Finding persons to deport through the IRS

ICE and the IRS have worked up a database sharing agreement. Several IRS officials have resigned due that agreement, which is an unprecedented authorization for the use of taxpayer data for purposes unrelated to paying taxes. Here is an analysis of the Memorandum of Understanding.  Millions of unauthorized persons pay taxes and their personal information is in IRS records.

How ICE could use IRS data?

As the NY Times puts it, “ICE officials can ask the I.R.S. for information about people who have been ordered to leave the United States or whom they are otherwise investigating.” But the net that ICE can cast is much larger.   There are about 12 million unauthorized persons in the U.S. and around 4.2 million or more persons protected from deportation either because they having asylum applications active (two million or because they are here due to humanitarian parole (1.3 million or Temporary Protected Status (900,000).

What personal (non tax) information does the IRS have about individual tax payers?

Date of birth, residence, wages, employer (if not self-employed), banks used.  Of course, Social Security number. But many unauthorized persons use another person’s SS number. And many unauthorized persons use an IRS -issued Individual Taxpayer Identification Number (ITIN), which is issued only for paying taxes. An ITIN is used legally by international students, foreign investors and others. But most of the 5.6 million actively used ITINs are estimated to be used by unauthorized persons. (Here is description of ITINs vs SS numbers.)

Do humanitarian parole and TPS persons pay federal taxes?

Assuming 70% of these (high vs U.S. citizens) are employed, we can assume that pretty much 100% of them are employed in a way that results in paying taxes (payroll taxes and in income taxes).  That comes to 1.5 million persons. ICE can trace through the IRS if they are still in the U.S. (due to tax submissions) and personal information about them. They can thereby, at the least, determine if they remain in the U.S. after they have been told to self-deport.

 

Do unauthorized persons pay federal taxes?

Yes, many do. In 2005, the Social Security Administration estimated that half of unauthorized persons pay taxes. Assuming 12 million unauthorized persons, an employment rate (high vs citizens) of 70% that comes to about six million unauthorized persons paying federal taxes and about 2.5 million working and not paying taxes – i.e. paid in cash.

How can unauthorized persons be found via the IRS?

Those paying taxes (estimated at six million) are using either some other person’s SS number or their own or some one else’s ITIN. This means that many and perhaps most unauthorized persons – but not all – cannot be easily found by ICE using these numbers.

How much tax payments are unauthorized persons paying?

The Budget Lab at Yale estimates that “in 2023, unauthorized immigrant workers paid $66 billion in federal taxes, with roughly $43 billion in payroll taxes and $22 billion in individual income taxes (see chart below; note that this does not include state and local tax payments).  This pay federal taxes. The Congressional Budget Office (CBO) noted in a 2007 report that between 50-75% of unauthorized immigrants pay some combination of federal income and/or payroll taxes.”

 

Canadian immigration update

Canada has had a relatively very proactive approach to welcoming immigrants – skilled, through a points system, and many refugees. I posted here and here in 2024 about Canada trimming back its immigration.  Thanks to Rupa Banerjee for helping me to understand what’s happened.

Permanent Immigration: Canada lowered its annual permanent resident targets from 500,000 to 395,000 in 2025, to 380,000 in 2026 and 365,000 in 2027.  At 500,000, that was equivalent to 1.25% of the population – contrast that with the prevailing rate in the U.S. (1 million) which is 0.3%. Evern at 365,000 the rate remains much higher than the U.S.

57% of Canadians now believe that too many newcomers aren’t adopting “Canadian values” (up 9 points from 2023). 43% think a lot of refugee claims aren’t legitimate (up 7 points). Rupa told me that even among racial minorities and first-generation immigrants, concerns about immigration levels are increasing.

The Canadian government mentioned demand for housing and social services as factors in reducing the volume.  Still it is quite high.

American migration to Canada has been very little – on average in the neighborhood of 10,000 a year. In the past few weeks Yale professors Timothy Snyder, Marci Shore, and Jason Stanley announced they will relocate to the University of Toronto due to the political climate in the U.S. Canada’s point system will screen out many would-be applicants.

Education and age disparities between foreign-born and U.S. born

J.D. Vance has argued that immigration has worked to the disadvantage of American workers. This argument can be easily made with respect to the wave of Latin American immigrants between the 1980s and the financial crisis of 2007-2008. A very high percentage neither had a high school degree nor spoke English proficiently. This created a very vulnerable workforce of perhaps 8 million workers.

