ICEing the U.S. Economy

Mass deportations will hurt more than people realize

Donald Trump has been able to convert Immigration and Customs Enforcement (and Customs and Border Protection, which is effectively part of the same operation) into a huge secret police force — because what are we supposed to call an organization whose masked agents, bearing no identification, simply grab people off the street? Who shoot at a family fleeing in their truck, after agents refused to identify themselves and smashed the car window, claiming – apparently falsely according to video footage – that the driver tried to harm them?

We’ve also seen both deportations to foreign gulags and the creation of a network of domestic detention centers — call it the ICE archipelago — that are overcrowded, filthy, and breeding grounds for disease. Last week a judge ordered that detainees at ICE’s Manhattan facility be given bedding mats rather than being forced to sleep on dirty concrete floors, have access to decent hygiene, and receive three meals a day. We’ll see whether this order is obeyed, but it gives you an idea of the conditions detainees are currently facing.

And the recently passed Big Beautiful Bill gives ICE $45 billion to expand its network of detention centers, making room for around 100,000 more detainees, plus $30 billion for arrest and deportation efforts, enough to hire around 10,000 more ICE agents.

I worry, as everyone should, about how a huge expansion of this deeply un-American organization may be used as a tool of presidential power and repression. Furthermore, give people power without accountability — and it’s hard to give a better example than masked, unidentified agents authorized to use force — and some of them will abuse their position. And given what ICE has already been doing, what kind of people do you think are likely to sign up as it massively expands?

Compared with these issues, concerns about the economic impact of mass deportations are definitely second-tier. But they’re still important, and a subject I know something about. So the rest of this post will be devoted to how the Trump administration is about to ICE the economy.

First things first: Trump officials and some of their allies have been touting numbers that appear to show 2 million native-born Americans gaining jobs over the past year. But this claim is, as Jed Kolko of the Peterson Institute says, a “multiple-count data felony.” Read Kolko for the details showing that this is a statistical artifact, not something that really happened. No, the native-born adult population didn’t suddenly jump by 4 million in a single year.

What will actually happen is a large decline in America’s foreign-born labor force. When Stephen Miller began promising to deport 3,000 immigrants a day, many people dismissed this as an idle boast. It’s true that we can’t possibly deport people anywhere near that rapidly while obeying the law and following due process. And your point is?

Incredibly, I quite often hear people saying that illegal immigrants aren’t entitled to due process. Are such people really unable to understand that the point of due process is to determine whether someone is, in fact, here legally?

In any case, ICE arrests have been skyrocketing — not yet to Miller’s target, but heading there:

We don’t know how many workers will eventually be incarcerated and deported. But undocumented immigrants make up around 5 percent of the U.S. work force. It seems plausible that a significant fraction of those workers will be pushed out, along with a number of legal workers snatched up based, as Trump’s border czar has said, on their physical appearance.

Losing large numbers of workers sounds as if it will be bad for the U.S. economy. In fact, it will be worse than you may think.

The reason is that immigrant workers aren’t spread evenly across the economy. They’re strongly concentrated in certain industries and occupations, where they constitute a large share, sometimes a majority, of the work force. As a result, the Trump administration’s latter-day Edict of Expulsion will be far more disruptive to the economy than the aggregate number of workers deported might suggest.

Consider, for example, agriculture. There are about 1.6 million paid agricultural workers in America, the great majority immigrants. Many of those immigrants are here legally, but it’s all too easy to imagine that anyone with brown skin will be at risk. So imagine that 800,000 of those workers end up being incarcerated and/or deported.

That’s a lot of workers, but America is a big country, so it’s only about half a percent of total employment. Not such a big deal, right? Except that the effect would be to cripple agricultural production, inflicting far more economic damage than a half-point across-the-board reduction in labor supply.

The loss of those workers would also be inflationary, sharply raising the prices of farm products.

You can tell similar stories for meatpacking, senior care, construction and more. Immigrants aren’t taking jobs away from native-born workers. For the most part they’re employed in jobs native-born Americans aren’t willing to do. As a result, ICEing the economy will make native-born Americans substantially worse off.

In fact, my guess is that arrests and deportations will eventually do even more economic harm than tariffs.

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