July 2, 2025 • 23 mins
On this episode of Trumponomics, we focus on US President Donald Trump’s crackdown on immigration, what’s at stake for businesses and the economy, what harm has been done already and whether the administration could change course.
Jonathan Levin, a Bloomberg Opinion columnist focused on US markets and economics, and Kate Davidson, Bloomberg’s managing editor for US economic policy, join host Stephanie Flanders to discuss the many consequences of Trump’s signature campaign promise, whether his administration is likely to modulate its policies—and whether there could be long-term benefits to the broader economy of forcing employers to offer higher wages and better conditions to attract the workers they need.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news. We have a lot
of buddyguards and a lot of cops that are in
the forum of Alligators. You do not have to pay
him so much, but I wouldn't want to run through
the Everett legs for long.
Speaker 2 (00:26):
I'm Stephanie Flanders, head of Government and Economics at Bloomberg,
and welcome to Trumpernomics, the podcast that looks at the
economic world of Donald Trump, how he's already shaped the
global economy, what on earth is going to happen next?
And we're recording this on Tuesday, just after the Senate
pulled an all nighter attempting to pass Donald Trump's three
point three trillion dollar budget bill. And that's the last
(00:49):
we're going to say about it, because this week we're
focusing on a part of Trump and Nomics which could
end up having a bigger impact on the US economy,
the crackdown on immigration. What's at stake, who's hurting already
and what are the odds that the administration on this
at least changes course. As we record this week's conversation,
(01:10):
President Donald Trump is in fact en route to o
choppy Florida. He's visiting what's been dubbed Alligator Alcatraz, which
is the Florida Attorney General's proposal to turn an abandoned
airport in the heart of the Everglades into a quote's
one stop shop to carry out President Trump's mass deportation agenda.
The plan has its critics, naturally, building a tense city
(01:33):
in a fragile swamp during hurricane season doesn't strike everyone
as the best idea, but it's captured the attention of
the mag of Faithful because it so perfectly symbolizes the
aggressive approach that ICE Immigration and Customs Enforcement is taking
to get its detention numbers up, raiding construction sites, workplaces,
and courthouses to round up unauthorized immigrants. We've all seen
(01:56):
the protest that these raids have caused across America. Slightly
more beneath the surface, there's also deepening concern about the
economic impact of these policies and the long term risks
to US economic growth. So to help us understand more
about what's worrying economists and businesses and how that might
shape the administration's immigration strategy from here, we've invited two
(02:19):
of my Bloomberg colleagues on for today's episode with me
from Miami. I'm very glad to welcome to Trump Andomics
Jonathan live In, a Bloomberg opinion columnist focused on US
markets and economics. Jonathan, thanks very much for coming on
Trump Andnomics.
Speaker 1 (02:32):
Honored to be here.
Speaker 2 (02:33):
And from Washington, d C. Kate Davidson, Bloomberg's managing editor
for US Economic Policy, who you've heard before. Thanks for
having me. I'm going to start with you, Jonathan, which
is sort of unusual because you're the opinion columnist, but
you're also sitting in Miami, so I know that you're
seeing some of these impacts of the immigration policies close up,
(02:56):
and let me just start with that. How are these
policies affect the labor market right now or what's the
concern for local employers?
Speaker 1 (03:04):
Yeah, well, a labor market, it's not exactly clear just yet,
but I think we're seeing indications of this in the
housing market, for instance. People are more apprehensive about making
long term decisions because they don't know what their status
is going to be in the medium term. Over the
next few months, you have to start feeling the impacts
(03:25):
because estimates from the likes of Morgan Stanley suggest that
the net flows of immigrants, this is both documented and undocumented,
are going to step down in just a huge way.
Speaker 3 (03:37):
From twenty twenty four to twenty twenty five.
Speaker 1 (03:39):
The estimate is that we'll go from something on the
order of a net three million all the way down
to something on the order of a zero point three
zero point four. So just from a flows standpoint, that's
a massive change, and it's something that's going to feel
even more massive in immigrant heavy cities like the one
(04:00):
that I live in. I do want to clarify that
despite this sort of shock in awe of a lot
of these raids, where the effect is really being felt
again is in that sort of chilling effect which is
affecting inflows, and it's also affecting people's willingness to show
(04:20):
up at their workplaces. And one final thing, unrelated to
the documented undocumented question, the Trump administration has also moved
to remove the status of a number of people who
were working here legally, including prominently in the hospitality industry
here in South Florida where I live, in the warehousing industry.
(04:44):
So you know, I'm thinking specifically about the many, many
Venezuelans who fled their country and we're working in South
Florida legally and going forward will no longer be able
to do so.
Speaker 2 (04:55):
So there's a lot there. Jonathan is great because you've
mentioned a lot of the different things that we want
touch on. There's a sort of long term reliance of
the US economy on immigration that we've seen, particularly in
the last few years. It's where a lot of the
labor force growth has come from the last few years.