The argument weakens significantly with respect to more recent immigration. I cannot find overall figures of the educational status of immigrants by date of immigration. But with the shift of most migration coming from Latin America to coming from elsewhere, the median educational status of recent immigrants has probably gone well above 50%. We see that in profiles of immigrants from China, India, and NigeriaA typical foreign-born worker with a college degree today earns more and a U.S. born worker with a college degree, Simple comparisons of this sort are becoming less meaningful as second generation immigrants increasingly occupy jobs. Keep in mind that immigration is a long game, of multiple generations.

High School Completion Rates 2000 vs 2020

In 2000, foreign-born adults were far less likely to have finished high school than U.S.-born adults. Only about 67% of foreign-born persons age 25+ had completed high school, meaning roughly 33% lacked a high school diploma, compared to just 13% of U.S.-born in that year. By 2020, this gap had narrowed but persisted. Around a quarter of immigrants did not have a high school diploma (approximately 25%), versus under 10% of U.S.-born adults (around 7–8%)

College Degree Attainment 2000 vs 2020

In 2000, about a quarter of foreign-born Americans held a college degree or higher, which was only slightly lower than (and in some cases on par with) the native-born rate. By 2020, immigrants had greatly improved in higher education: roughly 35% of foreign-born adults had a bachelor’s degree or more, comparable to 36% of U.S.-born adults. As noted above, Asian immigration since about 2010 has significantly included higher educated persons, as well has Nigerian immigration been higher – education oriented.

Median Wage Disparities 2000 vs. 2020

In 2000, immigrant workers earned roughly 77% of natives’ median wage around 2000. Two decades later, the gap persisted but narrowed. In 2020, the median usual weekly wage was $89%.  Higher education reduces the gap: immigrants with a college degree actually  surpass natives, about $1,492/week vs $1,409 for native born in 2020.

The importance of sector differences

The wage disparity, of course is partly explained by industry/sector differences. Immigrants are disproportionately employed in certain lower-paying sectors (like agriculture, hospitality, and some manufacturing roles) and underrepresented in some higher-paying occupations.

 

 

Labor crisis in Californias farm sector

The Los Angeles Times notes that both the immigration crackdown and new tariffs are threatening produce farmers in California:

“The administration’s vows of mass raids targeting undocumented immigrants, combined with its new tariff-induced trade wars, have farmers and labor groups united behind the need for legislation that ensures the U.S. continues producing an ample food supply and has sufficient workers to tend its crops.”

The administration’s approach to immigration appears to be comprehensive against all immigration perhaps with the exception of skilled workers.

The three largest California counties in terms of dollar value of farm production – Kern, Fresno, and Tulare, which produce half of the state’s farm output – have workforces which are 75% foreign born. Diary:  more than 50% foreign born; Grapes: 70% foreign born; Almonds: 70% foreign-born; Strawberries: 70% foreign born; Cattle: over 50% foreign born (go here).

How much do immigrants impact the total workforce?

I recently posted an estimate that permanent (green card) immigration adds roughly 720,000 new employed persons to the workforce.  How much do they contribute to the flow of all persons entering into and exiting employment (due to death and retirement)?

To sum up: Current immigration contributes to new worker growth and to total worker growth net of retirements.  Not as dramatically as some conjecture. However, if it is important to keep the working age population growing, then new immigrants every year are very important.

First, let’s look at new entrants.  Think of streams of persons entering into the job market.

In 2025, about four million U.S. born persons will turn 18. As a lifetime cohort group, at any time in prime working age, about 80% will be employed, or about 3.2 million. Thus one can say that they will add 3.2 million to employment rolls.

On the surface, today, first time immigrant workers (720,000) are about 22% of new these U.S. born workers. but there are expected fewer U.S. born persons turning 18 in 2035, and fewer new workers – 2.9 million. If we keep immigration at the same level, in 2025 immigrant workers will be about 25% of new job holders.

If you look at the contribution of new immigrants to the total stock of workers, the contribution of new immigrants soars. U.S. born workers are retiring in hordes due to aging-out, resulting in there being an annual net decline of all U.S. born workers of about 200,000. This net loss will increase, part to aging, part to low fertility.  Thus, 730,000 new foreign born workers compensate for an overall decline of U.S. born workers.

However, consider that foreign born workers are also aging. The net change in immigrant workers (720,000 new entrants less many retiring due to aging) is most likely probably slightly or moderately positive. This will continue to be positive, as today new immigrants are more into working age than U.S. born persons.  But before too long that will not be the case as the foreign-born population ages overall.

The Census expects the total workforce to grow by about 500,000 a year – about one third of one percent a year. This increase is due in part to people expected to work later in life. For example, Census expects that the number of 65+ working will increase from 2022 to as soon as 2032 by about on average 400,000 a year. This shows that there is more than immigration and young entrants to the growth of our workforce.

