Let’s talk about America’s illegal immigration issues.

I promise we’ll get back to “just investing” eventually. But right now, there’s too much politically driven investing that needs to be addressed.

We’re about to experience an enormous shift in governance, which will bring about an enormous shift in the economy.

I’d be remiss if I didn’t address it.

There are so many topics that could be and should be covered, with immigration being one of them. That’s especially true with articles out there like this one from CNBC: “What Trump’s mass deportation plan would mean for immigrant workers and the economy.”

Published on Sunday and updated Monday after Trump officially appointed no-nonsense Tom Homan – former acting director of U.S. Immigration and Customs Enforcement – as the new “border czar” – it was filled with near-apocalyptic allegations.

For instance, the American Immigration Council (“AIC”) “estimates that the U.S. GDP would shrink by $1.1 trillion to $1.7 trillion” without “undocumented workers” among us. In addition:

Mass deportations would exacerbate ongoing U.S. labor shortages, especially in industries that rely heavily on undocumented immigrant workers,” [AIC Research Director Nan] Wu said, citing AIC’s research that shows the construction industry would lose one in eight workers, citing AIC’s research that 14% of construction workers in the United States are undocumented.

“The removal of so many workers within a short period would push up construction costs and lead to delays in building new homes, making housing even less affordable in many parts of the country,” Wu said.

I have more than a few comments and even solutions to those concerns. But the bottom line is this…

The economic benefits of enforcing logical, pro-American immigration policies are something investors really need to know about right now.

‘A Net Fiscal Drain’

How does an unsecure border cost us anything? Let me count a few ways.

  • It expands gangs and gang violence in our country.

  • It ushers in waves of illegal and highly dangerous drugs.

  • It redirects money out of the U.S. system into other economies since many illegals send large chunks of their paychecks back home to family members.

And that’s the short list because it also sucks money out of our education system, our criminal justice system, and our welfare system.

Back in January, Steven A. Camarota, director of research at the Center for Immigration Studies, spoke before the House Judiciary Committee. His conclusion was that:

Illegal immigrants are a net fiscal drain, meaning they receive more in government services than they pay in taxes… a large share qualify for welfare programs, often receiving benefits on behalf of their U.S.-born children.

Now consider how:

We preliminarily estimate that the illegal immigrant population grew to 12.8 million by October of 2023, up 2.6 million since January 2021, when [Biden] took office. This is the net increase in the illegal population based on monthly Census Bureau data, not the number of new arrivals.

Also:

Based on their use rate of major welfare programs, we estimate that illegal immigrants receive $42 billion in benefits, or about 4 percent of the total cost of the cash, Medicaid, food and housing programs examined in our study.

This does not, apparently, include educational services. In which case, it’s important to know how the U.S. Census Bureau found that public school spending per student in 2023 “averaged $15,633, up 8.9% in [fiscal year] 2022.”

So take that $42 billion in benefits being given to illegal immigrants and add on another $13.288 billion per year… just for the 850,000 illegal immigrants under 18 that Pew Research Center believes reside in the U.S.

That’s to say nothing for the 4.4 million children born in the country to illegal immigrants. It adds up either way.

Suffice it to say, we’re spending a lot of money we don’t have to and outright shouldn’t be spending.

Americans Actually Do Want to Work

We’re also taking away American jobs unnecessarily.

Despite CNBC’s claims, there are U.S. citizens who are willing and able to take the kind of jobs often given to illegal immigrants. That’s certainly what Forest, Mississippi, found out in 2019 after ICE raided multiple meat businesses.

Over 100 local residents attended the subsequent job fair to fill those lost positions. According to The Washington Post – a publication that tends to go easy on illegal immigrants – these applicants:

… challenge the narratives that typically drive the immigration debate in the United States, pitting undocumented workers against Americans seeking opportunity. The workers’ efforts to explore jobs at the meatpacking plants go against the notion that Americans have no interest in the gritty jobs often held by undocumented workers…

So to the construction and homebuilding companies that would lose workers, here’s a suggestion. Consider offering paid internships for the rising number of men skipping college these days.

According to Pew Research Center last December, “about 1 million fewer young men are in college” than in 2022. And I’m sure there are solutions as well for the agriculture industry, “which would also see a loss of one in eight workers,” according to the aforementioned Wu.

Will it ultimately mean higher prices for certain services and products? Probably.

Would it ultimately put more money into the U.S. economy through added American jobs for Americans? Definitely.

Plus, who knows… Maybe we could even use that annual $55 billion in savings to help make a dent in our $35.94 trillion national debt.

Maybe.

What’s much more probable, however, is that we’d bring inflation down for everyday American citizens. Because mark my words: Illegal immigration is affecting inflation, no matter what CNBC and its sources might want you to ignore.

The Connection Between the Rise in Illegal Immigration and Inflation

Consider further testimony by the Center for Immigration Studies’ Camarota. He spoke before Congress again in September, this time to make the case that:

Adding millions of people to the country through immigration drives up the cost of housing and reduces affordability relative to wages in areas of heavy settlement.

It’s the basic law of supply and demand. The more demand, the less supply. The less supply, the more costly what is available becomes.

Adding 12.8 million people to even a country as big as the U.S. will have an impact – especially when they’re concentrated in certain areas, as they have been.

Removing them, therefore, could have an equally powerful but positive effect on the cost of living.

You might not know this, but the shelter category makes up a whopping 36% of the consumer price index (“CPI”). So it’s a large part of why the Federal Reserve started hiking interest rates back in 2022.

It wanted to rein in the out-of-control housing market in order to lower out-of-control price hikes elsewhere.

Yet while the housing market is, indeed, restricted today, shutting out hundreds of thousands of would-be buyers… housing prices have only climbed higher. And those households still renting are shelling out far too much of their income as well.

NPR told an all-too-familiar story in January of Genuine Campbell, a single mother of four in an unsafe area of Philadelphia, Pennsylvania. Over the past two years, her contract went from $1,300 a month for a two-bedroom apartment to $1,600.

This is all as “her hours as a hotel valet were getting cut,” leaving her with a decision: “pay the bills and then give half the rent” or “try to do the whole rent and then be back on bills.”

The NPR article adds:

… a newly released report from the Joint Center for Housing Studies of Harvard University… finds that in 2022, as rents spiked during the Covid-19 pandemic, a record half of U.S. renters paid more than 30% of their income for rent and utilities. Nearly half of those people were severely cost-burdened, paying more than 50% of their income.

But was it really just the Covid-19 pandemic that did that damage? Or was there another factor exacerbating it?

Being a real estate developer previously and now a Wall Street writer, I have to say that the current illegal immigration numbers add up against American affordability.

For now.

I expect that to start changing in January. You should, too.

Regards,

Brad Thomas
Editor, Wide Moat Daily

MAILBAG

Do you agree that illegal immigration is affecting the economy in big ways? What do you believe will happen with immigration during Trump’s second term? Write us at [email protected].