FOR THE MOMENT, let’s forget about the Liberal Left, the Alt Right, national security, health- care, protectionism, “bad hom- bres” and all the nativist rheto-
ric out there. Let’s talk about the two retail
realities—customers and employees.
Like many of you out there I am the
grandson of immigrants who made the
long, arduous journey to the U.S. in steerage. It seems that the immigrant experience—illegal or not—has not changed
much—just the mode of transportation.
This is not a political column. It is about
pragmatism. What seems to be lost on
both sides of the immigration argument
is that millions of people
now under duress are
consumers and employees and their loss, whether
through deportation or
staying in the shadows,
would significantly impact
the retail business.
Once we figure out border security we need to
figure out a way to shift
already here to some kind
of legal guest worker status and ease the pervasive fear of deportation or detention.
The numbers tell the story. There are
an estimated 11 million undocumented
immigrants in the U.S., representing
approximately 3. 5 percent of the population. Of those, an estimated seven million
They are a powerful force in the
growth and revitalization of America—
to say nothing of the food industry. We
all know that then candidate Trump’s
pledge to deport three million people is
going to be walked back. But we should
think about the consequences if only a
part of this comes to pass.
Even if companies agree to the
Administration’s proposal to electronically verify that their employees can
work in the country legally, some 2.5 million people would disappear from the
workforce. The result could be a drop of
1 percentage point in the GDP, which,
according to some economists, would
cut production and lead to higher unemployment and higher prices on products.
The biggest decline would be the
$74 billion in manufacturing output,
including the CPG industry, followed
by declines in the wholesale and retail
trades. The retail and wholesale industries employ an estimated 850,000
undocumented immigrants and another
890,000 in manufacturing.
There are even about 200,000 undocumented aliens working in the financial
sector. Interestingly, their weekly earnings are said to be just under $1,200—
about twice the average for authorized
workers across the U.S. and a pretty good
indication of their value as upscale customers and not just basics shoppers.
However, the biggest danger to retailers by proposed policies would be the
loss of millions of consumers, according
to a report by Morgan Stanley analysts,
an indication that Wall Street is watching.
This is unlikely since major changes
like this require Congressional approval
and many of those lawmakers come from
states that are disproportionately depen-
dent on the immigrant workforce. They
are not inclined to shoot themselves in
the foot if their jobs depend on the sup-
port of business in those areas.
What happens to retailers—
including supermarkets in places like Texas,
California, Arizona and even Nebraska,
Missouri and New York—that cater to
Hispanic customers for example? Do they
close up shop when a good portion of
their customer base is no longer here?
And would we see other, legal immigrants prefer to stay in the shadows and
seek the anonymity of neighborhood
corner stores rather than traditional
On another front, tax reduction policies could have a positive impact on high-income consumer spending. But the significant decline in consumer demand and
labor resulting from deportations would
counteract the spending benefit from
lower taxes, according to Morgan Stanley
economists. Even with a proposed corporate tax cap of 15 percent boosting retail
profits as much as 30 percent, it has been
estimated that mass deportations would
cost the federal government $900 billion
in lost revenue over the next 10 years.
Additionally, threats to tear up NAFTA,
punitive import tariffs and a failure
to replace the doomed TransPacific
Partnership with something more palatable, will add to the stress levels of every
retailer and raise prices for all kinds of
products. But that is another story.
Basically, we have to look at the law
of unintended consequences and the
potentially heavy price of a new bureaucracy. As one industry executive put it,
“We’re hopeful that pragmatism will prevail over ideology.”
PRAGMATISM, NOT POLITICS
The deportation or detention of illegal immigrants can adversely affect the retail landscape.
By Len Lewis
Len Lewis is a regular Grocery
Headquarters columnist and
veteran industry journalist.