How the federal immigration raids could disrupt California’s economy
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President Trump promised a new “golden age” for America, but it’s been anything but that for Los Angeles, with its dependence on trade and immigrant labor — two backbones of the region’s economy.
First, the president’s tariffs cut deeply into traffic at the ports of Los Angeles and Long Beach, and now his push to arrest undocumented immigrants at work sites, which has spurred massive protests as Trump deploys the National Guard, threatens a one-two punch to a region just starting its recovery from January’s firestorms.
“The reality is that the U.S. economy is largely today dependent upon foreign born labor — and in California more so,” said Nicholas Eberstadt, a political economist at the American Enterprise Institute, a right-leaning think tank in Washington. “For the country as a whole, we’re getting towards 1 out of 5 jobs being filled currently by somebody who was born abroad. In California, it’s more like 1 in 3.”
The crackdown, depending on its scope and scale, could come at a price for industries across Los Angeles and California that have become increasingly dependent on immigrants, here legally or not, economists say.
The surge in international migration in the last two decades — both by legal and undocumented workers — has been key to the growth of California’s economy. A number of industries such as construction, leisure and hospitality, health care and agriculture rely heavily on immigrant workers.
Hardware store chain Home Depot has become the site of several immigration raids across the L.A. area., with officials targeting day laborers in the latest crackdown.
Foreign-born Californians account for one-third of all workers at restaurants and warehouses; about 40% in home healthcare and child day care; almost 50% at trucking and lodging businesses; and 60% at services for landscaping and cleaning buildings, according to a Times analysis of 2022 Census Bureau data.
Some of the most obvious effects will hit the construction industry, given that the protests began after Immigration and Customs Enforcement agents targeted a Home Depot in Paramount, where casual workers seek employment.
Dean Baker, a senior economist at the Center for Economic and Policy Research, a left-leaning think tank in Washington, said the raids will scare off casual workers from congregating in public places, making it more difficult for small contractors to find employees.
“This will be a big problem. The question is when does it start to hit,” he said. “If you need workers and they aren’t there, that really holds up your site. It’s going to raise costs. In some cases, projects won’t be undertaken. There will be projects they don’t bid on.”
That will raise costs as labor becomes scarce, while undocumented workers might go “underground” where they are less easily detectable, he said.
Another sector federal agents have targeted is downtown L.A.’s apparel industry, where some 15,000 workers were employed in 2023 in the Los Angeles Fashion District, designing, making and selling clothes, according a report by prepared for the Los Angeles Fashion District Business Improvement District.
On Friday agents took workers into custody at a warehouse operated by Ambiance Apparel, a Los Angeles maker, importer and wholesaler of casual apparel for women and juniors.
“You have a lot of garment factories where they’re dependent on a lot of immigrant workers,” Baker said. “And I’m sure many of those people aren’t documented. If these crackdowns continue, you’ll see some of those people deported. It’s a safe bet that if they didn’t have access to the immigrant labor, they’d be out of business.”
The raids also come at a time when immigration is helping fill a demand for workers as the overall U.S. population ages and baby boomers retire. That’s especially true in California because it has been losing many residents to other states, including, more recently, wealthier and higher-income people.
California’s population, which shrank early in the pandemic, gained 232,570 people from July 1, 2023, to July 1, 2024. Immigrants accounted for 361,057 of those gains, making up for an outflow of 239,375 resident to other states, according to calculations by Brookings demographer William Frey.
Eberstadt said the idea that unemployed native-born Americans will somehow pick up the labor slack was given a dry run during the post-pandemic boom in 2022, when there were 12 million open jobs, including 800,000 unfilled in manufacturing — despite the availability of more than 6 million men ages 25 to 54 who had dropped out of the labor force.
“It didn’t bring a lot of those men on the couch back into the labor force,” he said.
The surge of migrants since 2021, including asylum-seekers and others, has lifted the U.S. and California economies by filling otherwise vacant jobs.
In the longer term, there also may be a paradoxical effects on wages, especially in California, Texas and Florida, according to a forthcoming research paper in the American Economic Review titled “Immigration, Innovation and Growth.”
If all undocumented immigrants in the U.S. were deported, after five years, California would see average annual wages decrease by $970, with Florida seeing a decrease of $560, according to the paper. Texas would see a decrease of $187, according to the paper.
The theory is that the more productive people you have in an economy, the more it grows, said Tarek Hassan, a professor of economics at Boston University. With immigrants filling jobs, it frees up others to invent, create new patents and figure out ways to make the economy more efficient, which generates wealth.
“Immigration in general is good for economic growth,” said Hassan, who is a co-author of the paper. “This idea that immigrants take away Americans’ jobs is not correct.”
Los Angeles-area hotel workers urge employers to protect them from Trump deportation threats.
Meanwhile, the local economy already has taken a hit from the on-and-off tariffs Trump announced in April, with the Port of Los Angeles processing 25% less cargo than forecast for May, Gene Seroka, executive director of the Port of Los Angeles, said in an interview.
That has resulted in dwindling job opportunities at the port, which along with the neighboring Port of Long Beach — the largest port complex in the country — provide jobs for thousands of dockworkers, heavy equipment operators and truck drivers.
Nearly half of the longshoremen who support operations at the Los Angeles port went without work over the last two weeks. Over the last 25 work shifts, only 733 jobs were available for 1,575 longshoremen looking for work, he said.
“They haven’t been laid off, but they’re not working nearly as much as they did previously,” Seroka told The Times. “Since the tariffs went into place, and in May specifically, we’ve really seen the work go off on the downside,” Seroka said.
The decline in shipping has ripple effects on L.A.’s economy.
A 2023 report found that the ports of Los Angeles and Long Beach contributed $21.8 billion in direct revenue to local service providers, generating $2.7 billion in state and local taxes and creating 165,462 jobs, directly and indirectly.
The slowdown in activity also has spread into surrounding communities. Businesses near the ports rely on a robust community of workers to frequent their establishments.
“We’re starting to hear from small businesses and restaurants in the harbor area that their customer patronage is trending downward,” Seroka said. “Outside of COVID, this is the biggest drop I’ve seen in my career.”
Then there’s the effect that deploying the National Guard and the turmoil it is having on the tourism industry, even though the disruptions have been limited to certain locales, said Jackie Filla, president of the Hotel Assn. of Los Angeles.
“I’m hearing there have been just significant cancellations all across the city,” Filla said, though she noted it’s too soon to have hard data. “People are nervous to come to Los Angeles.”
International travelers also may be concerned about being detained, with Los Angeles clearly a target of the federal government for immigration enforcement actions, she said.
And even if the immigration turmoil ends soon, the federal crackdown hurts L.A.’s brand as a tourist destination, which heavily leans on status as a global hub, with its diversity of cuisine, people and experiences, Filla said.
“People rightfully have a lot of questions. They are calling hotels and wondering what the environment and atmosphere is like, and if they’re going to be safe,” she said.
Time staff writers Suhauna Hussain and Caroline Petrow-Cohen contributed to this article.
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