Fed Chair Says Trump Immigration Policies Slowing Economic Growth – Forbes

Impact of U.S. Immigration Policies on Economic Growth and Sustainable Development Goals

Overview of Federal Reserve Chair’s Statement on Immigration and Economic Growth

At a Congressional hearing on June 24, 2025, Federal Reserve Board Chair Jerome Powell identified the Trump administration’s deportation policies as a significant factor contributing to the slowdown in U.S. economic growth. This aligns with economists’ concerns that immigration policies focused on reducing the labor force hinder economic expansion.

A recent Quinnipiac poll indicated that 56% of registered voters disapprove of the administration’s deportation approach, while 40% approve, reflecting public concern over the economic and social impacts of these policies.

House Financial Services Hearing: Immigration and Economic Growth

Key Questions Raised by Representative Maria Salazar

1. Salazar emphasized support for deporting undocumented immigrants involved in criminal activities but differentiated them from average workers essential to the economy.
2. She highlighted the loss of thousands of workers in critical sectors such as construction, hospitality, and agriculture, which collectively represent approximately 15% of the economy.
3. Salazar questioned the potential economic growth impact if deportations continue to remove workers from these sectors.

Federal Reserve Chair’s Response

• Powell acknowledged that economic growth depends on two main factors: labor force growth and productivity.
• He stated that slowing labor force growth due to immigration policies would inevitably slow economic growth.
• Powell noted that immigration policy is outside the Federal Reserve’s jurisdiction but confirmed that labor supply constraints contribute to the current economic slowdown.

Trump Administration’s Immigration Policies and Their Economic Implications

Labor Supply Shortfall and Inflation Control

Jerome Powell previously identified a labor supply shortfall, partly due to reduced net immigration and pandemic-related deaths, as a contributor to inflation. The Trump administration’s restrictive immigration policies, including limitations on refugees, temporary visa holders, and family-sponsored immigrants, have exacerbated this shortfall.

Mark Regets, a labor economist, emphasized that increasing labor supply is a less painful method to control inflation, which aligns with Sustainable Development Goal (SDG) 8: Decent Work and Economic Growth.

Economic Research on Immigration and Real Wages

• Research indicates that immigrants increase labor supply, helping to tame inflation and promote economic growth.
• Lower inflation enhances real wages, improving living standards consistent with SDG 1: No Poverty and SDG 10: Reduced Inequalities.
• Economic growth driven by a robust labor force supports SDG 8 by fostering productive employment opportunities.

Policy Reversals and Enforcement Actions

1. Following public and industry feedback, a temporary pause on immigration enforcement in key sectors was announced but quickly reversed, reaffirming strict enforcement policies.
2. Stephen Miller’s influence led to aggressive arrest quotas, resulting in widespread detentions beyond individuals with criminal records.
3. These enforcement actions have sparked protests and raised concerns about social stability, linking to SDG 16: Peace, Justice, and Strong Institutions.

Broader Impacts on Labor Supply and Future Economic Prospects

Additional Measures Reducing Labor Supply

• Blocking refugee admissions and terminating Temporary Protected Status for multiple countries have further decreased available labor.
• Ending humanitarian parole programs has removed work authorization for over half a million individuals.
• Proposed legislation to expand ICE detention and enforcement capacity could intensify deportations, exacerbating labor shortages.

Long-Term Labor Market Outlook

Powell acknowledged that domestic native-born labor supply is unlikely to meet U.S. labor demand over the next decade, underscoring the need for sustainable immigration policies to support economic growth and SDG 8.

Conclusion: Aligning Immigration Policy with Sustainable Development Goals

• Restrictive immigration policies that reduce labor supply risk slowing economic growth and increasing inflation, negatively impacting SDG 8.
• Ensuring a balanced approach to immigration supports economic inclusion, poverty reduction (SDG 1), and reduced inequalities (SDG 10).
• Policies promoting social stability and justice align with SDG 16, fostering a peaceful and inclusive society.
• Comprehensive immigration reform is essential to meet labor market needs, sustain economic growth, and advance the United States’ commitment to the Sustainable Development Goals.

1. Sustainable Development Goals (SDGs) Addressed or Connected

1. SDG 8: Decent Work and Economic Growth
   • The article discusses economic growth in the U.S. and the impact of immigration policies on labor supply and productivity.
   • It highlights the importance of labor force growth and productivity for sustaining economic growth.
2. SDG 10: Reduced Inequalities
   • The article touches on immigration policies affecting undocumented workers, which relates to social and economic inequalities.
   • It mentions deportations and their impact on immigrant workers in sectors like construction, hospitality, and agriculture.
3. SDG 1: No Poverty
   • Economic growth and labor supply influence income levels and poverty reduction.
   • The article discusses real wages and inflation, which affect poverty and living standards.
4. SDG 16: Peace, Justice and Strong Institutions
   • The article references immigration enforcement policies, legal processes, and public safety concerns.

2. Specific Targets Under Those SDGs Identified

1. SDG 8: Decent Work and Economic Growth
   • Target 8.1: Sustain per capita economic growth in accordance with national circumstances, and in particular at least 7% GDP growth per annum in the least developed countries.
   • Target 8.5: Achieve full and productive employment and decent work for all women and men, including young people and persons with disabilities, and equal pay for work of equal value.
2. SDG 10: Reduced Inequalities
   • Target 10.7: Facilitate orderly, safe, regular and responsible migration and mobility of people, including through the implementation of planned and well-managed migration policies.
3. SDG 1: No Poverty
   • Target 1.2: By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions.
4. SDG 16: Peace, Justice and Strong Institutions
   • Target 16.3: Promote the rule of law at the national and international levels and ensure equal access to justice for all.
   • Target 16.6: Develop effective, accountable and transparent institutions at all levels.

3. Indicators Mentioned or Implied to Measure Progress

1. Labor Force Growth and Economic Productivity
   • Indicator: Growth rate of labor force participation (implied by discussion on labor supply and deportations).
   • Indicator: GDP growth rate or economic growth rate (mentioned as slowing due to immigration policies).
   • Indicator: Productivity per hour worked (mentioned by Jerome Powell as a factor affecting growth).
2. Employment in Key Sectors
   • Indicator: Number or proportion of workers in construction, hospitality, and agriculture sectors affected by deportations.
3. Inflation and Real Wages
   • Indicator: Inflation rate (mentioned as influenced by labor supply).
   • Indicator: Real wage growth (discussed in relation to immigration and inflation).
4. Migration and Deportation Statistics
   • Indicator: Number of deportations or arrests by ICE (e.g., quota of 3,000 daily arrests, one million deportations annually).
   • Indicator: Number of refugees admitted or blocked (implied by policy changes).
5. Access to Justice and Institutional Transparency
   • Indicator: Enforcement actions and policies transparency (implied by discussion on ICE enforcement and policy reversals).

4. Table of SDGs, Targets, and Indicators

Source: forbes.com