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The economic fallout of mass deportations: historical lessons and the numbers

Undocumented in America: how many and who are they?

 

By most estimates, roughly 11 million undocumented immigrants live in the United States today. The number has rebounded slightly in recent years after declining from a 2007 peak of about 12 million. Notably, one recent analysis by demographers at the Migration Policy Institute suggests the total could be as high as 13.7 million as of 2023 – amid a surge of recent border arrivals. Either way, this shadow population makes up about 3–4% of U.S. residents, and roughly 23% of all foreign-born people in the country.

 

Historically, the largest share has come from Mexico. In 2022, an estimated 4 million undocumented immigrants in the U.S. were Mexican-born. That number is down sharply from about 7 million in 2007, reflecting fewer new arrivals and some return migration. Mexicans now account for roughly 37% of the undocumented, the smallest share on record. The rest of this population is diverse and growing. Central Americans make up a big portion, with about 1.4 million from Guatemala and 1.1 million each from Honduras and El Salvador. Increasing numbers also come from South America (e.g. nearly half a million Venezuelans) and Asia (hundreds of thousands from countries like the Philippines, India and China).

 

Undocumented immigrants live in every state, though they tend to concentrate in certain regions. Traditional immigrant gateway states like California, Texas, Florida, New York, and New Jersey have the highest numbers. In recent years the population has grown fastest in Florida, Maryland, Massachusetts, New York, New Jersey, and Texas, while California actually saw a decline. Many migrants who crossed the border recently have spread out to new destinations beyond the Southwest. Once settled, undocumented people form an integral part of local communities: they reside in an estimated 6.3 million U.S. households, often in “mixed-status” families alongside U.S.-born children or legal residents. About 4.4 million U.S.-born children have at least one undocumented parent.

 

Crackdown by the numbers: deportation trends under different presidents

 

American politics regularly swings between tougher and more lenient stances on deportation.

 

  • George W. Bush (2001–2009): Deportations rose steadily during the 2000s. In Bush’s last year (2008) there were around 359,000 removals, reflecting post-9/11 enforcement build-up.
  • Barack Obama (2009–2017): Obama oversaw record-high deportations in his first term. In fact, 1.18 million people were deported in Obama’s first three years, earning him the moniker “Deporter-in-Chief” from some activists. The peak came in 2012, with about 409,800 removals that year alone. After 2012, Obama shifted to target serious criminals and recent arrivals, and deportation rates slowed in his second term. Still, across eight years Obama’s administration deported over 3 million people – the highest total of any president in U.S. history.
  • Donald Trump’s first term (2017–2021): Given Trump’s hardline rhetoric, many assumed deportations would skyrocket. Indeed, in office Trump pledged to deport “millions” and unleashed ICE with fewer prioritization constraints. But Trump’s removals never reached Obama’s peak. For example, 2019 marked Trump’s high-water mark with about 267,000 deportations. In each of Trump’s years, annual deportations stayed in the 200,000–260,000 range. Over his full term, Trump deported roughly 800,000+ people. Analysts point to practical factors: more migrants in recent years came from Central America or elsewhere, meaning longer legal proceedings and more difficulties in repatriation compared to single adults from Mexico. Trump also broadened the net – casting “everyone” as a priority – which ironically clogged the system with lower-level cases and lengthy detentions.
  • Joe Biden (2021–2025): Early on, deportations plummeted. In FY 2021, ICE carried out only 59,000 deportations – a 20-year low. Part of this was due to COVID-19 disruptions and Biden’s interim rules shielding most non-criminal undocumented immigrants. Instead, the administration relied heavily on a public health expulsion policy (Title 42) to turn back border-crossers without formal deportation proceedings. By 2022 and 2023, however, the numbers began rising again as the border saw record influxes. Biden’s DHS ramped up formal removals once pandemic policies lapsed. By FY 2024, deportations soared to 271,000 – the highest in a decade and surpassing Trump’s best year. Over Biden’s tenure (up to 2024), ICE removals cumulatively reached around 545,000.

