WEBVTT - Here's Why Immigration Policy Matters So Much For The US Economy

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio news.

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<v Speaker 2>I'm Stephen Carol and this is Here is Why, where

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<v Speaker 2>we take one news story and explain it in just

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<v Speaker 2>a few minutes with our experts here at Bloomberg.

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<v Speaker 1>His claims for the mass deportations to me seem almost

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<v Speaker 1>logistically impossible, so we'll see what he actually accomplishes. Obviously,

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<v Speaker 1>getting rid of a lot of people will create a

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<v Speaker 1>lot more chaos than economic chaos.

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<v Speaker 2>If the breaks go on.

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<v Speaker 3>In terms of inward immigration, the break even employment growth

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<v Speaker 3>that keeps unemployment unchanged is.

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<v Speaker 2>Only one hundred thousand. So add that to your listen

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<v Speaker 2>of uncertainties.

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<v Speaker 3>And I think there's real concerns about being too strict

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<v Speaker 3>on immigration policy and possibly seeing net out migration, which

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<v Speaker 3>is something we haven't seen in my lifetime.

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<v Speaker 2>Immigrants have long been part of the economic success story

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<v Speaker 2>of the United States. Many economists and business leaders credit

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<v Speaker 2>immigration for filling vacancies across the economy, but Donald Trump

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<v Speaker 2>and many of his allies accuse immigrants of lowering wages

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<v Speaker 2>and taking jobs from native born Americans. He's begged to

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<v Speaker 2>crack down on illegal immigration and carry out the biggest

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<v Speaker 2>deportation plan in US history. What would that mean for growth, inflation,

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<v Speaker 2>and employment. Here's why immigration policy matters so much for

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<v Speaker 2>the US economy. Our senior editor, Derek Wallbank joins me

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<v Speaker 2>now for more. Derek, first of all, what does the

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<v Speaker 2>data tell us about the economic effect that immigration has

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<v Speaker 2>had on the US economy.

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<v Speaker 3>Immigration has a profound effect on the United States economy.

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<v Speaker 3>Just to put into context, is about one in five

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<v Speaker 3>US workers as an immigrant. And immigrants lead some of

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<v Speaker 3>the biggest companies in the United States, Right if you

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<v Speaker 3>think of Microsoft and such in Adela. If you think

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<v Speaker 3>of Nvidia and Jensen Huang, I mean the most famous

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<v Speaker 3>one obviously, right Elon musk Esla and SpaceX and many

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<v Speaker 3>other things. So immigrants have a very very profound effect

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<v Speaker 3>on the economy. Generally speaking, economists cy immigration as economically

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<v Speaker 3>positive in the US. The FED has cited immigration as

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<v Speaker 3>part of the reason the US economy has beat expectations.

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<v Speaker 3>The Congressional Budget officees immigration is increasing federal revenue more

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<v Speaker 3>than it increased costs, so it's a net benefit there.

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<v Speaker 3>And if you're looking sort of on a fully macro level.

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<v Speaker 3>The late Singaporean leader Le Kwan Yu used to say

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<v Speaker 3>that immigration is one of the United States's secret weapons economically,

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<v Speaker 3>because it could attract the best from all over the

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<v Speaker 3>world and instantly make them Americans and have them contribute

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<v Speaker 3>to the American economy.

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<v Speaker 2>Of course, there's distinction here too, between legal immigration and

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<v Speaker 2>some of those that you mentioned there who made their

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<v Speaker 2>path to the US via llegal means an illegal immigration,

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<v Speaker 2>which was talked about in a very different way during

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<v Speaker 2>the election campaign. What do we know about the effects

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<v Speaker 2>illegal immigration has.

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<v Speaker 3>It's a subject of let's say some considerable dispute. Let

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<v Speaker 3>me back up a quick second and put illegal immigration

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<v Speaker 3>into two camps. The first one is those people who

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<v Speaker 3>entered illegally, you know, come through the southern border. Another way, though,

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<v Speaker 3>is to come in on a fully legal and operational

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<v Speaker 3>visa and then overstay the visa, simply just not go home.

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<v Speaker 3>Both of those are present when we're talking there. It's

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<v Speaker 3>a lot easier to stop the first than the second.

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<v Speaker 3>It's hard to know about how many people were talking here.

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<v Speaker 3>There was an estimate pegging at about eleven million individuals

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<v Speaker 3>as of twenty twenty two. Of those, though, about eight

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<v Speaker 3>million are in the labor force and have a job

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<v Speaker 3>of some kind. Now, that number may actually be low

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<v Speaker 3>because it may have increased in the recent post COVID

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<v Speaker 3>spikes in terms of encounters at the US southern border.

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<v Speaker 3>You know, there's been a documented increase of people trying

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<v Speaker 3>to come in over the last couple of years, So

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<v Speaker 3>that number actually be low.

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<v Speaker 2>If Donald Trump were to carry out his promise of

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<v Speaker 2>mass deportation, what would that mean for growth or for

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<v Speaker 2>inflation in the US?