You've also highlighted something that I think is coming on
the radar more and more. It's not just undocumented with
(05:17):
immigrants that are potentially in the administration site. So there's
also various naturalized citizens and people of a legal status
like the Haitians who were offered a refuge in the US.
The policy is broadening to them. And finally, I want
to get to first, there's this fact that you can
be impacting the labor market and people can be disappearing
(05:39):
from the labor force even without being deported, because people
are not showing up to work. And some of your
team did a fantastic story the other day highlighting the
sectors where that was already apparent, including in La.
Speaker 4 (05:52):
Sure well, Chris Jonathan is in South Florida. But we
have seen on national news a lot of headlines about
what's happening in Los Angeles, right and what our colleagues
found and talking to various business owners and talking to
some workers. I mean, people are afraid you're not hearing
the hum of sewing machines buzzing in these garment factories
and la fields had emptied out where crops are picked,
(06:13):
although it sounds like workers were returning despite some of
the concerns. They spoke with Texas dairy farmers who say
workers aren't showing up to milk cows, an Idaho onion
grower who's struggling to find enough crop hands. A lot
of this again in that agricultural space, which we saw
President Trump talk about and kind of acknowledged that he
was hearing from people in those industries that this was
(06:33):
affecting their ability to keep business going essentially, and I
think that chilling effect is really important and as I said,
affects businesses and productivity. I think that's where you're starting
to hear and see more of the pressure ramp up
in our reporting of it's difficult right to find employers
who are willing to go on the record and say yes,
we hire and we employ immigrants who aren't allowed to
(06:55):
work here. But when push comes to shove and when
these raids, as these raids have ramped up, you're starting
to see these issues. They're unavoidable, you know, their clearest
day that they're becoming a bigger problem.
Speaker 2 (07:07):
Yes, and you've named there some of the sectors that
are most reliant on undocumented workers, agriculture, hospitality, construction. But
as Johnson said, the Trump administration isn't just targeting undocumented workers,
but also workers who are here on legal temporary work permits.
And I saw we've written about this that's become a
(07:28):
particular challenge for parts of the healthcare industry.
Speaker 4 (07:31):
Right some of our colleagues did a story about home
health AIDS, and that is one of the fastest growing
jobs in the country, or the fastest growing job in
the country, and a lot of workers in that sector
are here on those temporary work permits. And they are
We've talked to some some senior living communities and they
were saying that they are losing workers. People have left,
that they're afraid to come to work or that they're
(07:52):
unable to because of these efforts, and so it's having
an impact. They are not just in the sectors that
are reliant on undocumented workers.
Speaker 2 (07:59):
Yeah, I thought that was fascinating. Is one of the
single most common US job, something four million people working
as home health and personal care aids. And it's although
this foreign born about one in five of US workers,
but forty percent of home health aids foreign born. And Jonathan,
you've mentioned in some of your columns the uncertainty we've had.
(08:22):
As Kate mentioned, Donald Trump had even said he's concerned
about the impact. He's obviously hearing this from presumably people
in the hospitality business, his own business, are worried about this,
are complaining to him. And there was at one point
he seemed to be suggesting a softer path in those sectors,
but there was then a reversal remind us where we
(08:42):
actually are. I mean, there's just a lot of uncertainty
about the policy.
Speaker 1 (08:46):
Yeah, Well, it speaks to sort of what a shock
this policy would represent to a number of sectors. And
as you say, it seems like the Trump administration is
hearing this from some of their supporters. Basically, what happened
is to Trump came out on social media and he said,
we're cognizant of the pressure that this is putting on
(09:06):
the agriculture sector, of course, a core base for President Trump.
We're cognizant of the fact that this is putting a
lot of pressure on hospitality, where President Trump himself has
a lot of experience. You know, it seems like President
Trump took all this on board and he vaguely said
we're going to do something about this. Subsequently, there was
some reporting that came out that suggested that the very
(09:28):
same day the order actually trickled down to Ice and
said hold on raids in these places. But it wasn't
more than a few days that went by that guidance
ended up being walked back. So it seems like the
administration is between Iraq and a hard place. It wants
to come off as a sort of tough on immigration,
(09:53):
tough on these institutions, tough on would be violators of
immigration laws. But at the same time time there does
seem to be a very personal understanding by President Trump
that these workers are just the way that these corners
of the economy work. One further thing, I just want
(10:13):
to underscore that back in the first Trump administration, there
was a lot of wonderful reporting by the New York
times about how Trump himself either directly or indirectly employed
many of these workers at his various clubs and so
on and so forth. There was even a really eye
opening report that the woman who cleaned his room and
(10:37):
made his bed was undocumented herself. So it really just
goes to show you that these people are part of
the fabric of the US economy, and if you were
to take them out of it, you could think what
you will about the long term impacts, but it's going
to deliver a shock.
