With Donald Trump set to start his second term in the White House in January, some economics experts are looking ahead to what policies his new administration is likely to enact – and the impact they could potentially have.
The president-elect has openly pitched the idea of using the military to assist in the mass deportation of undocumented immigrants to the U.S. Since winning the election, his selections for prominent immigration-related positions – such as nominating South Dakota Gov. Kristi Noem for Secretary of Homeland Security and picking former ICE official Tom Homan as the incoming border czar – may also indicate early actions his administration could implement.
Murray State University associate professor of Economics Eran Guse said that people who come to the U.S. from countries like Mexico and Venezuela are often motivated by the opportunity for higher wages and a more politically stable environment.
“There is a huge benefit for an individual to move to the United States from a much poorer country. They can see their wages increase by a lot, and in Mexico and South America, they're making far less than what they could in the United States,” said Guse. “Even without benefit packages, they're going to see their wages triple, quadruple. ”
According to the Migration Policy Institute – a nonpartisan research group – authorities at the U.S.-Mexico border have encountered dramatically more South Americans arriving without authorization in recent years. The encounters have corresponded with new political or economic instabilities in origin countries.
Guse suggests that workers coming from other countries are typically more willing to do jobs that Americans do not want to do. He also believes that sweeping immigration changes or the mass deportation of undocumented immigrants could lead to labor shortages and increased costs across industries, particularly when it comes to areas like construction and agriculture.
“It depends on how the Trump administration does this, and I'm hoping that they take a more cautious approach and focus on what they said they were going to focus on. These jobs still need to be done,” Guse said. “And if those people are willing to do it at a lower wage, then what you're going to do is you're going to have to provide incentives for other individuals to go work those jobs. So you might have to raise that wage.”
Guse is concerned about how these immigration policy changes might impact the national and local economy, with some individuals potentially industry-hopping to fill worker shortages in others. He says, in that scenario, that prices and costs could go up if companies need to pay their workforces higher wages.
“The natural thing to do is to raise the prices and have the consumer pay additional amounts of money for those services,” Guse said. “You're going to see [companies] … decide to raise the prices so that the consumer has to pay for a part of that as well.”
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