Study: Mass Deportations Would Cost California Economy $275 Billion, Decimate Critical Industries
Construction, Agriculture and Occupational Service Industries Would be Hit Particularly Hard while State, Local and Federal Budgets Would See Loss of $23 Billion Annually in Tax Revenue
Tightly integrated into the California economy through millions of essential jobs that span a wide range of critical industries, from agriculture and construction to hospitality and occupational services, immigrants, both documented and undocumented and representing almost a third of the population, contribute mightily to the state’s $4.1 trillion economy.
A new study released today (June 17) by the Bay Area Council Economic Institute brings these contributions into sharp focus, examines how deeply embedded immigrants are in the economy and explores the potentially disruptive impacts that mass deportations would have on the economy, labor markets, small businesses and specific industry sectors. Certain geographic regions with higher proportions of undocumented residents, including the San Joaquin Valley, Bay Area, Inland Empire and Los Angeles, would experience the worst impacts. The study, which relied on numerous data sources and in-depth interviews with dozens of employers, elected officials, community leaders, and others, was done in partnership with Dr. Maria-Elena De Trinidad Young at UC Merced and with support from the California Health Care Foundation.
With 1.5 million of the state’s almost 2.3 million undocumented residents making up 8% of the California workforce, the impact of mass deportations would be significant, the study found, costing the state an estimated $275 billion in wages and other direct and indirect economic activity. Based on wages alone, undocumented workers generate 5% of the state’s overall economic activity, a figure that rises to 9% when the ripple effects of their spending and other contributions are factored in. Interview respondents emphasized that these workers bring extensive experience and deep skills to critical roles that benefit all Californians – from growing and cooking food, cleaning homes and offices, building housing, caring for children and the elderly, and ensuring packages are packed and delivered.
“Immigrants, both documented and undocumented, have played a significant role in making California’s economy the 4th largest in the world and they are deeply and intricately woven into our overall economic fabric,” said report co-author Abby Raisz, Research Director for the Bay Area Council Economic Institute. “The impact of losing 8% of California’s workforce would have a crippling effect on the state economy. And the impacts would extend far beyond California’s borders, with labor shortages contributing to higher food prices nationwide.”
The threat that mass deportations pose to California’s economy are exacerbated by the state’s changing demographic conditions, the heavy reliance by some industries on undocumented labor, and the unique skills and experience undocumented workers provide, according to the study. Immigrants in recent years have played a major role in buoying California against a shrinking population and declining workforce, both symptoms of economic stagnation. And because most immigrants have lived in California for long periods – almost half of the undocumented population has been in the state for 20 years or longer – and have extensive experience in their respective industries, they bring critical skills and knowledge to their work, despite taking on jobs often categorized as “low skilled.”
Another powerful finding from the research was the significant impact mass deportations would have on small businesses and business ownership, which are one of the largest creators of jobs in California and an important driver of economic activity. The study found that of the 40% of all small businesses owned by immigrants, almost 11% are owned by undocumented immigrants. These small businesses help lease commercial units, generate local taxes, create contracts for local distributors, and cater to the specific needs of the community. Immigrants, particularly in frontline industries, are the backbone of small business ownership. For example, the study notes, over 80% of housekeepers who own small businesses are immigrants, with nearly 39% of them being undocumented. This pattern extends to other industries like construction, landscaping, and childcare, where more than 20% of small business owners are undocumented and over half are immigrants.
For these reasons and more, the study found broad agreement within the business community for going beyond enforcement of existing immigration laws and enacting comprehensive federal immigration reform, something Congress has failed to do for decades. With comprehensive reforms, businesses would have more certainty in planning their workforce needs and how immigrants fit into those plans.
The impacts of mass deportations on certain industries and geographic regions would be particularly disruptive, the study found. As the nation’s top agricultural producer, California depends heavily on immigrant labor: 63% of the state’s agricultural sector are immigrants, and almost 26% are undocumented. And in construction, an industry already struggling with labor shortages, 41% of workers are immigrants and 14% are undocumented. The loss of workers in these and other industries would have considerable implications for California’s ability to address its housing and homelessness crisis, enact climate change policies and keep food costs affordable across the country.
The study comes at a fraught time as federal law enforcement agencies step up efforts nationwide to remove millions of undocumented immigrants from the country. In addition to highlighting the potential vulnerability of California’s economy to mass expulsions, the study identifies the numerous mechanisms that could be used to implement deportations and limit immigration. And it revealed the broader chilling effects that more aggressive immigration enforcement activities can have on the immigrant community overall.
“California has a long and rich history of embracing immigrants and the many valuable contributions they bring to our state, economically, culturally and in so many other ways,” said study co-author Dr. Maria-Elena De Trinidad Young, Assistant Professor of Public Health at UC Merced. “Understanding how increased immigration enforcement is affecting such a large swath of our population is critical to addressing the fears that many in the immigrant community are experiencing and informing how we plan for not only economic and fiscal impacts but the human impacts, as well.”
Using a variety of quantitative data sources and direct interviews with dozens of employers, workers, trade industry elected officials, and other community leaders, the study is designed to provide state and local policymakers and other groups with data and analysis to understand the full extent of immigrants’ participation in the economy and develop strategies for addressing the possible effects of mass deportations.
