January 17, 2025 • 9 mins
Immigrants have long been part of the economic success story of the United States. Many economists and business leaders credit immigration for filling vacancies across the economy, but Donald Trump and many of his allies accuse immigrants of lowering wages and taking jobs from native-born Americans. He's pledged to crack down on illegal immigration and carry out the biggest deportation plan in US history. But what would that mean for growth, inflation and employment? Bloomberg Senior Editor Derek Wallbank joins host Stephen Carroll to discuss.
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:08):
I'm Stephen Carol and this is Here is Why, where
we take one news story and explain it in just
a few minutes with our experts here at Bloomberg.
Speaker 1 (00:18):
His claims for the mass deportations to me seem almost
logistically impossible, so we'll see what he actually accomplishes. Obviously,
getting rid of a lot of people will create a
lot more chaos than economic chaos.
Speaker 2 (00:33):
If the breaks go on.
Speaker 3 (00:34):
In terms of inward immigration, the break even employment growth
that keeps unemployment unchanged is.
Speaker 2 (00:40):
Only one hundred thousand. So add that to your listen
of uncertainties.
Speaker 3 (00:44):
And I think there's real concerns about being too strict
on immigration policy and possibly seeing net out migration, which
is something we haven't seen in my lifetime.
Speaker 2 (00:51):
Immigrants have long been part of the economic success story
of the United States. Many economists and business leaders credit
immigration for filling vacancies across the economy, but Donald Trump
and many of his allies accuse immigrants of lowering wages
and taking jobs from native born Americans. He's begged to
crack down on illegal immigration and carry out the biggest
(01:13):
deportation plan in US history. What would that mean for growth, inflation,
and employment. Here's why immigration policy matters so much for
the US economy. Our senior editor, Derek Wallbank joins me
now for more. Derek, first of all, what does the
data tell us about the economic effect that immigration has
(01:37):
had on the US economy.
Speaker 3 (01:38):
Immigration has a profound effect on the United States economy.
Just to put into context, is about one in five
US workers as an immigrant. And immigrants lead some of
the biggest companies in the United States, Right if you
think of Microsoft and such in Adela. If you think
of Nvidia and Jensen Huang, I mean the most famous
one obviously, right Elon musk Esla and SpaceX and many
(02:01):
other things. So immigrants have a very very profound effect
on the economy. Generally speaking, economists cy immigration as economically
positive in the US. The FED has cited immigration as
part of the reason the US economy has beat expectations.
The Congressional Budget officees immigration is increasing federal revenue more
(02:22):
than it increased costs, so it's a net benefit there.
And if you're looking sort of on a fully macro level.
The late Singaporean leader Le Kwan Yu used to say
that immigration is one of the United States's secret weapons economically,
because it could attract the best from all over the
world and instantly make them Americans and have them contribute
(02:44):
to the American economy.
Speaker 2 (02:45):
Of course, there's distinction here too, between legal immigration and
some of those that you mentioned there who made their
path to the US via llegal means an illegal immigration,
which was talked about in a very different way during
the election campaign. What do we know about the effects
illegal immigration has.
Speaker 3 (03:02):
It's a subject of let's say some considerable dispute. Let
me back up a quick second and put illegal immigration
into two camps. The first one is those people who
entered illegally, you know, come through the southern border. Another way, though,
is to come in on a fully legal and operational
visa and then overstay the visa, simply just not go home.
(03:24):
Both of those are present when we're talking there. It's
a lot easier to stop the first than the second.
It's hard to know about how many people were talking here.
There was an estimate pegging at about eleven million individuals
as of twenty twenty two. Of those, though, about eight
million are in the labor force and have a job
(03:45):
of some kind. Now, that number may actually be low
because it may have increased in the recent post COVID
spikes in terms of encounters at the US southern border.
You know, there's been a documented increase of people trying
to come in over the last couple of years, So
that number actually be low.
Speaker 2 (04:01):
If Donald Trump were to carry out his promise of
mass deportation, what would that mean for growth or for
inflation in the US?
Speaker 3 (04:10):
Well, look, I think a lot of that is down
to how much there might actually be in terms of
an action. If you were to try and take this
at the most maximal level, and you said I'm going
to try and deport all eleven million or more people
in one swift action, you know, just do those numbers
in reverse. Imagine eight million or more people out of
(04:32):
the labor force immediately, Jobs lost. Even if the argument
is that removing illegal immigration is going to allow more
Americans to take jobs that other people are taking. Even
if that's the argument, there's simply not quite a way
to replace eight million people or more in the labor force.
So that's one part. Even though a smaller retraction in
(04:54):
the job force would have meaningful effects. That having been said, though,
we are hearing from a fair number of Trump supporting
Republicans who have suggested that anything would go in a
certain amount of phases, and that you would start off
with most obvious candidates people who have had criminal offenses,
so more limited action like that wouldn't have such a
(05:16):
mass effect, and indeed proponents would argue that deporting those
individuals would have a benefit both economically and also societally.
Speaker 2 (05:24):
What do businesses want on this issue.
