If President-elect Donald Trump follows through on his promises to deport millions of people living illegally in the United States, L.A.’s economy stands to lose big.
In addition to creating a gaping void in the labor force, mass deportations could mean less local consumer spending and an increase in the cost of goods.
While the ethical issues related to illegal immigration are hotly disputed among political parties, there is widespread agreement on the part of economists from both sides of the aisle that immigrants are actually a “net plus” for the economy, said Manuel Pastor, a USC professor and director of the school’s Center for the Study of Immigrant Integration.
“The undocumented immigrant population is about $130 billion of our California economy,” said Pastor. If mass deportations are carried out, “everyone predicts a recession as a result.”
New York economic research group Moody’s Analytics concluded in a pre-election report that deporting millions of immigrants, combined with Trump’s other proposed economic policies, likely would sink the country into a recession by as early as 2018.
Of the estimated 11 million immigrants living in the United States without legal status, more than 1 million are in Los Angeles County, according to the Migration Policy Institute. Most of these immigrants are employed in industries such as manufacturing, food services, construction, housekeeping, and elder and child care, said Pastor.
“(They’re) a very important part of the labor force in Los Angeles County in particular,” he said. “They’re an extraordinarily important part of the economy.”
Immigrants living here illegally make up more than 8 percent of the county’s population but are a much higher percentage of the workforce, said Pastor, in large part because there are few undocumented children – most are working adults.
L.A. employers are required to see documentation from workers that proves they’re eligible to work, so it’s likely many undocumented employees operate as independent contractors or work for smaller businesses, said Gary Toebben, chief executive of the Los Angeles Area Chamber of Commerce.
Without these workers, there would be fewer consumers to spend money in the local economy, he said.
Recession epicenter
The issue could hit particularly close to home in L.A.’s manufacturing industry.
Dov Charney, founder and former chief executive of American Apparel, estimates that more than half of employees who work in light manufacturing in Los Angeles – including apparel, furniture, upholstery, and food processing – are undocumented, though no hard numbers back up his estimate.
In 2008, the Canada-born Charney – an immigrant himself, he points out – expanded Legalize LA, a media campaign promoting amnesty, to the national stage. The company has long touted its hiring of immigrants who are legally allowed to work.
If Trump did deport millions of undocumented immigrants, it would be a financial calamity and thrust Los Angeles into the epicenter of a recession, said Charney. Still, he’s confident the president-elect won’t act on his election rhetoric.
“I don’t think it’s realistic that we’re going to see anything that affects the day-to-day operations of business in Los Angeles,” he said.
Trump already seems to have softened on his pledge to deport an estimated 11 million people living illegally in the United States, announcing a plan to deport at least 2 million of those who have criminal records once in office.
L.A. leaders are doing all they can to safeguard the city’s substantial immigrant population. Los Angeles Police Department Chief Charlie Beck announced that police won’t assist in the deportations and Mayor Eric Garcetti vowed to protect the immigrant community.
While Trump faces legal and logistical hurdles on the way to mass deportations, the immigrants protected under President Obama’s Deferred Action for Childhood Arrivals DACA program have few lines of defense. Enacted through a presidential executive order, DACA gives immigrants who were brought to the United States at a young age – and who satisfy certain requirements – a two-year work authorization and a deferral of deportation.
Trump has announced plans to discontinue DACA when he enters office. Immigrants in this program are often highly educated with well-paying jobs, so their deportations would hit the state’s economy the hardest, said USC’s Pastor.
“The one thing Trump can do immediately is the one that has the highest cost economically,” he said.
Immigration attorney Andres Ortiz, an associate at Fragomen Del Rey Bernsen & Loewy’s downtown office, said some legal exceptions can protect immigrants from deportation, depending on their circumstances. Clients who have fled dangerous conditions in another country may be eligible for asylum, and if they’ve lived in the United States for a long time and have qualifying relatives, they may be eligible for discretionary relief.
During the Obama administration, there has been a type of gentlemen’s agreement in which immigrants who had been in the country for years and had not committed any major crimes were largely left alone, he said. In the face of Trump’s victory, however, many of his clients who qualify for discretionary relief are now rushing to file the paperwork for it.
“Since the election, our phone has been ringing off the hook with all of those people,” said Ortiz. “At the very least I would expect it to continue through the inauguration. We’ll just have to see what the future holds after that.”
