Analysts say ending DACA would hurt economy, hiring
The Trump administration says its decision to end a program that safeguards young undocumented immigrants from deportation will open job opportunities for struggling U.S. workers.
But economists on both sides of the political spectrum say the move will deal a body blow to the U.S. economy, reducing output and making it even tougher to find workers in an already tight labor market, without aiding Americans.
That’s because the 800,000 immigrants who came to the U.S. as children and are protected by the policy — called Deferred Action for Childhood Arrivals, or DACA — are more educated and more productive than undocumented immigrants broadly.
And with unemployment at a low 4.4%, many businesses are struggling to find qualified workers, especially highly skilled ones. The Labor Department reported a record 6.2 million job openings in June.
“You’re starting to see severe (labor) shortages,” says Ike Brannon, visiting fellow at the conservative Cato Institute. “The last thing you want to do is dismantle a program that was putting people” into the work force.
Ninety-one percent of the
800,000 immigrants, or about
730,000, are employed, according to a survey led by the University of California-San Diego, the left-leaning Center for American Progress (CAP) and the National Immigration Law Center.
Assuming Congress doesn’t renew DACA and all the young immigrants are deported in the next few years, Moody’s Analytics estimates the hit to the nation’s gross domestic product will gradually rise as a growing number lose their temporary residency status.
That would culminate in
$105 billion in reduced economic output in 2022. That means an economy growing a modest 2% annually instead would expand by 1.8% within a year and 1.5% within five years, Moody’s Chief Economist Mark Zandi says.
Such a scenario would run counter to President Trump’s vow to boost economic growth to a healthy 3% annually, a level that hasn’t been reached since before the Great Recession of 2007 to 2009.
The economy would shrink mostly because there would be fewer workers to churn out products and services. The low supply of workers and ongoing Baby Boomer retirements are intensifying the crunch. The immigrants protected by DACA also no longer would be around to buy homes, cars and TVs, hurting consumption, which makes up about 70% of economic activity in the U.S.
They’re also more apt to start businesses. Five percent of the DACA recipients surveyed launched their own enterprises , compared with 3.1% of all Americans. Start-ups and young firms are big job generators and more likely to come up with productivity-enhancing innovations.
As a result, some analysts say there will be a bigger economic toll. Brannon says deporting the immigrants would reduce economic growth by
$280 billion over the next decade, or about a half-percentage point a year. CAP says GDP would be whittled by $460 billion.