Speaker 3 (05:27):
Well, this is an interesting one. If you take a
chamber of commerce view. Chambers of commerce representing the largest
businesses across the US, tend to want to have a
full pool of immigrant labor from which to pick from. Indeed,
many of them would like a lot more easing to
be able to have more individuals. This is actually, though,
(05:49):
playing out as a debate within Republican circles. So Elon
Musk is one who thinks that there are great benefit
to having H one B visas available in good abundant numbers.
These are the ones that are used by highly educated,
often tech workers, many from Indias and from China. At
(06:10):
the same time, you have people who have been with
Donald Trump for a very long time. Steve Bannon is
one immigration hawks who think that this is a program
that needs to be pulled down and that Musk's views
on this are indeed dangerous. So there is a big
split within Trump's own orbit. Trump right now is leaning
a little bit toward Musk on some of the skilled
(06:33):
immigration stuff, even as he's talking about big deportation plans.
On skilled immigration, he has talked about the need to
attract the best and brightest and bemoaned the idea that
there are a large number of international students to American
universities who will get an American education and then not
be able to stay. Trump would like to find ways
(06:54):
to have them stay.
Speaker 2 (06:55):
Immigration is a big postical issue in many parts of
the world. Is the same sort of debate playing out
in other countries?
Speaker 3 (07:02):
You know, that's a great question, it is, and indeed
we see this playing out in pretty much every advanced
economy that is a reception zone for immigration at scale,
famously the United Kingdom and Brexit. What more needs to
be said, immigration was at the absolute heart of that.
Even here in Singapore, though I mentioned, it's become a
(07:24):
flashpoint politically, very well educated city state that had received
a lot of immigrants coming in who had been working
in Hong Kong when that city was having difficulties after COVID.
But Singapore is in a position where it doesn't feel
like it could take in all of those Even if
you said the five hundred thousand or the million best
(07:46):
people from Hong Kong economically would come to Singapore, Singapore
is a city state of six million people, doesn't have
enough space to house them, doesn't have enough schools to
educate them. The transportation system wouldn't be able to handle
the load all of these sorts of things. So I
do think that anywhere that you go, you do find
(08:06):
these questions about immigration that are percolating. And look, it
is an issue in elections all over the world. It's
going to be an issue in the upcoming Singaporean election.
It's going to be an issue when Australian voters go
to the polls. It'll be an issue in Canada when
those voters go to the polls. So the United States
(08:27):
is very much not alone. The issues you're seeing in
the US around immigration are at play in every single
major economy around the world.
Speaker 2 (08:38):
Okay, dark Well, bind Karsenior editor, thank you very much
for more explanations like this from our team of twenty
nine hundred journalists and analysts around the world search for
quick take on the Bloomberg website or Bloomberg Business App.
I'm Stephen Carol. This is here's why. I'll be back
next week with more. Thanks for listening.
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:08):
I'm Stephen Carol and this is Here is Why, where
we take one news story and explain it in just
a few minutes with our experts here at Bloomberg.
Speaker 1 (00:18):
His claims for the mass deportations to me seem almost
logistically impossible, so we'll see what he actually accomplishes. Obviously,
getting rid of a lot of people will create a
lot more chaos than economic chaos.
Speaker 2 (00:33):
If the breaks go on.
Speaker 3 (00:34):
In terms of inward immigration, the break even employment growth
that keeps unemployment unchanged is.
Speaker 2 (00:40):
Only one hundred thousand. So add that to your listen
of uncertainties.
Speaker 3 (00:44):
And I think there's real concerns about being too strict
on immigration policy and possibly seeing net out migration, which
is something we haven't seen in my lifetime.
Speaker 2 (00:51):
Immigrants have long been part of the economic success story
of the United States. Many economists and business leaders credit
immigration for filling vacancies across the economy, but Donald Trump
and many of his allies accuse immigrants of lowering wages
and taking jobs from native born Americans. He's begged to
crack down on illegal immigration and carry out the biggest
(01:13):
deportation plan in US history. What would that mean for growth, inflation,
and employment. Here's why immigration policy matters so much for
the US economy. Our senior editor, Derek Wallbank joins me
now for more. Derek, first of all, what does the
data tell us about the economic effect that immigration has
(01:37):
had on the US economy.
Speaker 3 (01:38):
Immigration has a profound effect on the United States economy.
Just to put into context, is about one in five
US workers as an immigrant. And immigrants lead some of
the biggest companies in the United States, Right if you
think of Microsoft and such in Adela. If you think
of Nvidia and Jensen Huang, I mean the most famous
one obviously, right Elon musk Esla and SpaceX and many
(02:01):
other things. So immigrants have a very very profound effect
on the economy. Generally speaking, economists cy immigration as economically
positive in the US. The FED has cited immigration as
part of the reason the US economy has beat expectations.
The Congressional Budget officees immigration is increasing federal revenue more
(02:22):
than it increased costs, so it's a net benefit there.
And if you're looking sort of on a fully macro level.
The late Singaporean leader Le Kwan Yu used to say
that immigration is one of the United States's secret weapons economically,
because it could attract the best from all over the
world and instantly make them Americans and have them contribute
(02:44):
to the American economy.
