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Immigration & the economyTrump’s immigration policy would push legal U.S. workers down the occupational ladder

By Peter Dixon and Maureen Rimmer

Published 23 November 2016

U.S. President-elect Donald Trump has proposed deporting millions of undocumented immigrants, and many voters appear to believe that deporting illegal immigrants would boost job opportunities and wages for U.S. workers. But our economic modelling suggests different conclusions. The eight million illegal workers currently in the U.S. workforce contribute to U.S. output. If all the illegal workers left the United States, our modelling found, then the U.S. economy would be 3 percent to 6 percent smaller. A smaller U.S. economy would need fewer workers in all occupations. The exception is farm laborers and construction workers: there would be fewer jobs overall in these occupations, but there would be more jobs for legal U.S. residents. This is because deporting illegal workers would open up vacancies. Moreover, in general terms, eliminating illegal workers from the U.S. workforce would change the structure of employment for legal workers away from skilled occupations towards low-skilled, low-wage occupations.

U.S. President-elect Donald Trump has proposed deporting millions of undocumented immigrants, which proved appealing to large blocs of U.S. voters in key states. Many voters appear to believe that deporting illegal immigrants would boost job opportunities and wages for U.S. workers.

But economicmodelling we carried out for the U.S. departments of Commerce, Homeland Security and Agriculture suggest different conclusions.

Fewer jobs for legal residents

The eight million illegal workers currently in the U.S. workforce contribute to U.S. output. They do this mainly by working in low-skilled jobs, in roles such as farm laborers, construction workers, and landscape gardening.

If all the illegal workers left the United States, our modelling found, then the U.S. economy would be 3 percent to 6 percent smaller.

A smaller U.S. economy would need fewer workers in all occupations. The United States would employ fewer public servants, fewer teachers, fewer economists, fewer journalists, fewer farm laborers, and fewer construction workers.

And fewer public service jobs would mean fewer public service jobs for legal U.S. residents. This is because the departure of the illegals would not open up vacancies for legal workers in the public service. Why? Undocumented workers can’t get jobs in the U.S. public service, so there are no illegal workers in the public service to be deported.

It is a similar story with teachers, economists, and journalists, all of whom work in industries usually closed off to undocumented workers.

A different story for lower-paid jobs
But the story is different with farm laborers and construction workers. Although there would be fewer jobs overall in these occupations, there would be more jobs for legal U.S. residents. This is because deporting illegal workers would open up vacancies.

For example, there are one million farm laborers in the United States, of which about 500,000are illegal workers.

If illegal workers were deported, then there would be plenty of vacancies for legal workers. Perhaps not 500,000, but plenty nonetheless. The 3 percent to 6 percent shrinkage in the size of the U.S. economy and increases in labor costs to farmers might reduce total employment of agricultural laborers to around 800,000. That still leaves 300,000 vacancies to be filled by legal residents.

In general terms, eliminating illegal workers from the U.S. workforce would change the structure of employment for legal workers away from skilled occupations towards low-skilled, low-wage occupations. This effect is akin to shuffling down a ladder – moving from a higher tier in the jobs market to a lower one.

Shuffling down the occupation ladder
How does this ladder-shuffle look in practice? Would we see trained economists switching industries to become farm laborers?

Not quite – the transfer of individuals from one occupation to another is not really the right picture. The people most affected by this shift would be new entrants to the jobs market, and people returning to work after a spell of not working (after an illness or caring for children or elders, for example).

As illegal workers leave, vacancies open up at the low end of the labor market and close off at the high end. New entrants and people returning to the labor market are then faced with a less favorable mix of vacancies. This is what produces a shuffle down the occupational ladder.

Young people hoping to become police officers may find that the only vacancies are for security guards. Those hoping to become chefs might wind up as fast-food cooks, and people wanting to be teachers may settle for positions as administrative assistants.

In this way, the inevitable deterioration in the occupational mix of the legal residents takes place with no one actually switching occupation.

Migration-induced changes in the occupational mix of incumbent workers has happened before. As described by U.S. policy analyst Daniel Griswold, an influx of low-skilled migrants in the early twentieth century changed the occupational mix of incumbent U.S. workers towards skilled occupations, driving them up the occupational ladder.

What Trump now advocates would generate the opposite experience. Departure of low-skilled immigrants would send legal residents down the occupational ladder.

How should the U.S. handle illegal immigrants?
As Trump has pointed out, the Obama administration deported many millions of undocumented immigrants.

The Obama administration also proposed a broader approach to undocumented immigrants, which had four key elements.

First, most of the existing illegals should be legalized.

Second, border security should be tightened to control future supply of illegals.

Third, employers of illegals should be stringently prosecuted to control demand.

Finally, flexible temporary work visas should be used to deal with shortages of unskilled workers in agriculture. Unfortunately, these measures couldn’t get through the U.S. Congress.

Peter Dixon is Professor, Centre of Policy Studies, Victoria University. Maureen Rimmer is Professor, Centre of Policy Studies, Victoria University. This article is published courtesy of The Conversation (under Creative Commons-Attribution / No derivative).