 

 

Annual employment-based green cards – an overview 

Simply stated, about 140,000 green cards are reserved for employment-based applications, as opposed to about 750,000 family based green cards.  How many workers come in these ways?  That depends in part on whether those dependents accompanying the primary applicants (about 50-50) are working age.  A rough estimate is that 70% – 80% of those who get in with an employment based or a family based green card are of working age. That comes to about 650,000 – 750,000 a year.  How many actually become employed? Perhaps 600,000 – 700,000.  (if you include refugees and other green cards, these estimates of employed increase by about 70,000.)

Employment visas like most other visas have annual caps. These caps for each visa include dependents. Roughly half of these visas are issued to the primary individual seeking the visa, and half to their dependents. There is a 7% cap for each visa by country; i.e. only 40,040 x 7% = 2,828 can be awarded to any country (such as India).  Actual numbers of visas awarded in any year vary due to several factors, such as access to visas what were not issued under the cap for other purposes, such as family-based visas.

It usually takes at least 12 months, if not two years or more, between the initial date of filing an application and the award of one of these visas. Over three quarters of EB visa awardees are already residing and working in the U.S. while they file and wait.

40,040 EB1 visa: persons with extraordinary ability, tenure track in academia, corporate executive, and other reasons

40,040 EB2 visa: professionals with advanced degrees or exceptional ability. Need a job offer and cubject to wage evaluation (labor certification) by Dept, of Labor

40,040 EB3 visa skilled worked in name but basically plain ol’ highly desirable workers. .Perhaps a cook who skilled at one kind of ethnic dishes. Need a job offer and cubject to wage evaluation (labor certification) by Dept, of Labor

9,940 EB4 visa: special immigrants like religious workers.

9,940 EB5 visa: investors with at least $1 million to invest in a for-profit venture and create 10 jobs, plus other criteria.

UK’s troubled recruitment of foreign doctors

The UK has relied much more than the U.S. on foreign doctors (“foreign trained” very roughly equals “foreign born”).  About half of doctors practicing in the UK are foreign trained compared to 25% in the United States. In contrast to the U.S, the share in the UK has grown noticeably in recently.  Volatile trends in special recruitment by the National Health Service shows how much the terms of temporary immigration matter.

After World War II, the National Health Service faced harsh workforce shortages and actively recruited medical professionals from abroad, particularly from Commonwealth countries such as India and Pakistan.

A special Health and Care Worker visa was created in 2020. This provides for five years of work and after then an option to become a British citizen. In 2023, 350,000 such visas were issued (I think this includes the primary person and dependents). But the government stopped allowing workers to bring dependents, and the number in 2024 dropped to 50,000.

Today, the NHS is experiencing a shortage of health care professionals. The job vacancy rate which used to be about 2 jobs unfilled for every 100 jobs. That jumped to over 4 jobs per 100 after the pandemic.

From a 2024 report. This profile has been pretty much unchanged for at least 10 years, although sone sources say that immigration of health professionals has very recently picked up.

In 2021, 51% of junior doctors and 41% of senior doctors (called consultants) were non-white. This compares with 20% of the English working-age population. Much of this is driven by international recruitment. But even among UK-trained doctors, 37% of junior doctors and 24% of consultants were non-white.

By far the largest non-White group is Asian, making up 33% of junior doctors and 32% of consultants in 2021. The share of non-white senior doctors also increased, from 39% in 2012 to 45% in 2021.

India has been the world’s largest source of immigrant physicians.

Farm workers and the new administration

“On Jan. 7, the pre-dawn quiet of Kern County was shattered by a series of Customs and Border Protection raids billed as “targeted criminal enforcement.” The day after the first Kern County sweep, one citrus operation reported that 25% of its workers did not show up. By the following day, that number had climbed to 75%.” (from here).

The California produce farm community has sought for years for federal legislation that normalizes the status of unauthorized workers. Unless there is a comprehensive immigration reform package, there is no chance such legislation will pass.  Over the past 15 years these firms have relied less and less on unauthorized workers. However, If the Trump administration goes after these workers, and also make it more difficult for farms to use legally temporary workers (H-2A visas), there will be a serious labor supply problem. More food will be imported. If Trump imposes major tariffs on Mexico and other Latin American countries, food, primarily produces and nuts, will become more expensive. Half of vegetables, fruits and nuts are imported, roughly doubling in market share in 15 years.

