The Trump presidency could have a deleterious effect on the economics of the state of California. The effects would primarily be of two types: employment and demographic.
In 2022, 2.6 million immigrants came to the United States. Of that total, approximately half came to work. And about half of the total came from Mexico and Latin America. From 2019 to 2022, the undocumented immigrant population from nearly every region of the world grew.
There are approximately 37 million immigrants in the U.S., about 10% of the population. Most of the immigrants are naturalized citizens or lawful permanent residents. The balance are undocumented. The U.S. has long been home to more immigrants than any other country.
There are an estimated 10.5 million undocumented workers now in the U.S., almost 2 million of them in California. They are an intricate part of the construction, meat-packing and agriculture sectors.
The percent of immigrant population in California has increased from 21.7% to 27.0% from 1990 to 2012 and is now stable.
Equally important, undocumented workers pay taxes. An estimated 50% of undocumented workers file tax returns and pay $8.5 billion in state and local taxes, according to the Institute on Taxation and Economic Policy.
Envision a situation where half of the California construction, meat-packing and agriculture workers left their jobs, as well as the undocumented workers in the other large states: Texas (1.6 million) and New York (1.2 million).
The prices of food, in particular, would increase substantially.
Deporting undocumented workers would be a boon to northern Mexico since they have continually increased their production and export of agricultural products.
Equally obnoxious would be the levying of tariffs on selected foreign goods. It is rather simple math. When you put a tax on foreign goods that are consumed here, the prices of those goods increase accordingly.
Therefore, the stated Trump program would result in a major increase in the price of food as well as goods like clothing, electronics and automobiles.
It is notable that Spain is giving work permits to about 900,000 undocumented migrants over the next three years to help address its growing need for workers. According to Spain’s migration minister, Spain needs about 250,000 foreign workers a year given its “demographic challenges,” which include one of the lowest birth rates in Europe.
The second impact is of equal importance: fertility.
For those who have read my new book The Next Half Century, you know that for an economy to grow and prosper, it is necessary to have two children for every mom and dad – i.e., a fertility rate of 2.0.
If that ratio is not achieved, economies begin to falter. Certainly, the press has been increasingly vocal about China’s population woes. China has consistently stated that its population is 1.4 billion. We now know that it is closer to 1.1 billion as a result of the one-child policy.
Over the past 25 years, immigrant moms bolstered births in 48 states. The reason is the average age of Hispanic women is now 28.7 years compared to 43.0 years for non-Hispanic women.
However, the Hispanic fertility rate has been declining. A report by the Pew Research Center noted that the birth rate for Mexican-born women in U.S declined by 26% in the 2005-2014 period.
The fertility rate of recent female immigrants is 40% higher if they reside in states like California which extend health care to all pregnant women.
In any event, reducing the number of women of child-bearing age would result in reducing the population of California, thereby reducing the expansion of the California economy.
Economist Alan Nevin is the principal at Nevin Real Estate Advisors in San Diego.
(Except for the headline, this story has not been edited by PostX News and is published from a syndicated feed.)
