US immigration policy on a collision course with the economy

Immigration — the issue the president credits with propelling him to election — has now become a barrier to sustained economic growth. Falling numbers of undocumented workers – coupled with the administration’s agenda of decreased legal immigration, new impediments to legal status, and indiscriminate deportation policies – have exacerbated labor shortages and will increasingly slow economic growth. In a welcome development, the United States just pledged $5.8 billion in public and private investments to the Northern Triangle states of Central America to promote “institutional reforms, development, and economic growth” and another $4.8 billion to Mexico, including $2 billion in development aid to southern Mexico, as part of a plan to curb illegal migration. This announcement prompted Mexican President Andres Manuel Lopez Obrador to express his hope that “nobody will want to go work in the United States anymore.” If fewer immigrants are coming and more leaving, who will do the work?

Earlier this year, the Center for Migration Studies (CMS) reported that the U.S. undocumented population had fallen in 2016 to 10.8 million, its lowest level since 2003, driven by a 1 million decrease in undocumented residents from Mexico between 2010 and 2016.  Earlier this month, the Pew Research Center reported a similar decline, from an historic high of 12.2 million U.S. undocumented immigrants in 2007, to 10.7 million in 2016. A preliminary CMS analysis of American Community Survey (Census) data for 2017 found that the total undocumented population from Mexico fell an additional 363,000 from 2016 to 2017.

{mosads}What does this trend, combined with the administration’s immigration policies, portend for the economy? The Federal Reserve projects that the “natural rate of unemployment” — the lowest rate that the economy can sustain without causing inflation — will settle at between 4 and 5 percent over the next five to six years. Full unemployment is both undesirable and unattainable given the natural churning in the labor market, as workers enter, leave, and seek better jobs. In October 2018, the U.S. unemployment rate remained at 3.7 percent. Of those that might join the labor force, the long-term unemployed declined by 120,000, those marginally attached to the workforce increased by 197,000, and the rate of discouraged workers remained mostly unchanged from the previous year.

In these circumstances, employers desperately need more immigrant workers, not fewer. And, it is not an argument for illegal migration to point out that the numbers are trending in the wrong direction. The undocumented population decreases when fewer persons enter this population than exit it, whether through deportation, voluntary departure, securing legal status, or death. Of these factors, diminished entries, especially from Mexico, account for most of the multi-year population decline. Because fewer are entering, the average length of residence of U.S. undocumented residents has increased: more than two-thirds have now lived here for 10 years or more. A recent survey of 133 Mexican deportees found that they had lived in the U.S. an average of 19.9 years; 96 percent had been employed (40.6 percent in construction and 13.5 percent in food services); they had worked an average of 10 years in the same job; and three-quarters believed their spouse or partner – who remained in the US — did not have enough money to support their children. Needless to say, the loss of large numbers of reliable, long-term workers (like those we surveyed) and the impoverishment of their families ill-serves the U.S. economy.

The Pew Research Center reports that the undocumented workforce declined from 8.2 million (5.4 percent of the U.S. labor force) in 2007, to 7.8 million (4.8 percent) in 2016. The undocumented represent a disproportionate share of workers in the agriculture (15 percent), construction (13 percent), leisure/hospitality (8 percent), business services and other services (6 percent), and manufacturing (6 percent) industries. Not coincidentally, farmers and builders have reported significant labor market shortages. In the absence of sufficient workers, California farmers have moved production of labor intensive crops to Mexico. The hemorrhaging of U.S. workers will continue to damage immigrant-heavy industries in 2019 and beyond.

The U.S. undocumented population continues to fall as the Trump administration pushes ahead on an immigration agenda that would, if implemented, reduce legal immigration by 40 percent, end the Deferred Action for Childhood Arrivals (DACA) program which covers 700,000 persons brought to the U.S. as children, terminate Temporary Protected Status (TPS) for roughly 95 percent of the program’s 325,000 beneficiaries, and slash refugee resettlement, a program committed to self-sufficiency through early employment.

{mossecondads}In addition, the Department of Homeland Security has issued a proposed regulation that would bar large numbers of otherwise eligible working class persons from admission or adjustment to permanent resident status each year, and would significantly reduce the use of essential food, housing and health benefits by their family members. While the president has expressed support for increased migration of skilled workers, his administration has in fact made it far more difficult for these workers to enter.

These trends will exacerbate labor shortages. They will also contribute to inflation, lead to the migration of U.S. businesses and jobs abroad, reduce Social Security and Medicare contributions, slow economic growth, and lower GDP.  Rather than building a 2,000 mile wall, the administration and Congress should be pursuing policies to strengthen the U.S. immigrant workforce and increase their economic contributions. Reform of the legal immigration system and a path to citizenship for large numbers of undocumented residents would be a good start.

Donald Kerwin is executive director of the Center for Migration Studies.