The Trump administration's push to deport hundreds of thousands of workers is not opening up jobs for Americans — it is destroying jobs altogether. That is the warning from a top economist who says the "deportation economy" is backfiring on the very workers it was supposed to help.
The numbers tell a confusing story. The economy lost 23,000 jobs last month, yet the unemployment rate went down. The reason? The workforce itself is shrinking. People are not finding new jobs — they are simply leaving the labor market entirely.
Healthcare and social assistance hit hardest by deportation economy
The clearest sign of the problem is in healthcare. For the past three years, healthcare has been the pillar holding up a weak labor market. But in July, the sector added just 22,000 jobs — far below its 36,000 average monthly gain for the year prior.
Social assistance also slowed. This includes daycare and services for the elderly and disabled. These are the sectors "dominated by immigrant labor," according to Diane Swonk, chief economist at KPMG.
The pattern is clear: when immigrant workers are removed, the jobs do not stay behind waiting for Americans. The jobs disappear with the workers.
Why American workers are not filling the gap
The assumption behind mass deportation was simple — remove immigrant workers and Americans will step in to take their places. But that is not happening. Instead, the entire economy is losing ground.
When a daycare center loses its staff, it does not simply hire new people. It reduces capacity or shuts down. When a healthcare facility loses workers, it cuts services. The demand does not automatically transfer to American workers — often, the demand itself shrinks.
This creates a downward spiral. Fewer workers means fewer services. Fewer services means less economic activity. Less economic activity means fewer jobs for everyone, including American-born workers.
"Those are the sectors dominated by immigrant labor." — Diane Swonk, KPMG
The workforce shrinkage riddle explained
The economic data seems contradictory at first glance. How can the economy lose jobs but the unemployment rate go down? The answer is that the unemployment rate only counts people who are actively looking for work. When people give up looking — or leave the country — they no longer count as unemployed.
So the falling unemployment rate is not a sign of strength. It is a sign that people are dropping out of the labor force entirely. The workforce is shrinking, and that is a warning sign for the broader economy.
This is not just about immigrants. When the workforce shrinks, it affects everyone. Businesses that cannot find workers cut back. Communities that lose workers lose spending power. The ripple effects spread far beyond the sectors directly affected by deportation.
Our Take: The deportation economy is a self-inflicted wound
To put it plainly, this policy is hurting the people it claims to help. The idea that removing immigrant workers would open doors for American workers has not survived contact with reality.
The evidence is in the numbers. Healthcare — the one sector that kept the labor market afloat — is now slowing. Social assistance is slowing. These are not niche industries. They are the backbone of care for millions of Americans, including the elderly and disabled.
In our view, the administration is learning a hard lesson: you cannot deport your way to prosperity. The economy is an interconnected system. When you remove workers from one part of it, the whole system suffers.
American workers are not benefiting from this policy. They are losing jobs along with everyone else. The deportation economy is not creating opportunities — it is destroying them.
The question now is whether policymakers will recognize this before more damage is done. The data is already speaking clearly. The question is who is listening.
