Since taking office, President Trump has been adamant on enforcing immigration laws. His claims backing the controversial methods of expelling immigrants include improving the wages and cost of living for American-born citizens. Nevertheless, the American economy relies significantly on the inclusion and incentivization of immigrant workers. California, specifically, boasts a large immigrant portion of its labor force mostly in the agriculture, construction, and hospitality sectors. For instance, 63% of California's agriculture labor force is immigrants with nearly a quarter of them being undocumented.
While a decrease in the amount of workers would increase the wages for American-born workers, overall productivity of the economy would decrease and GDP would likely fall. It is estimated that California could lose a potential $278 billion in GDP if the current pace of deportations continues. In this issue, we see the intersection of political policy and a nation's economic system. In the long run, labor shortages would likely return to a sustainable level but overall output may increase at a slower rate. Another alarming facet of this issue is the skills in the labor force. If a political administration decides to enforce stricter immigration laws, and immigrants make up a majority of these "blue-collar" industries, then there should be some incentivization in the short turn for domestic workers to pursue these jobs. Wages and salaries will entice this labor force; however, these will remain sticky in the short-term. Government policy makers should consider incentivization programs such as stimulus checks, debt forgiveness, or other benefits to solve what could potentially be a dramatic labor shortage.
https://www.cnbc.com/2025/09/01/trump-california-newsom-immigrant-workers.html
3 comments:
This is a good piece showing how stricter immigration policies may raise wages in the short run but also runs the risk of hurting future productivity, GDP, and key industries like agriculture and maybe even interest rates. This just displays the need for balanced policymaking and smart labor incentives. Seems like an interesting article.
I found this very interesting because on one hand you have American born workers getting paid better and getting them jobs but on the other the U.S. and specifically California would struggle significantly without these immigration workers. Will love to see what president trump decides to do about this in the rest of his term.
I was very intrigued by this post as California’s economy faces mounting pressure under Trump’s immigration policies. The sustained pace of deportations could lead to severe labor shortages and an estimated $278 billion hit to the state’s GDP is just baffling to me.
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