Speaker 4 (10:55):
And if I could just jump into one thing to
add there as well, is that these are industries that
have already faced chronic labor shortages, right, So that's part
of the you know, the idea I think for the
administration is if immigrants weren't taking these jobs, there are
all these other people who would be willing to step
in and take them. And I think that there are
(11:15):
a lot of people with a lot of reason to
be skeptical that's the case unless there are other reforms
or other changes that happen that could make legal immigration easier.
Speaker 2 (11:25):
Yeah, because we know unemployment is extremely low, and as
a point we made earlier that a large share of
the employment growth possibly all the employment growth in the
last few years has been from immigrants because of a
tight labor market. Kate, you've taken us onto the next
year or so economic impact. How much do you have
a sense that this is on the Federal reserves the
(11:47):
Central Bank's radar.
Speaker 4 (11:49):
Well, I think it is definitely on their radar. And
when we have heard FED sher J. Powell talk about
all the uncertainty right now around the path ahead for
the Fed, he talked about broadly about government policies. Yes,
he talks about tariffs, and he's taken a lot of
heat for that that he's weighing on on them, but
he does make a point to say, it's not just tariffs.
It's tax the tax bill changes to the tax code,
(12:11):
it is or extending these tax cuts that we had previously,
and it's also immigration. And Powell talked a lot about immigration.
Actually last year, and even before then, there was a
lot of new research and analysis of the immigration data
that showed that actually this wave of immigration had helped
to expand the labor force and was helpful to the
(12:33):
FED in its bid to bring down inflation without driving
up unemployment. It helped to bolster growth. I mean, that
was something that we saw over several years after the pandemic,
but really picked up in recent years and might have
been part of the reason why the FED didn't have
a bigger downturn as was expected when it ramped up
interest rates, that inflation came down without this big weakening.
(12:53):
So now that is essentially going in reverse. And so
what we've seen so far this year is the size
of the work were shrunk in May and it was
the biggest back to back decline and the number of
foreign burned workers in the labor force since twenty twenty.
The outlook right now is for a smaller labor force,
which actually could actually end up limiting the rise in unemployment.
(13:13):
It gets a little bit complicated, but it's something that
the FED and the Powell has talked about, which is
that this just may be masking underlying weakness in the
economy if you have fewer workers in the labor force,
so I think that could potentially make their job harder
as they try to figure out what's actually going on here.
If there are just fewer workers competing for jobs, essentially
(13:35):
in businesses have slowed hiring or they're laying people off.
The underlying picture, it might not be clear that it's
looking as bad. So that's something that the FED has
to pay close attention to as well as it's deciding, hey,
is it time to start low wearing rates? How bad
is the labor marketer underlying demand? At the same time
that they're worried about potential inflation pressures from tariffs, and.
Speaker 2 (13:54):
The inflation impact is interesting, and I guess it goes
to the long term objective of this policy. I mean,
of course, there'll be some who say this is driven
by the nativist populist agenda, but there's plenty of people
who would back a version of this approach. We had
one of them on the show very beginning of Trumponomics,
(14:15):
or in Cass the Conservative Economists. There are thinkers on
the right and on the left who feel that the
US economy has been too reliant on cheap immigrant labor
that has worsened wages and working conditions for a big
chunk of a working population, and that we need to
have a different model.
Speaker 3 (14:36):
The reality is that illegal immigration overwhelmingly goes into the
labor market in a set of low wage sectors, and
those happen to be sectors where working conditions are not
very good where typically we have not seen significant investments
in productivity increases because there has always been an assumption
(14:56):
that we can find illegal immigrants to do the work.
Speaker 2 (14:59):
And sort of accepted that there was going to be
short term costs. But then ultimately the market would respond
and you would see working conditions get better and more
Americans more attracted into these industries.
Speaker 3 (15:16):
And so as those folks leave the labor market, what
we are going to see as employers having to offer
higher wages and better conditions to attract the workers that
they need, and that will be a very good thing
for workers. I'm always a little bit puzzled when the
exact same folks who celebrate the wonders of the free
market and competitive forces then turn around if we're talking
(15:38):
about immigration, say you know, oh, no, none of this works.
Businesses are designed to operate under constraints and solve the
problems put in front of them. And the problem is
for our economy, we have not put the problem of
provide a good product at a low price with the
workers in America as the problem to solve, and now
that is going to be the problem to solve. And
(15:59):
I'm actually somebody who has a lot of faith in
markets and businesses to solve that problem.
Speaker 2 (16:04):
But Jonathan, I mean, first, I guess, do you buy
that sort of longer term view of what's going on here?
And when you're just looking at the industries that you're
familiar with, those sectors that we've talked about, how likely
is it that's going to happen that you'll see just
a ramping up of working conditions and combined with possibly
a bit of automation.
Speaker 1 (16:23):
Well, first of all, I don't know that the evidence
exactly supports Orn's argument on that. I mean, phenomenal economists
David Card and George Borjas, who is now associated with
the Trump CEA have been studying this issue for decades
and decades, and what all of these studies find, both
(16:44):
sort of natural experiments and model based studies done by
George Borjas now with the CEA, they find sort of
small effects on the key population. What they sort of
disparaging the call unskilled native born workers. And you know,
(17:05):
I don't love the term, but a.
