California’s economy, the fourth-largest in the world, is already feeling the strain of intensified immigration enforcement, and experts warn that the long-term financial consequences could be severe. As deportations rise under the Trump administration, local economies are facing significant disruptions.
In particular, communities with large undocumented populations are experiencing a noticeable slowdown in business activity, and the ripple effects are expected to be felt across the state’s key industries.
Local Businesses Feeling the Impact
In East San Jose, a predominantly Hispanic neighborhood, local businesses have already seen the early signs of the consequences of increased immigration enforcement.
Lupe Lopez, whose family runs several Arteagas Food Center supermarkets, noted that customers are either staying home or shopping in bulk, driven by fear of detention. “We’re witnessing a shift in how families shop,” she said, as many parents are now worried about leaving their homes due to the threat of deportation.
This disruption is not confined to East San Jose. Across California, businesses are grappling with the effects of a shrinking workforce, particularly in sectors that rely heavily on undocumented immigrants.
Financial Fallout for California
A study from the Bay Area Council Economic Institute suggests that the economic impact of mass deportations could reach up to $275 billion in losses. Abby Raisz, the report’s lead author, was surprised by the scope of the financial hit.
“We expected the role of undocumented workers to be substantial, but the scope of their contribution to California’s economy is even more profound than we imagined,” she said.
Undocumented workers play a vital role in many of California’s most significant industries, and their absence would create widespread disruptions.
Immigrant Workforce Shrinking
Recent raids and enforcement actions have already led to a significant reduction in the state’s workforce. Between June 6 and June 22, nearly 2,800 undocumented immigrants were arrested in the Greater Los Angeles area alone, leading to a drop in private-sector employment by 3.1% in California during the week of June 8.
This decline is the most significant since the COVID-19 pandemic. It remains unclear whether these departures are temporary or permanent, but the short-term effects have been striking.
California Lieutenant Governor Eleni Kounalakis emphasized the importance of immigrants to the state’s economy, saying, “They are the workers who feed us, the caretakers who support us, the entrepreneurs who drive innovation, and the neighbors who strengthen our communities.”
Economic Dependence on Undocumented Workers
California’s economy is deeply dependent on undocumented workers. Of the state’s 10.6 million immigrants, approximately 2.3 million are undocumented. These workers make up 8% of the entire California workforce and are disproportionately employed in essential sectors like agriculture and construction.
In fact, more than 60% of California’s agricultural labor force consists of immigrants, with nearly 26% of them undocumented. The construction industry also relies heavily on undocumented workers, with 41% of the workforce being immigrants and 14% undocumented.
These industries, which are crucial to the state’s economy, would suffer severe consequences if mass deportations lead to further labor shortages. In particular, California’s agricultural output could decrease by 14%, while the construction industry could shrink by 16%, according to Raisz’s report.
Both industries are already struggling with labor shortages, and intensified immigration crackdowns could worsen these problems.
Global Impact on Agriculture
The impact of labor shortages in agriculture is particularly concerning. As Darlene Tenes, executive director of Farmworker Caravan, explained, “Without them, we don’t eat — plain and simple.”
The state’s agricultural industry relies on undocumented labor to harvest crops, from strawberries to lettuce, which makes up a significant portion of California’s food production. Any disruption to this workforce could lead to shortages and price increases nationwide.
Implications for the Construction Industry
In the construction sector, many undocumented workers are also essential to addressing the country’s housing crisis. With an estimated shortfall of 4.5 million homes, the loss of these workers could hinder efforts to address the gap.
George Carillo, CEO of the Hispanic Construction Council, pointed out that undocumented workers are crucial to rebuilding homes in areas affected by disasters like the wildfires in Los Angeles.
“Who do you think is going to help rebuild those homes that were lost?” Carillo asked, emphasizing the vital role these workers play in both rebuilding the state and supporting its economy.
As immigration enforcement continues to escalate, California’s economy faces mounting challenges. The state’s agricultural, construction, and service sectors, which rely heavily on undocumented workers, are already seeing the effects of a shrinking workforce.
The potential loss of billions of dollars underscores the urgent need for comprehensive immigration reform to safeguard the economic stability of California and ensure the well-being of its diverse communities.