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<v Speaker 3>Well, look, I think a lot of that is down

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<v Speaker 3>to how much there might actually be in terms of

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<v Speaker 3>an action. If you were to try and take this

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<v Speaker 3>at the most maximal level, and you said I'm going

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<v Speaker 3>to try and deport all eleven million or more people

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<v Speaker 3>in one swift action, you know, just do those numbers

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<v Speaker 3>in reverse. Imagine eight million or more people out of

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<v Speaker 3>the labor force immediately, Jobs lost. Even if the argument

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<v Speaker 3>is that removing illegal immigration is going to allow more

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<v Speaker 3>Americans to take jobs that other people are taking. Even

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<v Speaker 3>if that's the argument, there's simply not quite a way

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<v Speaker 3>to replace eight million people or more in the labor force.

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<v Speaker 3>So that's one part. Even though a smaller retraction in

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<v Speaker 3>the job force would have meaningful effects. That having been said, though,

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<v Speaker 3>we are hearing from a fair number of Trump supporting

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<v Speaker 3>Republicans who have suggested that anything would go in a

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<v Speaker 3>certain amount of phases, and that you would start off

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<v Speaker 3>with most obvious candidates people who have had criminal offenses,

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<v Speaker 3>so more limited action like that wouldn't have such a

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<v Speaker 3>mass effect, and indeed proponents would argue that deporting those

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<v Speaker 3>individuals would have a benefit both economically and also societally.

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<v Speaker 2>What do businesses want on this issue.

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<v Speaker 3>Well, this is an interesting one. If you take a

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<v Speaker 3>chamber of commerce view. Chambers of commerce representing the largest

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<v Speaker 3>businesses across the US, tend to want to have a

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<v Speaker 3>full pool of immigrant labor from which to pick from. Indeed,

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<v Speaker 3>many of them would like a lot more easing to

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<v Speaker 3>be able to have more individuals. This is actually, though,

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<v Speaker 3>playing out as a debate within Republican circles. So Elon

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<v Speaker 3>Musk is one who thinks that there are great benefit

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<v Speaker 3>to having H one B visas available in good abundant numbers.

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<v Speaker 3>These are the ones that are used by highly educated,

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<v Speaker 3>often tech workers, many from Indias and from China. At

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<v Speaker 3>the same time, you have people who have been with

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<v Speaker 3>Donald Trump for a very long time. Steve Bannon is

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<v Speaker 3>one immigration hawks who think that this is a program

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<v Speaker 3>that needs to be pulled down and that Musk's views

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<v Speaker 3>on this are indeed dangerous. So there is a big

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<v Speaker 3>split within Trump's own orbit. Trump right now is leaning

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<v Speaker 3>a little bit toward Musk on some of the skilled

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<v Speaker 3>immigration stuff, even as he's talking about big deportation plans.

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<v Speaker 3>On skilled immigration, he has talked about the need to

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<v Speaker 3>attract the best and brightest and bemoaned the idea that

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<v Speaker 3>there are a large number of international students to American

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<v Speaker 3>universities who will get an American education and then not

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<v Speaker 3>be able to stay. Trump would like to find ways

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<v Speaker 3>to have them stay.

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<v Speaker 2>Immigration is a big postical issue in many parts of

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<v Speaker 2>the world. Is the same sort of debate playing out

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<v Speaker 2>in other countries?

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<v Speaker 3>You know, that's a great question, it is, and indeed

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<v Speaker 3>we see this playing out in pretty much every advanced

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<v Speaker 3>economy that is a reception zone for immigration at scale,

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<v Speaker 3>famously the United Kingdom and Brexit. What more needs to

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<v Speaker 3>be said, immigration was at the absolute heart of that.

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<v Speaker 3>Even here in Singapore, though I mentioned, it's become a

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<v Speaker 3>flashpoint politically, very well educated city state that had received

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<v Speaker 3>a lot of immigrants coming in who had been working

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<v Speaker 3>in Hong Kong when that city was having difficulties after COVID.

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<v Speaker 3>But Singapore is in a position where it doesn't feel

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<v Speaker 3>like it could take in all of those Even if

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<v Speaker 3>you said the five hundred thousand or the million best

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<v Speaker 3>people from Hong Kong economically would come to Singapore, Singapore

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<v Speaker 3>is a city state of six million people, doesn't have

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<v Speaker 3>enough space to house them, doesn't have enough schools to

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<v Speaker 3>educate them. The transportation system wouldn't be able to handle

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<v Speaker 3>the load all of these sorts of things. So I

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<v Speaker 3>do think that anywhere that you go, you do find

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<v Speaker 3>these questions about immigration that are percolating. And look, it

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<v Speaker 3>is an issue in elections all over the world. It's

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<v Speaker 3>going to be an issue in the upcoming Singaporean election.

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<v Speaker 3>It's going to be an issue when Australian voters go

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<v Speaker 3>to the polls. It'll be an issue in Canada when

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<v Speaker 3>those voters go to the polls. So the United States

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<v Speaker 3>is very much not alone. The issues you're seeing in

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<v Speaker 3>the US around immigration are at play in every single

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<v Speaker 3>major economy around the world.

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<v Speaker 2>Okay, dark Well, bind Karsenior editor, thank you very much

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<v Speaker 2>for more explanations like this from our team of twenty

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<v Speaker 2>nine hundred journalists and analysts around the world search for

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<v Speaker 2>quick take on the Bloomberg website or Bloomberg Business App.

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<v Speaker 2>I'm Stephen Carol. This is here's why. I'll be back

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<v Speaker 2>next week with more. Thanks for listening.