Ending DACA Comes With Costs to Business and Government

Written by on December 19, 2016 in DACA/DAPA, Economics with 0 Comments

immigrationimpact-cost-of-ending-dacaIn June of 2012, President Obama used his authority to provide protection from deportation and work authorization to certain undocumented immigrants brought to the U.S. as children. In the ensuing four years, the Deferred Action for Childhood Arrivals (DACA) program has proven enormously successful for the 740,000 individuals who have benefited from the initiative.

Removal of the threat of deportation along with authorization to work legally in the U.S. has improved the lives of these young immigrants by not only giving them hope and increasing their motivation but by improving their educational and economic prospects. The program has yielded gains not just for the individual DACA beneficiaries, but also for the communities in which they live, their employers, and state and local governments.

President-elect Donald Trump has signaled a reversal in course regarding the DACA initiative, but hopefully his business-minded self with prevail. Aside from smashing the hopes of the individual beneficiaries, who have been able to live without fear of deportation for four years, there is an economic downside.

Two recent estimates provide a snapshot into those costs:

  1. The Center for American Progress (CAP) recently extracted from a larger study the cost that will be incurred by the removal of undocumented workers. Focusing on DACA beneficiaries who are employed, CAP estimates that the removal of unauthorized workers who are DACA recipients would lower U.S. GDP by $433 billion over 10 years.
  2. The Immigrant Legal Resource Center (ILRC) recently estimated the cost to the Medicare and Social Security systems that will be incurred by the removal of DACA workers from the economy. ILRC estimates that the combined worker and employer contribution that the Social Security system will forgo as a result of removing DACA workers will be $19.9 billion over a 10-year period. Similarly, our Medicare system will be forced to forgo $467.5 million annually or $4.6 billion over a 10-year period.

When DACA recipients lose their work authorization, employers will have to dismiss these workers and hire replacements. The process of replacing a worker comes with a cost to employers. Among those costs: having someone perform the work of the laid-off worker, recruiting and hiring a replacement worker, and training the new worker. The ILRC estimates the total cost will be $3.4 billion to U.S. employers.

These estimates do not include the lost contributions to federal income tax, nor state and local income and other taxes.

At some point, the new Administration will have to ask itself whether it really makes sense to have employers, communities, and governments incur such costs to reverse an initiative that has not only been a tremendous success for its recipients, but also popular with the general public. One can only hope that, after the transition has taken place, the business sense that Mr. Trump is reputed to have will translate to common sense with regards to the DACA initiative.

Photo by Images Money.

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