A small sideline story that reflects a combination of sociological and economic facets. A Yacht Club in the Hamptons of New York is forced to cancel their restaurant services after their staff is removed from the USA due to immigration enforcement.

The larger picture is well worth discussing, because there is a large and inorganic part of the U.S. economy that will obviously be impacted by immigration enforcement and the removal of illegal or unauthorized workers. First, from the Hamptons:

NEW YORK – An ultra-exclusive Hamptons yacht club catering to the wealthy and well-connected was forced to suspend its members-only restaurant service for multiple days after several of its kitchen staff were booted from the country over visa issues, The Post has learned.

The swanky oceanfront Devon Yacht Club in Amagansett — which reportedly charges around $100,000 in initiation fees — canceled its Wednesday night dinner service after its foreign cooks had to leave the US because of problems renewing their H-2B temporary work visas, according to a letter sent to members the same day.

Food service was also canceled Thursday and was not expected to be back up and running until Friday’s lunch service, the club informed its deep-pocketed members — a group that once included Jacqueline Kennedy Onassis’s parents.

[…] “It seems that an oversight either by the agent or attorney responsible for submitting our petition or perhaps by the US Immigration Office itself has resulted in a situation where our H2B kitchen staff must leave the country immediately and return to their home countries for at least 60 days before their visas can be renewed.” (read more)

Obviously, there is not a lot of sympathy for a bunch of elitists missing their Avocado toast and brunch options.  However, if we stand back and think about the scale of economic activity impacted by a return to a nationally organic labor force, we accept there are going to be major ramifications to a variety of businesses across a broad spectrum of sectors.

As a ‘let’s get on with it’ proponent of deporting all illegal aliens, cancelling H1B and J-1 visas as well as removing all Temporary Protected Status populations from the USA, we must also accept the very predictable consequences.

Due to the inorganic nature of corporatized economics built on the backs of foreign workers, right now there are thousands of businesses in the USA operating on an inorganic business model, that could never have been sustained without massive import of cheap foreign labor.  Additionally, there are billions of dollars in investment that was poured into the economy based on this inorganic and manipulated job market.

There are resorts and venues operating in the USA which never would have been built without a foundation of foreign labor to service them.  Take that labor force out of the economy and things will significantly change.  This outcome is both predictable and necessary to reset the labor market.

As all of these foreign workers are removed there is going to be massive pressure on the wage rates for American workers.  That’s a great benefit.  Simultaneously, there’s also some businesses that will never survive without that foreign labor pool because the business model itself was built upon a false foundation.

Most of the time we think about the service industries with workforces that are significantly staffed with foreign workers.  Hotels, resorts, restaurants, vacation destinations etc.  Many of these locations currently operating would never have found capital or investment in a true economy that was not built on illegal immigration, visas or foreign workers.  There are likely hundreds of resorts that exist only because the labor market is inorganic.

With a predictable rise in wages comes the increased operating costs and diminished profit return for the investors and owners.  This can have a major impact, but again, this outcome is due to fraud in the underlying business model.  Those businesses likely would never have started and the investment never would have been capitalized without the fraud it is dependent upon.

Take out the illegal aliens; remove the H1B visas and all other ancillary visa approvals and remove the protected status returning foreign workers to their country of origin, and U.S. wage rates and benefits will quickly increase as companies try to find a way to shift to a business model built upon real economics.

This rise in wages will be significant and that can create an inflation increase.  As wages increase in price, the operating costs increase.  The per unit business model then must adjust and things like hotel rooms go up in price.  As resort prices increase, they become unaffordable to the current target customer, that leads to lower sales and decreased revenue.  However, that natural dynamic also returns organic competition to a market that has been missing competition for decades.

It’s not just about the service industries.  As the labor market contracts, wage rates for blue collar construction and manufacturing jobs also increase.  This can lead to higher consumer prices during the painful phase as the natural market balance is restored.  Again, many businesses will not exist because many businesses never would have existed without the baseline of imported foreign workers.

Sectors of the economy will shrink just as the restaurant service in the Hamptons has been reduced.

There will be more housing available and rent prices will return to market competition.  New construction homes will be more expensive to build, but less demand for the finished product brings back incentives and competition.  Overall home prices for preexisting homes will likely drop significantly; however, on the upside with increased wages and lower home values the younger generation will have the opportunity for home ownership.

The U.S. population is roughly 350 million.  There are roughly 170 million civilians in the eligible labor market.  If you take out 50 million illegal aliens, then do the math and you will quickly realize how many inorganic or excess businesses are in operation.

Thousands of restaurants will go out of business, because thousands of restaurants never had a real business model to maintain their existence.

The labor fraud created a fraudulent economy, and this reset is going to be significant.