Trump’s deportations could cost California ‘hundreds of billions of dollars’

Mass deportations promised by President-elect Donald Trump could have a seismic economic effect in California — potentially inflicting billions of dollars in direct damages to a wide range of industries, including small business, agriculture, construction and child care, advocates and academics said.

The impact could also spread outward to other sectors, including growth drivers like tech.

The Golden State relies heavily on the labor of immigrants, whether they’re naturalized U.S. citizens, have temporary visas or are undocumented. More than 10 million, or 27%, of California’s population is foreign-born, according to the most recent U.S. Census data. Roughly a fifth of those are thought to be undocumented; as of 2022, estimates ranged from 1.8 million undocumented immigrants, according to the Pew Research Center, to 2.4 million, according to the left-leaning Institute on Taxation and Economic Policy. 

If undocumented immigrants “magically disappear, you’re going to erase 10% of California production,” said Giovanni Peri, professor of international economics at UC Davis. “We’re talking about hundreds of billions of dollars.”

The loss of workers only speaks to part of the financial impact of deportations. Undocumented immigrants also power the state’s economy as consumers and taxpayers. 

There may also be indirect impacts from the deportations. The loss of workers in construction, agriculture (including the state’s world-famous wine industry), hospitality and the care economy would have ripple effects on the rest of the state, according to Manuel Pastor, professor of sociology and American studies and ethnicity at the University of Southern California. 

“Behind every software engineer is an army of nannies, food-service workers and gardeners,” Pastor said. 

Pastor thinks businesses are likely to protest significant cuts to their workforces given how tight the labor market is. “They’ve come for the tax cut, they didn’t stay for stripping away their labor force,” he said, referring to business owners who supported Trump.

At his campaign rallies, Trump has said immigrants are “attacking” Black and Latino Americans’ jobs. Federal data undermines that claim, instead showing foreign-born, noncitizen Black and Hispanic workers predominantly work different types of jobs than their native-born counterparts. 

It could be costly to replace those who are deported. In the construction industry, for example, the median weekly earnings of full-time, U.S.-born workers as of 2020 were $1,031 vs. $786 for foreign-born workers, according to an analysis by the Bureau of Labor Statistics. In California, the median hourly wage as of 2021 was $30 an hour for U.S.-born workers vs. $24 an hour for immigrant workers vs. $16 an hour for undocumented workers, according to the California Immigrant Data Portal, a project by the Equity Research Institute at USC, which is directed by Pastor.

Even if Trump does not fully carry out his plan — or takes a long time to do so — the mere threat of deportations will have an economic impact, said Maria Lemus, executive director of Vision y Compromiso, a national community-based organization started in San Francisco that supports promotores, people who serve as liaisons between immigrant communities and health and social service providers.

“There will probably be a lot of people not going to work for fear of getting picked up,” Lemus said. “Employers will suffer the repercussions of this also.”

If a segment of the population goes into hiding, they will earn less and spend less, she said. Their kids — who are likely U.S. citizens — may not go to school, either, Lemus added. 

And undocumented immigrants contribute not just their labor, they also pay significantly into government coffers. In 2022, they paid $8.5 billion in local and state taxes in California, according to a national study by the Institute on Taxation and Economic Policy. Mass deportations would lead to lost sales, property and income taxes paid by those immigrants — including into programs they have never drawn from because they can’t, such as unemployment insurance benefits, or, until recently, Medi-Cal. 

Then there are the immigrants who have legal status and may be in the state for different reasons, such as for temporary work. During the campaign this time around, Trump and Vice President-elect JD Vance mentioned that they would also target the Temporary Protected Status program, which allows immigrants to stay in this country and work legally if their countries are determined to be unsafe.

The Trump administration may also target different visas that allow people born elsewhere to come to California to work in the fields (the H-2A visa), or in the tech industry (the H-1B visa). During his first term, Trump loosened rules for the issuing of visas for temporary workers such as the ones who worked for businesses he owned, and tightened rules for H-1B visas. 