California has been the leading farm state since 1949. A major role of farming in the state are fresh produce. Mexican born workers dominate the farm workforce, which includes about 420,000 full time equivalent workers at any time. Mexicans have an average of eight years education and average 42 years old. Half of them are unauthorized.   The unauthorized Mexican workforce in the United States, including California farms, began to a decline after the financial crisis. In the last 15 years, farms throughout the United States including California have relied more and more on temporary H-2A workers workers. (Here is my overview of this program, posted in 2013.) With decreasing dependence on unauthorized workers, farms–particularly the very large ones– drove up the H-2A workforce from about 75,000 in 2010 to 400,000 today.

H2A guest workers are mostly Mexican men in their 30s who work about six months a year. They cost employers $25 to $30 an hour which includes housing and transportation as well as wages. (Weekly income to the workers is about $800.) This is more expensive than other farm workers but, H-2A workers are more productive due to there being tied to employers as opposed to being freelancing, going from one farm to another period.  This is an important aspect of large-scale temporary visa worker on forums. They favor large farms which are relatively more adept at driving productivity improvements.

California farmers usually report trouble in finding workers. The relatively very old, 42 years, of the established Mexican workforce reflects not only the absolute decline in authorized Mexican workers but also the lack of interest of their children and others to work in the fields.

There are several ways to reduce dependence on foreign-born workers for produce food for the American table.  A key one is to match vegetables and fruits, plus nuts, with mechanization.  Another way, of course, is to simply import food.A great deal of produce sold in the United States now comes from Mexico such as avocados and blueberries from Peru and South American countries. Since 2016 the majority of blueberries consumed by Americans are imported. There more Mexican produce workers in Mexico for the export market to the United States then produce workers in California.

Beyond the workforce issues of California farmers there is also the acute dependence by small dairy farmers throughout the country on unauthorized workers. That is for another posting.

 

(Sources of content mainly prior posts and an April 2024 report by Philip Martin of UC Davis, who has studied California farming for years).

Job growth and immigrant share 2022 – 2024

Adam Tooze refers to these figures below as “the coming labor market shock.”

If the Trump administration stops or, more likely, cuts back drastically on the inflow of working age immigrants, the impact on workforce supply will be significant. That is because the U.S. born workforce is declining, and a healthy economy needs to fill a net increase of at least two million jobs a year. If he removes hundreds of housands of immigrant workers, there may be an acute worker shortage in some industries.

By combining data from different sources, I estimate that:

In 2022, 4.8 million jobs were created, largely due to a rebound from the pandemic.  In 2023, 3 million jobs were created. In 2024, 2.2 million jobs were created. (All of these net increases.) for the three years: 10 million jobs.

In these three years, 6 million, or 60% of these jobs were filled by recent immigrants.  Half of these by asylum applicants and Parole or Temporary Protected Status persons.  About one million were those with legal non-humanitarian temporary visas such as H-1B. About 1.5 million were unlawful entry or visa overstays.

In the past ten or so years, the number of U.S. born persons of working age has been shrinking by about 300,000 a year. Thus the only way that job growth was a large as it was, was at least half due to immigration and the rest due to Americans returning to work after an involuntary or voluntary absence.

 

 

Do immigrant workers create, complement, or displace?

In a modern economy, the dynamics between immigrant and native born workers is so complex that it cannot be reduced to an all-inclusive, simple sum without eliminating 90% of meaningful insight.  Thus, to say that overall immigrants add jobs, do not affect native workers, or compete with native workers is to engage in vast simplification.

Cauimi and Peri came perilously close to vast simplification in a study they released in early 2024. Giovanni Peri is a star academic researcher on immigration who has for some time argued that immigration overall is neutral or positive in its effect on native born workers.

They explain their findings through the concept of complementarity: Immigrants and U.S.-born workers often have different skills and specializations that complement each other rather than compete directly. This complementarity boosts productivity and, in turn, wages for U.S.-born workers. Since 2000, there has been an increase in college-educated immigrants, which has further enhanced the complementary effect, especially benefiting less educated U.S.-born workers.

Pretty much all academic research into the economic impact of immigrants on American workers relies on correlation analysis that deals with association, not cause. Further, these analysis address employment and wages, but not productivity, the investment decision, job switching, career switching, or domestic migration. Nor do they deal with the secondary effects. These analyses cannot capture the possibility that immigrants concentrate on geographic locales and occupations where they perceive substantial growth requiring new workers.

An example of immigrant impact which has a very rich story that is lost in statistical analysis typically done is the independent motel industry. About 60% of all hotels in the US are owned by Indian Americans, and this group may own at least 80% of all motels in small towns.   I addressed this phenomenon here.   At the core of this story is the evolution of a business model crafted by Indian immigrants that facilitated the voluntary purchase/sale of motels and hotels from native owners, and which preserved the viability of thousands of motels in the country.