In this second installment of our series examining Project 2025’s potential impact on corporate governance, finance, and human capital, we focus on the initiative’s proposed immigration policies and their implications for the American workforce. Understanding these potential changes is crucial for preparing and safeguarding the workforce of tomorrow.
Project 2025: A New Direction for Immigration Policy
Project 2025 outlines a comprehensive plan to overhaul the U.S. immigration system. The initiative emphasizes national security and economic considerations, proposing measures to significantly reduce both legal and illegal immigration. Key proposals include:
- Reduction of Legal Immigration: According to Immigration Impact, the plan advocates for decreasing the number of visas issued, particularly targeting programs such as the Diversity Visa Lottery and certain employment-based visas like the H-1B. This reduction aims to prioritize American workers and address national security concerns.
- Enhanced Enforcement Measures: Democracy Forward discusses how Project 2025 proposes increased enforcement of immigration laws, including mass deportations of undocumented immigrants and stricter border controls. The plan suggests utilizing local resources to carry out these operations, potentially involving state and local law enforcement agencies.
- Elimination of Certain Humanitarian Programs: Nolo outlines how the initiative calls for the repeal of programs such as Temporary Protected Status (TPS) and Deferred Action for Childhood Arrivals (DACA), which currently provide temporary legal status to specific groups of immigrants.
Governance, HR and Finance Impact
Mass deportation of undocumented immigrants would have profound implications for corporate governance, affecting labor markets, operational stability, and compliance frameworks across various industries.
The proposed immigration policies under Project 2025 could have far-reaching effects on various sectors of the U.S. economy:
- Labor Shortages in Key Industries: Sectors such as agriculture, construction, and technology heavily rely on immigrant labor. Mass deportations and reductions in legal immigration could lead to significant labor shortages, disrupting productivity and economic stability. The current lack of talent in these industries is hamstringing organization success. According to the National Association of Home Builders, to keep pace with the industry’s need, they estimate that about 723,000 new hires are required annually, with 89% of construction firms reporting challenges in hiring skilled workers. According to the Economic Research Service, over the last 5 years, there has been a nearly 15% decline in the number of farms employing hired labor. The U.S. farm industry, which depends on approximately 2 million workers—nearly half lacking legal status—faces potential upheaval. You might think this doesn’t impact you, but these labor shortages hit our wallets with higher housing and food prices. In Andy Semotiuk’s Forbes article, he stresses that “undocumented immigrants are deeply woven into the fabric of the U.S. economy. They contribute billions in taxes, fill critical labor gaps, and sustain industries that depend on their work.”
- Economic Impact: The removal of millions of workers from the economy could result in decreased consumer spending, lower GDP growth, and increased inflation. Experts warn that such large-scale deportations could harm sectors like agriculture, homebuilding, and services, potentially leading to economic disruption. In addition, undocumented workers contribute approximately $13 billion in payroll taxes each year, putting more pressure on the social security system. Undocumented workers also contribute more to the Medicare Trust Fund than they withdrew, creating a surplus of over $35 billion. A Joint Economic Committee study found that mass deportations could reduce GDP by nearly $280 billion in the first year, with that growing to $5 trillion after 10 years. Couple this with the 25% import tax that is soon coming, and we’ll see inflation rates that will have us long for the rates we saw in 2022.
- Workforce Diversity and Innovation: Reducing legal immigration pathways may diminish the diversity of the American workforce, potentially stifling innovation and reducing the global competitiveness of U.S. companies. Diverse teams have been shown to enhance creativity and problem-solving, driving business success.
- Operational and Financial Challenges: The sudden removal of a substantial portion of the workforce would necessitate rapid adjustments in hiring practices, potentially increasing operational costs. Businesses might face challenges in maintaining productivity levels, meeting contractual obligations, and sustaining profitability.
- Compliance and Ethical Considerations: Corporate governance frameworks emphasize ethical practices and compliance with legal standards. Mass deportations could compel companies to reassess their employment verification processes and ensure strict adherence to immigration laws. Additionally, companies may face ethical dilemmas concerning the treatment of their workforce, potentially impacting corporate reputation and stakeholder trust.
- Strategic Implications: Boards and executives would need to navigate the complexities arising from labor shortages, including exploring automation, restructuring supply chains, or relocating operations. Strategic planning would become essential to mitigate risks associated with workforce instability and to maintain operational continuity.
The Path Forward
As Project 2025’s proposals are debated, it is essential for policymakers to consider the complex interplay between immigration and the U.S. workforce. A balanced approach that addresses security and economic concerns while recognizing the contributions of immigrants to the labor market is crucial. In “How to Strengthen Corporate Governance: 7 Key Areas To Focus On”, published by the Forbes Business Council, many governance areas will be impacted by mass deportation.
Engaging with a diverse range of stakeholders, including business leaders, labor organizations, and immigrant communities, can help in crafting policies that support economic growth and uphold American values, and avoid a business model upheaval for many of our labor-intensive industries.
In conclusion, while Project 2025 aims to reshape U.S. immigration policy with the intent of prioritizing American workers and national security, it is imperative to carefully assess the potential economic, governance, and social ramifications. Thoughtful consideration and inclusive dialogue will be key in ensuring that any policy changes serve the best interests of the nation’s workforce and economy.