home Commentary, North America, Politics Donald Trump’s xenophobia could destroy the economy

Donald Trump’s xenophobia could destroy the economy

While Paul Ryan may have curbed fears of a deportation force for now, president-elect Donald Trump’s campaign promises of mass deportation should still be taken seriously considering their appeal among right-wing voters. A similar approach should be used regarding his negative view of Syrian refugees and his fearmongering of a “Trojan horse” made up of Muslims entering the United States. Rightwing populism in both Europe and the US is in part built upon a fear of outsiders, refugees and immigrants who share different beliefs and cultural norms than our own. While Trump’s flirtations with jingoism may have propelled him into the White House, they may conflict with his plan to create a “dynamic booming economy” due to the underappreciated economic role immigrants and refugees play in our economy.

Along with crime, terrorism, rape, and drugs, Trump claims that outsiders are a strain on the US due to their supposed negative effect on the job market. This totally inaccurate and baseless belief may very well be what prevents the Trump economy from succeeding. More than a handful of studies on this topic have found that economies which accept immigrants and refugees experience a net gain due to the uplift in the labor force. While the cost of bringing in outsiders and the initial fiscal strain of aid can seem economically demanding, it’s necessary to look at the medium- and long-term effects to get the full picture.

Many in the west believe that poor, unskilled immigrants and refugees will make jobs hard to come by and force more individuals and families to become reliant on government aid. While it’s easy to connect the dots of this argument, the actual situation within the economy tells quite a different story. Michael Clemens, senior fellow at the Center of Global Development, told the Washington Post:

There is a myth in the U.S. that desirable immigrants are the ones with PhDs, and people with high school degrees aren’t desirable. And there’s no economic substance behind that myth…there’s not any credible research that I know of that in the medium and long term that refugees are anything but a hugely profitable investment.

While immigrants and refugees entering the US have varying skill sets, the majority of them are either low-skilled or will be taking jobs that they’re overqualified for, which is what the IMF calls “skill-downgrading”. To say “we’re losing our jobs” to immigrants, as Trump has said on more than one occasion, drastically oversimplifies the reality of labor markets. While low-skill refugees may be forcing low-skill natives out of their line of work, those natives aren’t necessarily becoming unemployed. Alex Nowrasteh of the Cato Institute writes:

…an increase in the number of non-English speaking immigrants who specialize in manual labor jobs pushes Americans who speak English but have few other skills into higher paid jobs that require communication.  For instance, low-skilled English-speaking Americans used to be dishwashers and now they are waiters, but this is only possible because of lower skilled immigrants.

Foreigners who replace low-skilled native workers may lead those workers to be promoted within their own workplaces, which leads to a net increase in incomes, rather than simply being fired. This is supported by a multinational study done by Giovanni Peri and Mette Foged, which found that as a result of large-scale refugee presence, “unskilled native workers experienced a significant transition towards more complex jobs…native workers’ hourly wages are affected positively by the refugee-country immigrants.” This fact is further confirmed by an IMF study that examined the impact of Syrian refugees on Turkey, which has taken in more refugees from Syria than any other nation on the planet. The study found that “higher-paid formal jobs filled by native workers have increased and so have average wages for natives, suggesting that there has been an important compositional change in employment.”

Similar lessons can be learned by observing economic impacts on other low income countries who have taken in a proportion of refugees that far surpasses that of the US or Europe. Jordan has taken in over 630,000 Syrian refugees, now hosting one refugee for every three native Jordanians. A Georgetown study finds that the influx of refugees “has had no discernable impact on the Jordanian labor market”, and that the Jordanian unemployment rate has failed to drop as a result of the immigration. This principle exists for all countries neighboring Syria who have taken in millions of Syrians “despite the number of refugees being substantially large relative to the host countries’ populations.”

Numerous examples from around the world demonstrate that at influx of foreigners are the antithesis of the economic burden they’re made out to be by people like Trump. There’s no reason a framework such as those implemented in Turkey, Jordan and elsewhere couldn’t be replicated in the United States. Such is already emerging in Cleveland, which took in approximately 600 refugees in 2012. According to a study by Chmura Economics and Analytics, the city has spent $4.8 million on refugee services that year and will receive 650 jobs and $48 million in economic activity in return. That activity is largely stimulated by refugee household spending and refugee owned businesses. You’d think someone who “built an unbelievable business” would know a good investment when he sees it.

Naturally, pulling people who spend money and run businesses out of an economy will result in a loss of jobs and a slowdown in economic activity. The free-market oriented American Action Forum, which studied the implications of deporting all 11.2 million illegal immigrants in the US, found that it would reduce real GDP by over 5%, shrink the labor force by over 6%, and cost over $400 billion dollars. These numbers, compared to the numerous studies that support the idea that refugees help economies, paint a very different picture than the one being sold by Trump and the right-wing. If Trump really wanted to create an economic revival that will “massively increase jobs, wages, incomes and opportunities”, he wouldn’t be promoting a backwards policy that would seriously harm the finances of those same people he claims to want to help.

Photo: Omar Chatriwala/Creative Commons

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Patrick Carr

Patrick Carr is a freelance writer and researcher who specializes in economics, current events, international relations, and environment issues. He has worked as a staff member on a number of independent publications, and his work has appeared on DailyKos and Counterpunch.