 

Undocumented workers: a hidden backbone in key sectors

 

Undocumented immigrants are deeply embedded in the U.S. labour force. About 8.3 million were part of the workforce in 2022. This is roughly three-quarters of the adult undocumented population, a participation rate similar to or higher than that of U.S.-born adults.

 

They fill physically demanding or lower-paid jobs that native-born Americans are less inclined to take, at least at current wages. They form an integral labour pool in agriculture, construction, hospitality, and other sectors. For example:

 

  • About 16% of all workers in U.S. agriculture are undocumented.
  • In construction, about 12% of the workforce is undocumented.
  • About 9% of workers in leisure and hospitality are undocumented.
  • In certain sub-sectors, over 20% of workers are undocumented – including landscaping, housekeeping, and crop production.

 

Undocumented workers often accept lower wages because their status suppresses their bargaining power. Many are paid below the legal minimum. This creates downward pressure on wage standards more broadly.

 

Paying taxes from the shadows

 

Despite lacking legal status, undocumented migrants pay a surprising amount in taxes, though they are ineligible for many benefits funded by those taxes? (like Social Security, food stamps, Medicare or Medicaid). They also generally can’t claim tax credits like the Earned Income Tax Credit. In a few cases, their U.S.-born children or spouses might receive benefits. Thus, while they do utilize public schools and local services, on balance they often pay more into the system than they take out.

 

  • About 75% are on formal payrolls using borrowed or false Social Security numbers. The result is that billions in federal income tax and Social Security and Medicare taxes are withheld from their paychecks?.
  • One study has found that, collectively, undocumented immigrants could contribute as much as $100 billion in taxes each year – roughly $60 billion to the federal government (including payroll taxes; the Social Security Administration estimates undocumented workers contribute around $7–12 billion annually to Social Security) and $40 billion to state and local coffers.
  • If they never file a tax return (out of fear of revealing themselves), the IRS simply keeps that money.
  • Undocumented households also pay sales, excise, and property taxes.

 

What happens if they’re gone?

 

Intuition might say fewer workers (due to deportation) means less labour supply, which should drive wages up for the remaining workers. But studies have found little evidence of broad wage gains from deportations. In fact, a recent study examining the fallout of large Obama-era deportations found no increase in job opportunities or pay for U.S.-born workers in areas that saw big deportation surges. On the contrary, removing workers can eliminate complementary jobs held by U.S. citizens. For example, if deportations sweep away half of a roofing crew, the U.S.-born manager might lose business because the company can’t complete as many projects. On one estimate, for every 500,000 people deported, about 44,000 fewer jobs exist for American-born workers.

At a national scale, some economists project that mass deportation would shrink the overall economy and push wages downward in the aggregate. The labour of undocumented immigrants produces value and income. If they are removed, there may be fewer people competing for jobs, but there’s also less work being done — so total wages can still fall.

In specific cases, undocumented immigrants can be replaced by American citizens, but at the cost of higher wages, which would translate into higher prices for consumers or lower profits for businesses (or a combination). In some cases, even wage hikes might not yield enough willing workers if the job is arduous or requires living in remote areas. The U.S. historically has struggled to fill many of these roles without immigrant labour. For instance, when Arizona enacted a law in 2010 driving out many undocumented people, construction firms found a shortage of tradesmen and framers; projects were delayed or had to import workers from other states at greater cost. When Alabama and Georgia passed harsh immigration laws in 2011, farmers that autumn were unable to fill the labour gap. Georgia’s agricultural industry estimated a $1 billion loss in 2011 due to shortages from the exodus of workers.

Over time, the labour market can adjust – perhaps automation will accelerate. But those adjustments don’t happen overnight, and they carry their own economic trade-offs (automation tends to eliminate other jobs too).

 

Demand-side impacts

 

Undocumented immigrants are not only workers – they are also consumers, renters, and also small business owners. They rent apartments, buy groceries and gas,  create jobs and spend money in the local economy. Remove them, and you remove that demand. For local economies, it can mean a shrinking tax base and even declining property values.

