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What is the economic impact of undocumented immigrants on state economies like New York and Florida in 2025?
Executive summary
Available reporting shows that undocumented immigrants in 2025 make measurable fiscal and labor contributions to states like New York and Florida and that policies removing them would reduce tax revenue, shrink labor supply in key sectors, and lower GDP growth [1] [2] [3] [4]. Analyses and state-focused studies estimate multi‑billion dollar tax contributions and project large budget and output losses from mass deportation scenarios [3] [5] [6].
1. What the numbers say: taxes, jobs and state revenue
State and nonprofit analyses find undocumented households pay billions in taxes and supply crucial labor: New York’s undocumented population is estimated to contribute roughly $3.1 billion today and could contribute about $4.0 billion with legal status—a near $900 million upside for state and local coffers in one study [3]; Florida analyses report undocumented-led households contributed more than $125 billion as consumers and paid an estimated $1.5 billion in state taxes in 2021 [4] [7]. Nationally, commentators and research centers report undocumented workers fill large shares of construction, agriculture, hospitality and other sectors—estimates include millions of workers in those industries whose wages and tax payments sustain state economies [6] [8] [9].
2. The macro view: deportation scenarios and GDP effects
Modeling exercises show mass deportation is costly at the national level and would ripple through state economies. The Penn Wharton Budget Model projects revenues would fall by roughly $300.4 billion from 2025–2034 under aggressive deportation scenarios and primary deficits would widen by hundreds of billions [5]. Broader policy briefs and congressional committee analyses warn mass removal could shrink GDP and remove large numbers of workers from construction, agriculture, hospitality, manufacturing and transport—effects that would concentrate damage in states with big undocumented populations such as Florida and New York [6] [10].
3. How labor shortages translate to higher prices and stalled projects
Reporting and policy studies link declines in undocumented labor to concrete disruptions: construction slowdowns, higher housing costs, and agricultural losses. The Urban Institute and other analyses note immigrants were over 23% of the construction workforce in 2023 and that about half of those may be undocumented—meaning removal could worsen housing shortages and raise construction costs in states like New York and Florida [9]. Florida business reporting and local coverage document employers already struggling to replace workers after state enforcement changes, with some sectors reporting stalled projects and lost output [11] [12].
4. Fiscal balance: taxes paid vs. services used
Multiple think tanks and academic reviews find that, in aggregate and over the long run, immigrants modestly reduce budget deficits or at least pay more in revenues than they consume in services; the Economic Policy Institute summarizes a broad consensus that immigration reduces overall budget deficits [1]. State analyses echo that undocumented workers pay state and local taxes (property, sales, payroll) while often remaining ineligible for many public benefits—an imbalance that boosts net fiscal contributions in some states [3] [8].
5. Conflicting estimates and methodological caveats
Estimates vary widely because of differing population counts, definitions (who counts as “undocumented”), and scenario assumptions. Journalistic and advocacy sources report state counts ranging from several hundred thousand undocumented workers (Florida: 390k in key industries; other reports up to 770k or more) depending on methodology and year [7] [12] [13]. National models that simulate deportation effects make divergent assumptions about the pace of removal, self‑deportation, and dynamic macro responses—leading to very different fiscal projections [5] [6].
6. Political incentives and reporting agendas to watch
Advocacy groups and policy shops emphasize different risks: immigrant‑rights organizations highlight tax contributions, labor shortages and community disruption if removals proceed [2] [4], while some government budget offices and opponents of legalization stress costs of benefits or enforcement. Be aware that partisan actors may selectively cite worst‑case or best‑case modeling; peer‑reviewed methods and transparency about assumptions matter for comparing claims [5] [1].
7. Bottom line for New York and Florida in 2025
Available sources consistently show undocumented immigrants are economically significant in both states—supporting construction, agriculture, hospitality and consumer demand—and that removing large numbers would reduce tax revenues and output while creating sectoral shortages and upward price pressure [3] [4] [9]. Exact dollar impacts differ by model and assumption: state studies point to multi‑billion-dollar tax contributions and potential revenue losses, while national models quantify far larger fiscal and GDP effects under mass‑deportation scenarios [3] [5] [6].
Limitations and remaining questions: state‑level impacts hinge on up‑to‑date population estimates, local industry reliance, and whether enforcement leads to self‑departure; available sources do not mention a unified, single number for “economic impact in 2025” that covers all channels simultaneously (not found in current reporting).