Last month I mentioned that elections have consequences, and one that will have a massive impact to the world of employment is the mass deportation of undocumented workers currently being contemplated by the incoming administration. What will this mean and how will it affect us?
Many people think of undocumented workers as solely the hundreds of thousands who work in agricultural, construction, meat production, but that is just the tip of the iceberg. Think about all the immigrant labor you see in restaurants, hotels, landscaping, roofing, manufacturing, and so much more. The numbers are astounding, and their removal will significantly impact our economy and production capacity across the board.
While it is rarely talked about, the labor shortage which so adversely affected our economy in 2019-2022 was cured by the influx of immigrant labor in 2023. The unsung hero of that rebound was not a sudden increase in native born Americans showing up to take low paying jobs, it was immigrant labor, pure and simple.
In addition to filling open, hard to fill jobs, undocumented workers contributed over $100 Billion in federal, state, and local tax revenue in 2022.
As a consumer group, it is reported that immigrants added over $2 Trillion to the US economy in 2023, accounting for nearly 8% of our GDP. They buy cars, pay rent, buy groceries, clothing, spend money at restaurants, theaters, so the spending of their hard-earned dollars will be missed.
Many people think undocumented workers get paid under the table, but that’s extremely rare. They pay taxes, and yes, pay into Social Security. Newsweek reported that undocumented workers contributed nearly $26 billion into Social Security coffers in a single year, without any means to collect any benefits from it. This is not news to the SSA. It has been a long-standing revenue stream.
Many people ask me how undocumented workers get jobs if their status is not verifiable. Undocumented workers simply present documentation to an employer, and the employer accepts it. Unless the employer E-Verifies the employee, they have to accept the documentation provided at face value. In fact, an employee can sue an employer for denying employment based on a suspicion of fake documents.
Less than 20% of US companies use the voluntary E-Verify system. This is nothing new. Turning a blind eye towards hiring undocumented workers is a very long-established pattern in the US, and occasionally you hear of companies deciding to engage with E-Verify and suddenly need to get rid of a major portion of their employees. Once you use E-Verify with one, you must use it with all, or face discrimination issues.
Unless there is a sudden and dramatic increase in native born citizens lining up to take low-paying, often dangerous and dirty jobs, the impact of sweeping deportations is a harrowing concept and will have a dramatic impact on our labor force. Who will fill them? How will businesses respond to a reliable, competent work force being deported with no alternative workers to replace them?
Consequences.