Speaker 2 (17:06):
Small impact on employment, but also on wages, on the.
Speaker 1 (17:10):
Real wages more specifically. But moving beyond that, I think
that the key question in the here and now is
a are there going to be shocks and be like, is
there a smooth path to move beyond the shocks? And so,
for a I'm sure there are going to be shocks, because,
as we've talked about earlier in this conversation, we have
(17:32):
all these industries that Kate's talked about, healthcare, construction, agriculture, leisure,
and hospitality that, for better or worse, we have built
these industries in the United States to depend on this
immigrant labor, specific specifically that quote unquote low skilled immigrant labor.
(17:52):
It's the way our economy works. And then the subsequent
question is there a smooth and easy way to move
on from that? So let's just take the example of construction,
and construction is so important because everybody on every side
of the political aisle will acknowledge that there's a massive
housing deficit in the United States and that critical for
(18:13):
better quality of life for the entire population is to
build more housing. Okay, yes, we need productivity boosters in
that sector. Yes, we need to be doing more off
site manufacturing. We need to be bringing in these pre
fabricated components, entire walls with the insulation built in. We
(18:37):
need to get a lot more productive in that sector
in the way that some Scandinavian economies have gotten, or
the Germans or the Japanese. But guess what, that alone
is not going to help us solve the deficit. We
need the productivity enhancements and we need the immigrant labor.
(18:57):
Let's move over to agriculture. I am fairly bullish on
the possibility to bring in machines that are going to
pick the grapes that make our wine and whatever, pick
our strawberries, but the robepots just aren't good enough to
pick everything that we want to eat in this country.
(19:19):
Think about like these sinnowy trees that a lot of
fruits grow on. It's really hard to get a big
machine in between those trees in these orchards. Right. So,
there are a lot of problems that still haven't been solved.
And we can have these sort of sci fi fantasies that,
like the humanoid robots that Tesla is manufacturing, are going
(19:42):
to solve all of these problems, but they can't solve
them in the here and now, and I'm fairly confident
that they're not going to solve them even in the
medium term. And in the meantime, we need labor to
solve the problem for us to put food on the table.
Speaker 2 (19:57):
And of course, yeah, and the test is not going
to solve it if he's Elon Musk has been deported,
But that's a whole other we come back full circle. Okay,
final question to UK Federal Reserve and economists generally are
looking at the economy and thinking about the impact of tariffs,
which is inflationary. If the bottom line of this policy,
the sort of ultimate economic impact, whatever the political ramifications
(20:21):
may be, is that we have higher wages, labor shortages,
and yes, higher inflation. Do you think there's a chance
that the administration has to soften its approach or is
this just too central to the agenda.
Speaker 4 (20:35):
That's the big question, right. I wish I could answer it,
but I think that there's a chance. Sure, there's a chance.
I think it might come down to it, as it
always does, and the Trump administration who has more influence
or who maybe has the president's ear last, I think
that I think the Treasury Secretary Scott Bessant would probably
be the voice to deliver that message right if things
(20:59):
were getting there, if it was getting that bad for
the economy, Although as we've seen with tariffs, you know,
President Trump seems to be pretty happy just blaming the
FED and saying the FED should lower rates and that
will help support the economy. So maybe that's the tack
you would take. Of course, he'll only be able to
do that for so much longer. He'll be naming a
new FED shair and maybe that comes up. You know,
maybe he will he said he wants somebody who's going
(21:19):
to lower rates. Maybe this is or should be part
of the conversation about how would the next FED chair
view this immigration issue and what could the FED do
to fix that problem. So that's another way. That's another
way around it. But but I think for now it
certainly seems, as Jonathan was pointing out, that they're you know,
(21:40):
when there has been an effort to be more to
I guess ease off a little bit. That the folks
who are those immigration hardliners, if we want to call them,
that have come right back in and managed to get
the president back on the track that they think he
ought to be on.
Speaker 2 (21:55):
Yeah, it makes me think so the sort of forward
indicators that we have to develop for this Trump and economy,
it's not just what we've noticed in the labor market.
There has been a shrinking proportion of foreign born in
the labor numbers just in the last few months, which
shows something about that chilling effect. But maybe we also
ought to be monitoring how well Scott Bessent is getting
(22:15):
on with Stephen Miller and who's had you know which
of them has more meetings with Donald Trump? Kate Davidson,
Jonathan Levine, Thank you so much, thank you, thank you,
thanks for listening to Trump and Nomics from Bloomberg. It
was hosted by me Stephanie Flanders. I was joined by
(22:38):
Bloomberg's Jonathan Levin and Kate Davidson. Trump and Noomics is
produced by Summer, Sadi and Moses and with help from
Amy Keene and special thanks to Rachel Lewis Chrisky. Sound
designs by Blake Maples and the head of Bloomberg podcast
is Sage Bowman. To help others find the show and
enjoy it, please rate it and review it highly. Wherever
(22:59):
you listen, the street
Speaker 1 (23:01):
The change paper construct contact of the cut
Bloomberg Audio Studios, Podcasts, radio news. We have a lot
of buddyguards and a lot of cops that are in
the forum of Alligators. You do not have to pay
him so much, but I wouldn't want to run through
the Everett legs for long.
