For our lower-bound estimate, to find how many employed undocumented immigrants could be replaced by native and lawful foreign-born workers, we first have to estimate how many native and lawful foreign-born workers are actually available to fill the undocumented immigrant workers’ jobs. For this, we examine unemployment among native and lawful foreign-born workers in each industry. These are the workers who are jobless and actively looking for work. We assume that these unemployed workers would fill the jobs left by the removed undocumented immigrants until the industry’s unemployment rate falls to the long-run natural unemployment rate. The Congressional Budget Office determined that in 2012, the long-run natural unemployment rate was 5.1 percent.
[7] Generally hovering around 5 percent, the long-run natural unemployment rate is the rate at which the labor force is considered to be at full employment, as no one is unemployed due to fluctuating economic conditions and those who remain unemployed tend to be transitioning between jobs. With the natural rate of unemployment reached in each industry, we designate the remaining unfilled jobs to be the lower-bound labor decline.
We turn to the unpublished CPS labor force figures to estimate private sector unemployment rates and levels among native and lawful foreign-born workers in each industry. Specifically, we reduce each industry’s labor force by size of the undocumented immigrant labor force. Then with the remaining native and lawful foreign-born workers, we calculate 2012 unemployment and unemployment above the long-run natural rate of unemployment. For each industry, the unemployment rate above the long-run natural rate is simply the percentage point difference between the unemployment rate and the long-run natural unemployment rate (5.1 percent). We then multiply that percentage point difference by the native and lawful foreign-born labor force to estimate the number of unemployed workers in each industry above the natural rate. It is important to note that we in effect assume that unemployment rates for undocumented workers are the same as native and lawful foreign-born workers.
Table 2 displays by industry both overall 2012 unemployment among native and lawful foreign-born workers and unemployment above the long-run natural rate of 5.1 percent. The latter represents the number of native and lawful foreign-born workers who are available to replace the employed undocumented immigrants.
Table 2: Native and Lawful Foreign-Born Worker Unemployment by Industry in 2012
Industry
Unemployment
Unemployment Above Natural
Rate Workers Rate
Workers
Agriculture, Forestry, Fishing, and Hunting
8.1%
157,732
3.0%
58,633
Mining
5.8%
57,171
0.7%
7,208
Construction
11.7%
991,262
6.6%
557,811
Manufacturing
7.1%
1,051,314
2.0%
300,819
Wholesale/Retail Trade
7.8%
1,593,154
2.7%
546,958
Transportation and Utilities
6.5%
396,470
1.4%
86,858
Information
7.3%
211,896
2.2%
63,031
Financial Activities
4.7%
455,282
-0.4%
-34,468
Professional and Business Services
7.8%
1,271,088
2.7%
437,904
Educational and Health Services
5.3%
1,211,056
0.2%
42,356
Leisure and Hospitality
9.9%
1,276,730
4.8%
619,147
Other Services
6.2%
431,460
1.1%
75,690
Total
7.3%
9,104,615
2.2%
2,761,947
*Negative because the long-run natural rate of unemployment is larger than the unemployment rate in that industry.
To find the lower-bound labor decline estimates in each industry, we subtract the number of unemployed native and lawful foreign-born workers above the long-run natural rate of unemployment (in Table 2) from the estimated number of employed undocumented immigrant workers (in Table 1). Meanwhile, for the upper-bound worker decline estimates, we assume no native or lawful foreign-born workers would fill the jobs left open by the removed undocumented workers. As a result, the upper-bound estimates in each industry are simply the number of employed undocumented immigrant workers in 2012.
We then calculate the decline in output in each industry that would result from removing all undocumented immigrant workers. To accomplish this, we divide real output by the number of employed people in each industry in 2012, which estimates output per employed worker in each industry that year.
[8] We then multiply the estimated output per worker by the lower- and upper-bound reductions in labor to yield lower- and upper-bound declines in output in each industry. This method inherently assumes output per undocumented immigrant worker is the same as native and lawful foreign-born workers.
It is important to note that this analysis has a few shortcomings. Since 2012, unemployment rates have fallen substantially and there are very few industries that have unemployment rates significantly above the long-run natural rate today. This means that today there are likely very few unemployed native and lawful foreign-born workers who are available to replace the employed undocumented immigrants. In this regard, the lower-bound estimates may be larger than we project in this analysis. However, our methods also do not take into account the possibility that native and lawful foreign-born workers not currently looking for work may enter the labor force to fill the jobs that would be left open by removing all undocumented immigrants. Since there is no way of knowing how many workers would enter the labor force, we do not take into account this possibility, which would make the lower-bound labor and output declines smaller than what we project.
