UC Davis Economics Professor Giovanni Peri joins Yahoo Finance’s Zack Guzman and Seana Smith to discuss how the coronavirus is impacting U.S. immigration, as President Trump signs an executive order curbing green cards.

Video Transcript

SEANA SMITH: President Trump is cracking down on immigration. This time he says he's doing it in an effort to protect American citizens looking for a job after millions were lost because of coronavirus. So just this week he signed an executive order temporarily blocking the issuance of green cards to those outside of the US, but, of course, there are many exceptions in this. And for more on this, I want to bring in Giovanni Peri, UC Davis economics professor, and also we have Yahoo! Finance's Zack Guzman joining the conversation.

Professor Peri, thank you so much for making time for us this afternoon. I first want to get your thoughts on President Trump's immigration order, the executive order that he signed. What do you think of his idea that immigration threatens American jobs? And really what kind of potential economic impact will a crackdown like this potentially have?

GIOVANNI PERI: Hi, thank you for having me. Yes, so this executive order is really a distraction at this point. The economy has a lot of unemployed people because there has been a collapse in demand of jobs. So people cannot leave their homes, and the business are restricted. So there is no problem of supply of jobs, but President Trump wants to push this measure as if it's going to do something to American workers.

There is a lot of research that shows that, in normal time, reducing immigration does not have a positive effect on American opportunities. In fact, there is a lot of research that shows that immigrants are a key part in growing the economy, expanding companies with positive effect on-- also on American workers. So the premise is not sound in terms of data and economics, and in this particular case, when clearly the root of unemployment and loss of jobs are very different, it seems even less to the point to do something like this.

ZACK GUZMAN: Yeah, no, it's a good point when we think about the cause of all this necessarily isn't a massive surge in immigration causing record unemployment claims. It's the fact that businesses are shut down, but when we look into state by state levels, obviously different states are taking different approaches here to kind of solve this problem, because you did see in your state Governor Gavin Newsom basically setting aside money to give to undocumented immigrants in California. A lot of people criticized that move, but of course those people aren't receiving stimulus checks or federal level stimulus here. So what do you say to those plans and why, in a state like California, even something that might be as controversial as that might actually make sense economically?

GIOVANNI PERI: So to understand how this makes sense economically, one has to understand the role of immigrants and of undocumented immigrants in the US and in the California economy. The-- about 12%, 13% of the American labor force are immigrants, and about 4% are undocumented, but this number is 33% immigrants in California, and 10% undocumented in the labor force. Moreover, a lot of immigrants and undocumented have been working and contributing in a very important way in some of those essential type of jobs and essential sectors that are keeping up with the economy-- health care sector, production of food and agriculture, distribution, utilities.

Those are sectors in which immigrants are overrepresented. One third of the health care in California are immigrants-- is people who are working there are immigrants. And 60% of the California agriculture are immigrants, out of which, you know, most of them are, in fact, undocumented. So undocumented are clearly a very important part, a very crucial sector in California. And given their status, many of them have been in California for 10, 15 years.

70% of them have been in California for more than 10 years, and so they've been working and contributing. We estimate that they have contributed a lot in state taxes and local taxes-- up to $2.5 billion to the coffers of the California State. And so this is a little gesture. I mean, the amount of money is only $125 million, which is not very much compared to how much is put in total unemployment-- $125 million for undocumented, but it's an important gesture to show the importance of this group in the California economy and to emphasize how needed they are, and how in this very tough time they also need some protection. I think it makes perfect sense from an economic point of view.

ZACK GUZMAN: Yeah, I mean, outside of California, obviously because this is something that's impacting states across the board here when we look at, you know, the issues, whether you're an immigrant or not, it's even Americans who are married to immigrants. That's something we've been highlighting on our air-- that stimulus checks not sent to US citizens who are married to people who don't have social security numbers, despite the fact that they may be US citizens. That would also include the stimulus money that would go to their children, as well.

So I mean, we're talking about significant safety nets that are supposed to be there for people who need them not getting into the hands of US citizens. And when you think about the reason why we're doing all this is to make sure that the money gets back into the economy to support businesses and make sure that the economy keeps chugging along. What are the implications there? And what might be the economic thinking in trying to withhold stimulus checks for some citizens?

GIOVANNI PERI: So you're absolutely right. The undocumented immigrants in the American economy are intermingled and connected with-- they are married. They are children of, they are fathers of American citizens. So it's very hard to break them apart.

So this-- the fact that there is no assistance for them and the fact that they are in a lot of those jobs which are deeply affected by this recession, and although-- and also the fact that they are taking a lot of risks I think will have an impact which is very negative on the economy. So not supporting this group and having some of these families who are depending on these checks go hungry some months will reduce, certainly, their mental health, their physical health. It can have impact in the long run on their kids, on their children.

So there is no sound reason why these people, who have contributed to the California and the American economy for the last, as I said, 10, 15 years, most of them, and who-- keep in mind-- mostly rely on their wage, because they have not even in the past been qualified for any other sort of welfare and the network support.

So in this time, when the jobs are lost, and these people really, in a sense, are forced to lose their job in order to comply, they should be supported in order to make sure that, when the economy goes back, their family, their children, their mental health, their physical health has been preserved, and they can go back to work. Unfortunately, this situation with undocumented immigrants is really a very big problem with the American and California labor market that can only be fixed with some form of regularization, or thinking about bigger. This is a little bit of a help that it come their way, but at least it signals the-- a need to address this problem.

SEANA SMITH: Professor Peri, when it comes to the executive order that President Trump signed and also the fact that they are withholding the stimulus checks that you were just talking about, what do you think this is just in terms of, is this an effort just to distract from the real issue that's causing unemployment? And then also potentially, what do you think some of those unintended consequences could be?

GIOVANNI PERI: Yes, so as I said, this is definitely just a measure motivated by destructing and by sending a message to some base who's very anti-immigrant. I think, in the longer run, this sort of part of the strategy of the Trump administration of ramping down and cracking down on immigration-- undocumented, but also documented-- restricting the number of immigrants who can come in-- in the long run, this can have important consequences, because they're a large sector of the American economy that depend very much on the inflow of immigrants, their contribution, and they growth thanks to them. Some example are, at the high skill level, the information technology, but the health care, the medical profession have a very large percentage of immigrants.

And among those what are called low skilled-- the agriculture and construction sector-- depend on them. So reducing progressively the ability of immigrants to come in, you reduce progressively the ability of this sector to grow, to have company that employs more people, and therefore to also be employing American workers. So in the mid to long run, this reduction in immigration, which had actually started before the COVID, but maybe has had an acceleration in this period, can have a medium run effect on the growth of sectors like health care, like technology, but also construction and agriculture due to lack of needed skills and needed workers.

SEANA SMITH: And certainly an extremely important issue. Giovanni Peri, economics professor at UC Davis, thanks so much for taking the time to talk to us.

GIOVANNI PERI: Thank you very much for having me.