Speaker 2 (00:26):
I'm Stephanie Flanders, head of Government and Economics at Bloomberg,
and welcome to Trumpernomics, the podcast that looks at the
economic world of Donald Trump, how he's already shaped the
global economy, what on earth is going to happen next?
And we're recording this on Tuesday, just after the Senate
pulled an all nighter attempting to pass Donald Trump's three
point three trillion dollar budget bill. And that's the last
(00:49):
we're going to say about it, because this week we're
focusing on a part of Trump and Nomics which could
end up having a bigger impact on the US economy,
the crackdown on immigration. What's at stake, who's hurting already
and what are the odds that the administration on this
at least changes course. As we record this week's conversation,
(01:10):
President Donald Trump is in fact en route to o
choppy Florida. He's visiting what's been dubbed Alligator Alcatraz, which
is the Florida Attorney General's proposal to turn an abandoned
airport in the heart of the Everglades into a quote's
one stop shop to carry out President Trump's mass deportation agenda.
The plan has its critics, naturally, building a tense city
(01:33):
in a fragile swamp during hurricane season doesn't strike everyone
as the best idea, but it's captured the attention of
the mag of Faithful because it so perfectly symbolizes the
aggressive approach that ICE Immigration and Customs Enforcement is taking
to get its detention numbers up, raiding construction sites, workplaces,
and courthouses to round up unauthorized immigrants. We've all seen
(01:56):
the protest that these raids have caused across America. Slightly
more beneath the surface, there's also deepening concern about the
economic impact of these policies and the long term risks
to US economic growth. So to help us understand more
about what's worrying economists and businesses and how that might
shape the administration's immigration strategy from here, we've invited two
(02:19):
of my Bloomberg colleagues on for today's episode with me
from Miami. I'm very glad to welcome to Trump Andomics
Jonathan live In, a Bloomberg opinion columnist focused on US
markets and economics. Jonathan, thanks very much for coming on
Trump Andnomics.
Speaker 1 (02:32):
Honored to be here.
Speaker 2 (02:33):
And from Washington, d C. Kate Davidson, Bloomberg's managing editor
for US Economic Policy, who you've heard before. Thanks for
having me. I'm going to start with you, Jonathan, which
is sort of unusual because you're the opinion columnist, but
you're also sitting in Miami, so I know that you're
seeing some of these impacts of the immigration policies close up,
(02:56):
and let me just start with that. How are these
policies affect the labor market right now or what's the
concern for local employers?
Speaker 1 (03:04):
Yeah, well, a labor market, it's not exactly clear just yet,
but I think we're seeing indications of this in the
housing market, for instance. People are more apprehensive about making
long term decisions because they don't know what their status
is going to be in the medium term. Over the
next few months, you have to start feeling the impacts
(03:25):
because estimates from the likes of Morgan Stanley suggest that
the net flows of immigrants, this is both documented and undocumented,
are going to step down in just a huge way.
Speaker 3 (03:37):
From twenty twenty four to twenty twenty five.
Speaker 1 (03:39):
The estimate is that we'll go from something on the
order of a net three million all the way down
to something on the order of a zero point three
zero point four. So just from a flows standpoint, that's
a massive change, and it's something that's going to feel
even more massive in immigrant heavy cities like the one
(04:00):
that I live in. I do want to clarify that
despite this sort of shock in awe of a lot
of these raids, where the effect is really being felt
again is in that sort of chilling effect which is
affecting inflows, and it's also affecting people's willingness to show
(04:20):
up at their workplaces. And one final thing, unrelated to
the documented undocumented question, the Trump administration has also moved
to remove the status of a number of people who
were working here legally, including prominently in the hospitality industry
here in South Florida where I live, in the warehousing industry.
(04:44):
So you know, I'm thinking specifically about the many, many
Venezuelans who fled their country and we're working in South
Florida legally and going forward will no longer be able
to do so.
Speaker 2 (04:55):
So there's a lot there. Jonathan is great because you've
mentioned a lot of the different things that we want
touch on. There's a sort of long term reliance of
the US economy on immigration that we've seen, particularly in
the last few years. It's where a lot of the
labor force growth has come from the last few years.
You've also highlighted something that I think is coming on
the radar more and more. It's not just undocumented with
(05:17):
immigrants that are potentially in the administration site. So there's
also various naturalized citizens and people of a legal status
like the Haitians who were offered a refuge in the US.