Speaker 2 (02:45):
Of course, there's distinction here too, between legal immigration and
some of those that you mentioned there who made their
path to the US via llegal means an illegal immigration,
which was talked about in a very different way during
the election campaign. What do we know about the effects
illegal immigration has.
Speaker 3 (03:02):
It's a subject of let's say some considerable dispute. Let
me back up a quick second and put illegal immigration
into two camps. The first one is those people who
entered illegally, you know, come through the southern border. Another way, though,
is to come in on a fully legal and operational
visa and then overstay the visa, simply just not go home.
(03:24):
Both of those are present when we're talking there. It's
a lot easier to stop the first than the second.
It's hard to know about how many people were talking here.
There was an estimate pegging at about eleven million individuals
as of twenty twenty two. Of those, though, about eight
million are in the labor force and have a job
(03:45):
of some kind. Now, that number may actually be low
because it may have increased in the recent post COVID
spikes in terms of encounters at the US southern border.
You know, there's been a documented increase of people trying
to come in over the last couple of years, So
that number actually be low.
Speaker 2 (04:01):
If Donald Trump were to carry out his promise of
mass deportation, what would that mean for growth or for
inflation in the US?
Speaker 3 (04:10):
Well, look, I think a lot of that is down
to how much there might actually be in terms of
an action. If you were to try and take this
at the most maximal level, and you said I'm going
to try and deport all eleven million or more people
in one swift action, you know, just do those numbers
in reverse. Imagine eight million or more people out of
(04:32):
the labor force immediately, Jobs lost. Even if the argument
is that removing illegal immigration is going to allow more
Americans to take jobs that other people are taking. Even
if that's the argument, there's simply not quite a way
to replace eight million people or more in the labor force.
So that's one part. Even though a smaller retraction in
(04:54):
the job force would have meaningful effects. That having been said, though,
we are hearing from a fair number of Trump supporting
Republicans who have suggested that anything would go in a
certain amount of phases, and that you would start off
with most obvious candidates people who have had criminal offenses,
so more limited action like that wouldn't have such a
(05:16):
mass effect, and indeed proponents would argue that deporting those
individuals would have a benefit both economically and also societally.
Speaker 2 (05:24):
What do businesses want on this issue.
Speaker 3 (05:27):
Well, this is an interesting one. If you take a
chamber of commerce view. Chambers of commerce representing the largest
businesses across the US, tend to want to have a
full pool of immigrant labor from which to pick from. Indeed,
many of them would like a lot more easing to
be able to have more individuals. This is actually, though,
(05:49):
playing out as a debate within Republican circles. So Elon
Musk is one who thinks that there are great benefit
to having H one B visas available in good abundant numbers.
These are the ones that are used by highly educated,
often tech workers, many from Indias and from China. At
(06:10):
the same time, you have people who have been with
Donald Trump for a very long time. Steve Bannon is
one immigration hawks who think that this is a program
that needs to be pulled down and that Musk's views
on this are indeed dangerous. So there is a big
split within Trump's own orbit. Trump right now is leaning
a little bit toward Musk on some of the skilled
(06:33):
immigration stuff, even as he's talking about big deportation plans.
On skilled immigration, he has talked about the need to
attract the best and brightest and bemoaned the idea that
there are a large number of international students to American
universities who will get an American education and then not
be able to stay. Trump would like to find ways
(06:54):
to have them stay.
Speaker 2 (06:55):
Immigration is a big postical issue in many parts of
the world. Is the same sort of debate playing out
in other countries?
Speaker 3 (07:02):
You know, that's a great question, it is, and indeed
we see this playing out in pretty much every advanced
economy that is a reception zone for immigration at scale,
famously the United Kingdom and Brexit. What more needs to
be said, immigration was at the absolute heart of that.
Even here in Singapore, though I mentioned, it's become a
(07:24):
flashpoint politically, very well educated city state that had received
a lot of immigrants coming in who had been working
in Hong Kong when that city was having difficulties after COVID.
But Singapore is in a position where it doesn't feel
like it could take in all of those Even if
you said the five hundred thousand or the million best
(07:46):
people from Hong Kong economically would come to Singapore, Singapore
is a city state of six million people, doesn't have
enough space to house them, doesn't have enough schools to
educate them. The transportation system wouldn't be able to handle
the load all of these sorts of things. So I
do think that anywhere that you go, you do find
(08:06):
these questions about immigration that are percolating. And look, it
is an issue in elections all over the world. It's
going to be an issue in the upcoming Singaporean election.
It's going to be an issue when Australian voters go
to the polls. It'll be an issue in Canada when
those voters go to the polls. So the United States
(08:27):
is very much not alone. The issues you're seeing in
the US around immigration are at play in every single
major economy around the world.
Speaker 2 (08:38):
Okay, dark Well, bind Karsenior editor, thank you very much
for more explanations like this from our team of twenty
nine hundred journalists and analysts around the world search for
quick take on the Bloomberg website or Bloomberg Business App.
I'm Stephen Carol. This is here's why. I'll be back
next week with more. Thanks for listening.
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