After Arizona passed the strict SB 1070 immigration law in 2010, in Phoenix many immigrant families (including those legally present, out of fear) packed up and left the state. Neighborhoods began emptying, and small businesses saw sales dry up as a significant share of their customer base vanished?. Landlords had vacant units; some homes went into foreclosure or prices dropped due to the population loss. The loss in consumer spending was tangible. An analysis by Arizona’s finance officials predicted that if all undocumented people were driven out, state GDP would shrink by nearly $49 billion (about 17% of Arizona’s economy) and tax revenues would fall more than 10%?. 581,000 jobs (held by both immigrants and natives) would be eliminated as businesses contracted or closed.

Another example of lost demand occurred after a massive ICE raid in Postville, Iowa in 2008. The raid removed a huge chunk of the workforce (mostly undocumented Guatemalans) at the town’s meatpacking plant – but it also removed a chunk of the town’s consumers. Local grocery stores, shops, and churches in this small town all suffered from the sudden drop in population.

On a national scale, similar dynamics apply. Undocumented immigrants spend an hundreds of billions of dollars each year as consumers. They rent housing (about 35% of undocumented households even own homes). If they were all expelled, who would fill those apartment units or houses? In many regions, a housing glut would push prices down.

 

Lessons from abroad

 

Other countries have tried large-scale expulsions of undocumented migrants.

 

One of the largest such episodes occurred in West Africa in 1983. Nigeria, then in an oil-price slump, decided to expel up to 2 million foreign workers, mainly from neighboring Ghana. President Shehu Shagari gave undocumented West African migrants two weeks to leave the country. In the short run, the move eased some pressure on Nigeria’s job market for natives, but Nigeria’s economy did not notably improve – in fact, it continued to struggle through the 1980s. Meanwhile, Ghana’s population swelled around 10% overnight, and its economy lost an estimated $300–500 million per year in remittances.

Saudi Arabia has millions of foreign workers, many undocumented or on expired visas. In 2013, Saudi Arabia launched a crackdown to deport illegal expatriate workers in hopes of opening jobs for Saudi citizens. The result: nearly 1 million foreign workers left Saudi Arabia in under a year (some deported, others leaving preemptively). Construction companies – heavily dependent on migrant labour – were stalled by labour shortages, causing building projects delays. Wages for certain jobs had to rise sharply to attract Saudi workers, denting profit margins. Saudi businesses from banks to telecom firms reported hits to earnings. Consumer spending dropped. Over time, Saudi Arabia did some roles with domestic workers, but many jobs went unfilled for months, and certain labour-intensive businesses contracted.

Operation Wetback in the U.S. (1954) is a historical parallel often cited. In that summer, U.S. immigration agents, with military assistance, deported an estimated 1.1–1.3 million Mexican migrants from the Southwest – the largest deportation operation in American history?. The farm industry lobbied to keep the Bracero guest-worker program running to ensure replacement labour. Indeed, not long after Operation Wetback, growers brought in more legal Mexican guest workers to compensate. The deportation campaign lasted only a few months; it was so logistically harsh and disruptive that it was not sustained. The episode underscores how integral Mexican labour was (and is) to U.S. agriculture – Americans did not flood into the fields; instead, the government and growers essentially swapped one group of foreign workers for another.

Malaysia has periodically expelled large numbers of Indonesian and Bangladeshi migrant workers who lacked permits. Each time, certain industries, like plantations and construction, experienced acute labour shortages. In fact, Malaysia often had to reverse its policies and quietly invite workers back or loosen visa rules because the economy could not cope without them. This pattern of crackdown, shortage, U-turn has recurred multiple times.

Following the expulsion of Asian traders from Uganda in 1972, Uganda’s economy fell – shops emptied, supply chains broke down, and the business community took decades to recover.

Across these examples, some common themes emerge. First, mass expulsions often occur during economic downturns or political upheaval – they are a reactive measure, sometimes scapegoating foreigners for domestic woes. Second, they nearly always have negative economic repercussions: labour shortages, lost output, lower consumption, and international backlash. No country has prospered by purging itself of a large chunk of its workforce overnight. Third, any potential benefits (like job openings for locals) tend to be offset by the disruption and loss of complementary jobs or skills. It’s a lose-lose proposition economically, which is why even nations that talk tough on deportation often moderate when faced with the practical consequences.