The policy is broadening to them. And finally, I want
to get to first, there's this fact that you can
be impacting the labor market and people can be disappearing
(05:39):
from the labor force even without being deported, because people
are not showing up to work. And some of your
team did a fantastic story the other day highlighting the
sectors where that was already apparent, including in La.
Speaker 4 (05:52):
Sure well, Chris Jonathan is in South Florida. But we
have seen on national news a lot of headlines about
what's happening in Los Angeles, right and what our colleagues
found and talking to various business owners and talking to
some workers. I mean, people are afraid you're not hearing
the hum of sewing machines buzzing in these garment factories
and la fields had emptied out where crops are picked,
(06:13):
although it sounds like workers were returning despite some of
the concerns. They spoke with Texas dairy farmers who say
workers aren't showing up to milk cows, an Idaho onion
grower who's struggling to find enough crop hands. A lot
of this again in that agricultural space, which we saw
President Trump talk about and kind of acknowledged that he
was hearing from people in those industries that this was
(06:33):
affecting their ability to keep business going essentially, and I
think that chilling effect is really important and as I said,
affects businesses and productivity. I think that's where you're starting
to hear and see more of the pressure ramp up
in our reporting of it's difficult right to find employers
who are willing to go on the record and say yes,
we hire and we employ immigrants who aren't allowed to
(06:55):
work here. But when push comes to shove and when
these raids, as these raids have ramped up, you're starting
to see these issues. They're unavoidable, you know, their clearest
day that they're becoming a bigger problem.
Speaker 2 (07:07):
Yes, and you've named there some of the sectors that
are most reliant on undocumented workers, agriculture, hospitality, construction. But
as Johnson said, the Trump administration isn't just targeting undocumented workers,
but also workers who are here on legal temporary work permits.
And I saw we've written about this that's become a
(07:28):
particular challenge for parts of the healthcare industry.
Speaker 4 (07:31):
Right some of our colleagues did a story about home
health AIDS, and that is one of the fastest growing
jobs in the country, or the fastest growing job in
the country, and a lot of workers in that sector
are here on those temporary work permits. And they are
We've talked to some some senior living communities and they
were saying that they are losing workers. People have left,
that they're afraid to come to work or that they're
(07:52):
unable to because of these efforts, and so it's having
an impact. They are not just in the sectors that
are reliant on undocumented workers.
Speaker 2 (07:59):
Yeah, I thought that was fascinating. Is one of the
single most common US job, something four million people working
as home health and personal care aids. And it's although
this foreign born about one in five of US workers,
but forty percent of home health aids foreign born. And Jonathan,
you've mentioned in some of your columns the uncertainty we've had.
(08:22):
As Kate mentioned, Donald Trump had even said he's concerned
about the impact. He's obviously hearing this from presumably people
in the hospitality business, his own business, are worried about this,
are complaining to him. And there was at one point
he seemed to be suggesting a softer path in those sectors,
but there was then a reversal remind us where we
(08:42):
actually are. I mean, there's just a lot of uncertainty
about the policy.
Speaker 1 (08:46):
Yeah, Well, it speaks to sort of what a shock
this policy would represent to a number of sectors. And
as you say, it seems like the Trump administration is
hearing this from some of their supporters. Basically, what happened
is to Trump came out on social media and he said,
we're cognizant of the pressure that this is putting on
(09:06):
the agriculture sector, of course, a core base for President Trump.
We're cognizant of the fact that this is putting a
lot of pressure on hospitality, where President Trump himself has
a lot of experience. You know, it seems like President
Trump took all this on board and he vaguely said
we're going to do something about this. Subsequently, there was
some reporting that came out that suggested that the very
(09:28):
same day the order actually trickled down to Ice and
said hold on raids in these places. But it wasn't
more than a few days that went by that guidance
ended up being walked back. So it seems like the
administration is between Iraq and a hard place. It wants
to come off as a sort of tough on immigration,
(09:53):
tough on these institutions, tough on would be violators of
immigration laws. But at the same time time there does
seem to be a very personal understanding by President Trump
that these workers are just the way that these corners
of the economy work. One further thing, I just want
(10:13):
to underscore that back in the first Trump administration, there
was a lot of wonderful reporting by the New York
times about how Trump himself either directly or indirectly employed
many of these workers at his various clubs and so
on and so forth. There was even a really eye
opening report that the woman who cleaned his room and
(10:37):
made his bed was undocumented herself. So it really just
goes to show you that these people are part of
the fabric of the US economy, and if you were
to take them out of it, you could think what
you will about the long term impacts, but it's going
to deliver a shock.
Speaker 4 (10:55):
And if I could just jump into one thing to
add there as well, is that these are industries that
have already faced chronic labor shortages, right, So that's part
of the you know, the idea I think for the
administration is if immigrants weren't taking these jobs, there are
all these other people who would be willing to step
in and take them. And I think that there are
(11:15):
a lot of people with a lot of reason to
be skeptical that's the case unless there are other reforms
or other changes that happen that could make legal immigration easier.
