocumented immigrants would be important, so that means that it’s going to be hard to fill these jobs if you deport these employees,” Harris said. “You have to think about indirect effects when you disrupt production in industries in which they’re a critical part of getting things done. So there’s a transition cost, as well as the cost of a reduced labor force.”

Harris estimates that for every 1 million fewer workers in the economy, GDP would be reduced by about 0.5 percent. That’s the equivalent of $94 billion, based on the annualized pace of $18.9 trillion in fourth-quarter GDP.

And here are the states that would be forced to absorb the greatest economic losses:

Perhaps it"s time to start preparing young Tristan James Abernathy III for a life in the fields?  Good luck with that...