The Economic Impacts of Removing Unauthorized Immigrant Workers

An Industry- and State-Level Analysis

In every state and in every industry across the United States, immigrants—authorized and unauthorized—are contributing to the U.S. economy. Immigrant labor and entrepreneurship are believed to be powerful forces of economic revitalization for communities struggling with population decline. Estimates suggest that the total number of unauthorized immigrants currently residing in the United States is approximately 11.3 million, or about 3.5 percent of the total 2015 resident population of 324.4 million. Of those 11.3 million, we estimate that 7 million are workers. What is the economic contribution of these unauthorized workers? What would the nation stand to lose in terms of production and income if these workers were removed and returned to their home countries?

The main findings of this report are as follows:

A policy of mass deportation would immediately reduce the nation’s GDP by 1.4 percent, and ultimately by 2.6 percent, and reduce cumulative GDP over 10 years by $4.7 trillion. Because capital will adjust downward to a reduction in labor—for example, farmers will scrap or sell excess equipment per remaining worker—the long-run effects are larger and amount to two-thirds of the decline experienced during the Great Recession. Removing 7 million unauthorized workers would reduce national employment by an amount similar to that experienced during the Great Recession.

Mass deportation would cost the federal government nearly $900 billion in lost revenue over 10 years. Federal government revenues are roughly proportional to GDP, while federal spending is less responsive. A conservative estimate suggests that annual revenue losses would start at $50 billion and accumulate to $860 billion over a 10-year period. With associated increases in interest payments, removal* would thus raise the federal debt by $982 billion by 2026 and increase the debt-to-GDP ratio, a common measure of fiscal sustainability, by 6 percentage points over the same time period. Unsustainably high levels of the debt-to-GDP ratio may ultimately raise interest rates and choke off economic growth.

By Ryan Edwards and Francesc Ortega for Center for American Progress/CAP
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