Speaker 2 (11:25):
Yeah, because we know unemployment is extremely low, and as
a point we made earlier that a large share of
the employment growth possibly all the employment growth in the
last few years has been from immigrants because of a
tight labor market. Kate, you've taken us onto the next
year or so economic impact. How much do you have
a sense that this is on the Federal reserves the
(11:47):
Central Bank's radar.
Speaker 4 (11:49):
Well, I think it is definitely on their radar. And
when we have heard FED sher J. Powell talk about
all the uncertainty right now around the path ahead for
the Fed, he talked about broadly about government policies. Yes,
he talks about tariffs, and he's taken a lot of
heat for that that he's weighing on on them, but
he does make a point to say, it's not just tariffs.
It's tax the tax bill changes to the tax code,
(12:11):
it is or extending these tax cuts that we had previously,
and it's also immigration. And Powell talked a lot about immigration.
Actually last year, and even before then, there was a
lot of new research and analysis of the immigration data
that showed that actually this wave of immigration had helped
to expand the labor force and was helpful to the
(12:33):
FED in its bid to bring down inflation without driving
up unemployment. It helped to bolster growth. I mean, that
was something that we saw over several years after the pandemic,
but really picked up in recent years and might have
been part of the reason why the FED didn't have
a bigger downturn as was expected when it ramped up
interest rates, that inflation came down without this big weakening.
(12:53):
So now that is essentially going in reverse. And so
what we've seen so far this year is the size
of the work were shrunk in May and it was
the biggest back to back decline and the number of
foreign burned workers in the labor force since twenty twenty.
The outlook right now is for a smaller labor force,
which actually could actually end up limiting the rise in unemployment.
(13:13):
It gets a little bit complicated, but it's something that
the FED and the Powell has talked about, which is
that this just may be masking underlying weakness in the
economy if you have fewer workers in the labor force,
so I think that could potentially make their job harder
as they try to figure out what's actually going on here.
If there are just fewer workers competing for jobs, essentially
(13:35):
in businesses have slowed hiring or they're laying people off.
The underlying picture, it might not be clear that it's
looking as bad. So that's something that the FED has
to pay close attention to as well as it's deciding, hey,
is it time to start low wearing rates? How bad
is the labor marketer underlying demand? At the same time
that they're worried about potential inflation pressures from tariffs, and.
Speaker 2 (13:54):
The inflation impact is interesting, and I guess it goes
to the long term objective of this policy. I mean,
of course, there'll be some who say this is driven
by the nativist populist agenda, but there's plenty of people
who would back a version of this approach. We had
one of them on the show very beginning of Trumponomics,
(14:15):
or in Cass the Conservative Economists. There are thinkers on
the right and on the left who feel that the
US economy has been too reliant on cheap immigrant labor
that has worsened wages and working conditions for a big
chunk of a working population, and that we need to
have a different model.
Speaker 3 (14:36):
The reality is that illegal immigration overwhelmingly goes into the
labor market in a set of low wage sectors, and
those happen to be sectors where working conditions are not
very good where typically we have not seen significant investments
in productivity increases because there has always been an assumption
(14:56):
that we can find illegal immigrants to do the work.
Speaker 2 (14:59):
And sort of accepted that there was going to be
short term costs. But then ultimately the market would respond
and you would see working conditions get better and more
Americans more attracted into these industries.
Speaker 3 (15:16):
And so as those folks leave the labor market, what
we are going to see as employers having to offer
higher wages and better conditions to attract the workers that
they need, and that will be a very good thing
for workers. I'm always a little bit puzzled when the
exact same folks who celebrate the wonders of the free
market and competitive forces then turn around if we're talking
(15:38):
about immigration, say you know, oh, no, none of this works.
Businesses are designed to operate under constraints and solve the
problems put in front of them. And the problem is
for our economy, we have not put the problem of
provide a good product at a low price with the
workers in America as the problem to solve, and now
that is going to be the problem to solve. And
(15:59):
I'm actually somebody who has a lot of faith in
markets and businesses to solve that problem.
Speaker 2 (16:04):
But Jonathan, I mean, first, I guess, do you buy
that sort of longer term view of what's going on here?
And when you're just looking at the industries that you're
familiar with, those sectors that we've talked about, how likely
is it that's going to happen that you'll see just
a ramping up of working conditions and combined with possibly
a bit of automation.
Speaker 1 (16:23):
Well, first of all, I don't know that the evidence
exactly supports Orn's argument on that. I mean, phenomenal economists
David Card and George Borjas, who is now associated with
the Trump CEA have been studying this issue for decades
and decades, and what all of these studies find, both
(16:44):
sort of natural experiments and model based studies done by
George Borjas now with the CEA, they find sort of
small effects on the key population. What they sort of
disparaging the call unskilled native born workers. And you know,
(17:05):
I don't love the term, but a.
Speaker 2 (17:06):
Small impact on employment, but also on wages, on the.
