In recent years, immigration has been a major source of employment growth in the USA. President-elect Trump's plan is almost certain to dampen this source of growth. The question is, to what extent will it be weakened.

This year, the number of jobs in the USA has been increasing by an average of 0.17 million per month. Independent institutions estimate that based on Trump's specific plans to combat and deport illegal immigrants, next year's job growth may decrease by 0.025 million to 0.1 million positions.

According to the Congressional Budget Office's estimates, since 2021, immigration has led to an increase of approximately 10 million people in the USA's population. Less than a third of these individuals have entered the USA with immigrant, work, student visas, or as refugees. Many others have crossed the border unauthorized or overstayed their visas, often requesting to stay on humanitarian grounds upon entry.

According to data from the U.S. Department of Homeland Security, as of 2022, even before this historic surge in immigration, there were approximately 11 million undocumented immigrants living in the USA. According to data from the Migration Policy Institute, the undocumented population includes around 3 million DREAMers, who were brought to the USA as children and grew up here.

The presence of these immigrants has intensified the debate over U.S. immigration and border policies, and was a major factor in Trump's victory in the last election. Nevertheless, newcomers play an important role in the economy.

Trump promised to "stop the invasion of illegal immigrants" and launch "the largest deportation action in U.S. history." He provided little specific detail on how to achieve these goals, but as president, he has broad powers to restrict many pathways through which immigrants have entered the USA in recent years.

Tom Homan, chosen by Trump to lead the deportation effort, suggested in an interview with Fox News that initially, the deportation action will target a small percentage of immigrants: those considered "public safety and national security threats," as well as those ordered to leave the USA but have not yet departed.

According to data from the Immigration and Customs Enforcement (ICE), as of July, 425,431 non-citizens in the USA have been convicted but not detained. The agency states that priority has been given to deporting individuals who pose a threat to public safety. Traffic violations are the most common offense.

President Trump's immigration plan has had virtually no precedent in recent history in terms of its expected impact on the job market. In 2009, during the most severe period of the 2007-09 economic downturn, the peak number of inland (not border) immigrants reached 243,000, averaging 126,000 per year over the next decade when the job market was generally softer than it is now.

Even if Trump cannot deport all or even a majority of undocumented immigrants living in the USA, or 'seal the border' as he promised, his policies will undoubtedly have an effect.

Tightening immigration worker supply may bring upward pressure on wages and prices in industries that heavily employ immigrant workers such as construction, food processing, restaurants, and hotels. Data from the US Census Bureau shows that as of last year, immigrants who arrived in the USA in 2020 or later accounted for 1.8% of the population, but when classified by occupation, the proportion of immigrants among roofers was 8.1%, farmworkers 6.7%, construction workers 5.6%, and maids and cleaners 5.6%.

Industries Mainly Employing Immigrants

Brookings Institution economist Wendy Edelberg said, 'The labor supply in these industries will decrease. Holding other conditions constant, this will drive prices up.'

Both Goldman Sachs and JPMorgan estimate that net immigration (the difference between incoming and outgoing individuals) will decrease to an average of around 0.75 million per year during Trump's first term, with this indicator peaking at 3.3 million in 2023, averaging 0.919 million in the 2010s.

Goldman Sachs believes that approximately 1 million legal immigrants per year will see no significant change, while the number of immigrants allowed into the USA for humanitarian reasons or through future immigration court hearings is likely to decrease significantly.

In contrast, Evercore ISI expects that net migration will actually be negative, with the outflow population exceeding the inflow population by 0.1 million people in 2025, and by 0.6 million people by 2028.

Researchers at the Brookings Institution simulated "high" and "low" scenarios for net migration during Trump's presidency in 2025, ranging from a net increase of 1.22 million people to a net decrease of 0.74 million people.

"This is still far from his (Trump's) ambitious goals," Edelberg said. She predicted that legal obstacles and public sentiment may hinder Trump from implementing the 'largest-scale deportation' in history. But she said this still means a sharp slowdown in U.S. population growth.

Immigration and employment growth.

"Our economic growth will be slower, our job growth will be slower - in some ways, it's just an accounting problem," Edelberg said. 'Painfully, such changes happen very suddenly.'

Caroline Leavitt, spokesperson for the Trump transition team, stated that the real economic crisis is borne by American communities and workers due to the costs of illegal immigrants. Trump's 'large-scale deportation of illegal immigrants will not only make our communities safer, but will also prioritize hard-working Americans, sparing them the bill in the coming years.'

The 'low net migration' scenario from the Brookings Institution predicts that compared to the years 2017-19 during Trump's first term, issued visas will decrease, humanitarian parole for Ukrainians, Venezuelans, and citizens of other countries will be terminated, secret border crossings will decrease, and the number of individuals expelled domestically will increase fivefold.

As the U.S. population ages, immigration has become the main driving force behind employment growth in the post-COVID era. Edelberg and her colleague Tara Watson estimate that the number of foreign-born workers increased by 1.7 million last year, while the number of U.S.-born workers only increased by 0.74 million.

Economists calculate the sustainable employment growth rate, tracking the speed of labor force growth in job creation just enough to maintain a stable unemployment rate. Alec Phillips, chief political economist at Goldman Sachs, said that if Trump's policies slow net immigration to the pace expected by Goldman Sachs, this will reduce sustainable monthly job growth by about 0.03 million. If net immigration turns negative as modeled in extreme cases by Edelberg, sustainable employment growth would decrease by 0.1 million per month.

Most of the controversy about immigration is not about the economy, but about border security and the impact on host communities. Furthermore, its economic impact mainly falls on immigrants rather than American residents.

In other words, this has an impact on the economy. Slow labor force growth will reduce the quantity of goods and services the economy can provide, and without these extra wages, total spending will decrease compared to other scenarios.

Since immigrant workers often have lower productivity and income than workers born in the United States, their overall impact on growth and spending is less than on employment. The Brookings Institution's 'low' net immigration scenario would reduce economic growth by 0.4 percentage points in 2025, while the 'high' net immigration scenario would only mean a drag of 0.1 percentage points on economic growth.

New immigrants typically take time to find jobs, so under similar conditions, a decrease in the number of immigrants often lowers the unemployment rate. Therefore, despite slowing job growth next year, Goldman Sachs expects the unemployment rate to decrease by 0.25 percentage points.

Editor/Rocky