Deportation Economy Backfiring on US Workers, Economist Warns

The current wave of deportations is backfiring on American workers, leading to job losses rather than job creation for native-born citizens, according to Diane Swonk, chief economist at KPMG. The economy lost 23,000 jobs in the most recent month, while the unemployment rate decreased due to a shrinking workforce, a phenomenon Swonk attributes to the "emerging deportation economy." Historically, sectors like healthcare have been crucial in supporting a weak labor market, but recent job gains in healthcare have slowed significantly. In July, the healthcare sector added only 22,000 jobs, falling short of its average monthly gain of 36,000 over the preceding year. Similarly, social assistance services, which include daycare and elder care, have also experienced a slowdown in job growth. These sectors are heavily reliant on immigrant labor. Data from PHI indicates that in 2022, immigrants constituted 28% of direct care workers in the U.S., an increase from 21% in 2011. The direct care industry is projected to need nearly one million new employees over the next decade to accommodate the growing aging population. Swonk highlighted that many of the approximately 200,000 individuals whose temporary protective status was terminated at the end of July were employed in these critical roles. Furthermore, an additional 400,000 Venezuelan workers, primarily concentrated in nursing homes, hospitality, and construction, are slated to lose their work authorization in October. This impending labor shock coincides with state-level reductions in Medicaid funding, which is the primary financial backer for long-term care services. Swonk expressed concern that employers will struggle to replace departing immigrant workers at wages that are economically feasible, potentially leading to a rationing of care services or an increased burden of unpaid care responsibilities falling on family members. The economic impact of unpaid care is substantial, with American families already providing an estimated $1 trillion in unpaid care annually. This unpaid care is provided by 59 million Americans who dedicate an average of 27 hours per week to it, a contribution equivalent to approximately 24 million full-time workers. The current economic climate, characterized by a shrinking labor pool in essential service industries due to deportation policies, exacerbates the challenge of meeting the growing demand for care services, particularly in light of reduced public funding.