The U.S. approved more than 46,000 H-1B visas for California employers in September, according to the most recent U.S. Citizenship and Immigration Services data. About 30% were for Google, Meta and Apple.

Chris Iglesias, CEO of Unity Council, a nonprofit affordable-housing developer that also provides social services to thousands of residents of Oakland’s Fruitvale neighborhood, said people there are alarmed but not panicked. 

Iglesias said there is “a lot of Trump-proofing” going on at organizations such as his, which serve low-income and marginalized communities that include undocumented immigrants. 

Though President Joe Biden’s administration has also deported immigrants, Trump’s anti-immigrant rhetoric is different. He has referred to immigrants as criminals, “rough people” and even animals. The incoming president has said he will use the U.S. military to carry out deportations.

“He built his whole campaign off vilifying Latinos and immigrants,” Iglesias said. “People feel ready. They know this is coming.” Iglesias said the previous Trump term, plus the pandemic, strengthened bonds in the community, which has found “different ways to feed and house” its members. 

He is also taking comfort in the fact that Oakland is a sanctuary city, and in the promises state officials have made, including Gov. Gavin Newsom and Attorney General Rob Bonta, to fight the Trump administration. Newsom has called a special session to ask the state Legislature to fund lawsuits against the incoming administration. Bonta told CalMatters in a recent interview that his office is preparing legal challenges to “a full frontal assault on our immigrant communities.” 

In San Francisco, Lemus’ organization has joined with other community groups to prepare for the deportations.

They are working on getting out information about what people can do to get ready and to inform them of their legal rights. “They don’t have to open their doors,” she said. “They can refuse to give out their information.”

She also said the fear is bound to be felt by others who could be mistaken for being undocumented: “I’m a dark Latina. What if I’m walking somewhere and don’t have my (ID)? What would happen to me?”

What business and industry are saying — or not saying

Business and labor representatives from some of the industries most likely to be affected refused interview requests from CalMatters, or had no comment. They include the California Restaurant Association, Napa Valley Vintners, the Wine Institute and the State Building and Construction Trades Council of California.

The California Chamber of Commerce emailed a statement from its president, Jennifer Barrera: “It is no secret that undocumented workers greatly contribute to California’s economy given our geographical proximity to the border, which is why CalChamber has been a long-time supporter of a national comprehensive effort that provides a pathway to citizenship or legal status for these individuals while at the same time addressing border security.”

A.J. Rossitto, advocacy director for the California Hotel and Lodging Association, said the group “does not anticipate a significant impact to hotel operations in California at this time.” 

That contradicts the view of Unite Here Local 11, a union that represents 32,000 hospitality workers in Southern California and Arizona who work in hotels, restaurants, universities, convention centers and airports.

“It’s really hard to hear that there would be no impact,” said Ada Briceño, co-president of the union. “It seems there’s a shortsightedness about not understanding who (the workers) are.”

She said the union is trying to figure out how to support those who would feel the impact of deportations, from its own members to their children and families. That includes educating the workers about what to do in case of workplace raids, or “making sure they’re able to assign legal guardians to their children.”

Many California small businesses could also be affected by deportations.

Iglesias, of Unity Council in Oakland, said “a lot of our merchants and business owners in Fruitvale, whether they’re immigrants with or without status, are worried about the impact on their businesses.”

Carolina Martinez, CEO of small business advocacy group CAMEO Network, said “entrepreneurs who are undocumented pay taxes and support the economy.” 

Latin American immigrants start businesses at double the rate of other Americans, she said, referring to a recent UCLA Luskin Public Policy analysis of U.S. Census data, which also found that immigrants started 36% of U.S. businesses last year.

Besides the deportation worries, Martinez is concerned about a possible drop in government funding that helps small businesses get up and running: “Business leaders and advocates need to speak up and support ongoing investments. Small businesses are a bipartisan issue.”