With the formation of the donald trump 2.0 cabinet, several anti-immigrant individuals have taken important government positions, and outsiders expect him to begin fulfilling his campaign pledge to "deport undocumented immigrants." Trump had threatened to launch "the largest mass deportation operation in usa history," which has led to a significant increase in the stock prices of private prison operators this month.
At the same time, industries that rely on immigrants may be affected, with the construction and agriculture sectors being the most vulnerable. Economists and labor experts have also warned that trump's plans are potentially destructive and could threaten the usa economy.
Who benefits from the bullish immigration policy? Private prison companies are the biggest winners of donald trump 2.0.
After trump took office, a series of concept stock trades spurred on the us stock market, and among these trump trades, there is a "niche sector"—private prison operators that benefit from immigration policies. $The GEO Group Inc (GEO.US)$ For example, since trump's victory on November 5, the stock price of this company has soared nearly double; $CoreCivic, Inc. (CXW.US)$ similar types of companies have surged nearly 60% this month.
The GEO Group, Inc. is a private prison company headquartered in Florida, usa. The company collaborates with the government, with a significant portion of its revenue coming from contracts for the detention, processing, and deportation of illegal immigrants. The CEO of the GEO Group holds an exclusive supply contract worth over 1 billion dollars with the u.s. Immigration and Customs Enforcement (ICE) to provide detention and correctional facilities.
According to an investigation by the American Civil Liberties Union (ACLU), during Donald Trump's previous term, the federal government expanded the immigration detention system by over 50%, benefiting private prison companies greatly. At that time, the stock price of the geo group inc rose by 36% in the first year of Trump's presidency (2016). By 2019, the number of detained immigrants had peaked at 0.055 million.
This year, trump has threatened to initiate "the largest mass deportation in American history." Vice President-elect Vance suggested that the target number of illegal immigrants for the first wave of the "deportation wave" be set at 1 million. If this declaration is realized, it will undoubtedly bring more profit growth for private prison companies like GEO.
What adverse effects do immigration policies have on the industry and economy?
Currently, there are approximately 11.3 million illegal immigrants in the usa, with 7 million employed. Trump's hardline immigration policies will impact industries that heavily rely on undocumented immigrants and low-skilled labor, raising employment costs, with construction, agriculture, landscaping, food processing, and hospitality being the most affected. Nan Wu cited research data from AIC indicating that deporting illegal immigrants would result in construction and agriculture each losing about 1/8 of their labor force:
Construction industry: 14% of construction workers in the usa are undocumented immigrants. The sudden removal of so many workers in a short period will raise construction costs, leading to delays in new housing development, making housing even less affordable in many areas.
Agriculture: About one-quarter of farmworkers, agricultural graders, and packers are undocumented workers. Losing agricultural workers responsible for planting, picking, and packaging food will harm food production in the usa and drive up prices.
In addition to low-skilled labor, if obtaining visas becomes more difficult, it may also affect skilled workers and engineers, impacting employment issues in the technology industry. Although these technical talents will not be rounded up and deported, restrictions on H-1B visas and a generally unfavorable atmosphere may hinder the arrival of talent.
Some analyses suggest that immigration policies could not only lead to large-scale labor shortages but also harm the economic development of the usa. Previously, during his presidential campaign, donald trump stated that he had "no choice" but to conduct large-scale deportations and that it would be "at any cost."
The american immigration council estimates that in a long-term large-scale deportation effort, deporting one million people annually would average a cost of 88 billion dollars per year, with a total cost over a decade reaching 967.9 billion dollars. Additionally, research by AIC shows that immigration plans could lead to a reduction in usa GDP by 1.1 trillion to 1.7 trillion dollars.
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