Speaker 1 (17:10):
Real wages more specifically. But moving beyond that, I think
that the key question in the here and now is
a are there going to be shocks and be like, is
there a smooth path to move beyond the shocks? And so,
for a I'm sure there are going to be shocks, because,
as we've talked about earlier in this conversation, we have
(17:32):
all these industries that Kate's talked about, healthcare, construction, agriculture, leisure,
and hospitality that, for better or worse, we have built
these industries in the United States to depend on this
immigrant labor, specific specifically that quote unquote low skilled immigrant labor.
(17:52):
It's the way our economy works. And then the subsequent
question is there a smooth and easy way to move
on from that? So let's just take the example of construction,
and construction is so important because everybody on every side
of the political aisle will acknowledge that there's a massive
housing deficit in the United States and that critical for
(18:13):
better quality of life for the entire population is to
build more housing. Okay, yes, we need productivity boosters in
that sector. Yes, we need to be doing more off
site manufacturing. We need to be bringing in these pre
fabricated components, entire walls with the insulation built in. We
(18:37):
need to get a lot more productive in that sector
in the way that some Scandinavian economies have gotten, or
the Germans or the Japanese. But guess what, that alone
is not going to help us solve the deficit. We
need the productivity enhancements and we need the immigrant labor.
(18:57):
Let's move over to agriculture. I am fairly bullish on
the possibility to bring in machines that are going to
pick the grapes that make our wine and whatever, pick
our strawberries, but the robepots just aren't good enough to
pick everything that we want to eat in this country.
(19:19):
Think about like these sinnowy trees that a lot of
fruits grow on. It's really hard to get a big
machine in between those trees in these orchards. Right. So,
there are a lot of problems that still haven't been solved.
And we can have these sort of sci fi fantasies that,
like the humanoid robots that Tesla is manufacturing, are going
(19:42):
to solve all of these problems, but they can't solve
them in the here and now, and I'm fairly confident
that they're not going to solve them even in the
medium term. And in the meantime, we need labor to
solve the problem for us to put food on the table.
Speaker 2 (19:57):
And of course, yeah, and the test is not going
to solve it if he's Elon Musk has been deported,
But that's a whole other we come back full circle. Okay,
final question to UK Federal Reserve and economists generally are
looking at the economy and thinking about the impact of tariffs,
which is inflationary. If the bottom line of this policy,
the sort of ultimate economic impact, whatever the political ramifications
(20:21):
may be, is that we have higher wages, labor shortages,
and yes, higher inflation. Do you think there's a chance
that the administration has to soften its approach or is
this just too central to the agenda.
Speaker 4 (20:35):
That's the big question, right. I wish I could answer it,
but I think that there's a chance. Sure, there's a chance.
I think it might come down to it, as it
always does, and the Trump administration who has more influence
or who maybe has the president's ear last, I think
that I think the Treasury Secretary Scott Bessant would probably
be the voice to deliver that message right if things
(20:59):
were getting there, if it was getting that bad for
the economy, Although as we've seen with tariffs, you know,
President Trump seems to be pretty happy just blaming the
FED and saying the FED should lower rates and that
will help support the economy. So maybe that's the tack
you would take. Of course, he'll only be able to
do that for so much longer. He'll be naming a
new FED shair and maybe that comes up. You know,
maybe he will he said he wants somebody who's going
(21:19):
to lower rates. Maybe this is or should be part
of the conversation about how would the next FED chair
view this immigration issue and what could the FED do
to fix that problem. So that's another way. That's another
way around it. But but I think for now it
certainly seems, as Jonathan was pointing out, that they're you know,
(21:40):
when there has been an effort to be more to
I guess ease off a little bit. That the folks
who are those immigration hardliners, if we want to call them,
that have come right back in and managed to get
the president back on the track that they think he
ought to be on.
Speaker 2 (21:55):
Yeah, it makes me think so the sort of forward
indicators that we have to develop for this Trump and economy,
it's not just what we've noticed in the labor market.
There has been a shrinking proportion of foreign born in
the labor numbers just in the last few months, which
shows something about that chilling effect. But maybe we also
ought to be monitoring how well Scott Bessent is getting
(22:15):
on with Stephen Miller and who's had you know which
of them has more meetings with Donald Trump? Kate Davidson,
Jonathan Levine, Thank you so much, thank you, thank you,
thanks for listening to Trump and Nomics from Bloomberg. It
was hosted by me Stephanie Flanders. I was joined by
(22:38):
Bloomberg's Jonathan Levin and Kate Davidson. Trump and Noomics is
produced by Summer, Sadi and Moses and with help from
Amy Keene and special thanks to Rachel Lewis Chrisky. Sound
designs by Blake Maples and the head of Bloomberg podcast
is Sage Bowman. To help others find the show and
enjoy it, please rate it and review it highly. Wherever
(22:59):
you listen, the street
Speaker 1 (23:01):
The change paper construct contact of the cut
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