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Removing millions of illegal immigrants from the country could have “devastating” unintended economic consequences, Treasury Secretary Janet Yellen said at The Atlantic Festival on Sept. 19.
Estimates vary on how many illegal immigrants are in the United States. Some estimates put the number at 11 million, while others suggest it’s closer to 30 million.
Yellen said she thinks the Republican presidential candidate’s deportation proposal “would raise inflation.”
“The influx of workers into the labor market is something that’s helped to bring down inflation and create a lot of jobs,” she said.
The senior administration official said the injection of workers since the pandemic has countered the growing number of people withdrawing from the workforce.
Yellen told the audience that the immigrants have contributed to the nation’s ability to produce goods, including agricultural products, throughout the post-crisis recovery.
“I believe that immigrants have always made and continue to make a positive contribution to the U.S. economy,” Yellen said.
The poll, conducted July 5–July 9, found that 56 percent of the respondents think inflation would be higher under Trump because tariffs and clamping down on illegal immigration would apply upward pressure on prices.
The GOP nominee has dismissed claims that another term would rekindle the inflation flame.
Trump has promised to combat inflation by revitalizing the domestic energy sector, reining in “wasteful spending,” eliminating excessive regulations, and securing the U.S. border.
“We will defeat inflation, tackle the cost-of-living crisis, improve fiscal sanity, restore price stability, and quickly bring down prices,” the Republican platform stated.
Goldman Sachs chief U.S. economist David Mericle stated that the labor force growth, fueled by illegal immigrants, allowed employers to fill job vacancies. This, he says, eased inflationary pressures.
“So far measures of labor market tightness have continued to fall or move sideways, not rise.”
“Partly for that reason, these jobs account for only a small share of overall wages and salaries paid to workers in the U.S. economy,” Camarota wrote.
While the immigration-inflation conversation persists, economists have said higher immigration trends have altered the makeup of the labor market over the last few years.
Conversely, the number of employed U.S.-born workers declined by more than 1.3 million in the same one-year span.
In addition, the labor force participation rate—a gauge of the number of employed compared to the number of working-age individuals—edged up by 0.2 percent for foreign-born workers.
It fell by the same percentage for U.S.-born workers.
Dallas Fed economists, using data from the Department of Labor’s Current Population Survey (CPS), revealed that about 60 percent of newly arrived migrants in the United States have found jobs.
According to Fed Chair Jerome Powell, one reason the unemployment rate has increased to above 4 percent is the “influx across the borders.”
While Dallas Fed economists say “the immigration wave contributed to higher GDP growth,” some critics note that the cost on the government surpassed the gains.
“The fundamental reason illegal immigrants are a net drain is they have a low average education level which results in low average earnings and tax payments,” he said in testimony before a House Judiciary Subcommittee hearing.
“Like their less-educated and low-income U.S.-born counterparts, the tax payments of illegal immigrants do not come close to covering the cost they create.”
That said, according to Michael Ettlinger, a senior fellow at the Institute on Taxation and Economic Policy, a mass deportation initiative would substantially impact the U.S. labor market.