By Jessie Chen and Caleb Bergeron | Spring 2026 – Volume 16

Introduction

Since the return of the Trump administration, the
United States has seen a sharp escalation in
immigration enforcement. In May 2025, Trump’s
adviser Stephen Miller publicly stated that DHS has a
target of 3,000 daily arrests (Olivares, 2025), and by
November 2025, the number has increased by over
75% in a year (Melnick, 2026). These intensified
crackdowns have reached deep into factories, farms,
construction sites, and service-sector workplaces.
Beyond removing migrants from employment, they
have also created fear among workers, leading many to
avoid workdays (Ma, 2025). This paper focuses on the
economic consequences of this enforcement, a topic
that demands more rigorous attention than it has
received. First, it examines the impact of ICE
enforcement on the agricultural and construction labor
markets. Second, it analyzes the fiscal costs of ICE
enforcement and the reduction in the labor supply.
Finally, it assesses the impact of the disruptions in
labor growth and participation from ICE enforcement.

Background

Economists have long debated how immigration
affects wages. Economist George Borjas (2013)
observed that an influx of low-skilled immigrant labor
places downward pressure on wages for low-skilled
native workers, acting as a short-term supply shock
that increases labor supply faster than capital
adjustment. By contrast, David Card (1990, 2016)
suggests a statistically insignificant average wage effect,
or even a slightly positive one, because immigrant
labor is often an imperfect substitute for native labor
and can increase efficiency through specialization and
complementarities in production. The debate between
these two positions has never been fully resolved.

In this context, however, we wonder the reverse question:
what happens to labor markets when that immigrant
workforce is suddenly removed? To discuss this outcome,
we observe two specific industries. Let’s start with
agriculture.

Agricultural Impact

Farmers are disproportionately affected by Migration
enforcement. Over the past decade, some 40% of the crop
labor force has been undocumented (Gutiérrez, 2025).
Compare that to the 19.2% of foreign born that account
for the civilian labor force (U.S. Bureau of Labor
Statistics, 2024). The roots of migrant dependence trace
back several decades. After the United States eliminated
lawful pathways for seasonal agricultural labor in the
1960s, undocumented migration surged in the 1970s. Over
time, employers continued to require large numbers of
workers, and migrants increasingly settled permanently in
local communities to fill low-wage jobs (Shashkevich,
2018). With few legal pathways for entry, a sudden surge in
ICE arrests, and widespread fear of showing up to work,
migrant labor is not as reliable as it used to be.

We see that through added labor costs and reduced output
for farmers in the short run (Charlton, 2025). According
to the 2022 USDA Census, wages and salaries represented
42% of production expenses for greenhouse and nursery
operations, and 40% for fruit and tree nut operations
(USDA, 2025).

Without a new stream of migrant workers, and with many
well established communities being targeted, agricultural
systems must rapidly change. In the short run, where
harvest seasons are time sensitive, firms that depend on
this labor will have to face reduced productivity and/or
higher production costs (Charlton, 2025).

In the long run, the effect is expected to be less drastic. If
these ICE enforcements were to continue, the laborintensive
farmers eventually must turn towards
technological innovations and large-scale capital-intensive
farming techniques (Charlton, 2025). The US has already
gravitated towards technological innovation in agriculture
since the 1950s, which has reduced the need for
farmworkers significantly (USDA, 2025). Increased farm
yields and mechanization over the past few decades have
substituted the need for human labor. Historically, any
long run effect of a migrant labor shock is quite small
compared to any short run effect, as farmers respond by
investing in capital improvements to ensure productivity
gains.

For the average American grocery shopper, the most
tangible question is whether the agricultural labor
disruption translates into a rise in food prices. In the short
run, farmers, not consumers, will absorb most of the
shock. Farmers typically bear the cost of price variability
because consumer demand for agricultural goods is more
elastic than producer supply (Mitchell, 2022). Not only do
domestic producers face foreign competition for a virtually
identical product, but consumers can substitute for
alternative agricultural goods much easier than farmers
can. Consider almonds, one of California’s most laborintensive
crops: a 1% increase in price leads to a 1.0464%
decrease in quantity demanded, while the same price
increase yields only a 0.64% increase in quantity supplied
(Bakhtavoryan, 2022). But the risk of food supply
disruption still exists. In Oxnard, California, analysis by
Xinyu Li estimates a 20–40% reduction in the agricultural
workforce, leading to $3–7 billion in crop losses and a 5–
12% increase in produce prices (Li, 2025). This implies that
while farmers may absorb much of the immediate shock,
sustained labor shortages can disproportionately impact
the price of labor-intensive crops in the short run. The
same labor supply shocks are also present in the
construction industry.

Impact on Construction

While agriculture only comprises about 1.9% of foreignborn
jobs, construction compromises 9.9% of foreignborn
jobs (U.S. Census, n.d.). The proportion of
undocumented workers in the construction industry is
likely larger; some predictions say 20% of the
construction workforce is undocumented (University of
Michigan, 2024). At the same time, it’s worth noting that
the Census reports that 8.1% of the foreign-born
population is self-employed in a non-incorporated
business (U.S. Census, n.d.). The nature of
subcontracting in construction implies that many of
those classified as self-employed on the census and
acting as “independent contractors” are still working in
construction (University of Michigan, 2024). Moreover,
US Immigration law encourages such subcontracting,
penalizing firms that knowingly hire migrant labor
(S.1200, 1986).

Neither of these industries comprises a very large part
of the total foreign-born population workforce (Service,
Management, and Education are the top three) (U.S.
Census, n.d.). However, much like agriculture, this
is an industry that reports disproportionate targeting
from ICE.

In 2024, foreign born workers were more likely to be
employed in construction occupations than native
workers (U.S. Bureau of Labor Statistics, 2024). At the
same time, although without correlation, a survey by the
Associated General Contractors of America says that
“Over 92% of construction firms report having a hard
time finding workers to hire”. Around 5% of
respondents to that survey reported direct visits from
immigration agents, leading to project delays
(Construction Workforce Shortages, 2025). This makes
issues of affordability worse, as the construction
industry is already suffering from systemic project delays
(Construction Workforce Shortages, 2025).

The problem of the construction worker
shortage, much like that of the
agricultural worker shortage, is
multifaceted. Immigration
enforcement is only one small
part of construction worker
shortage.

Projects are being delayed in the short term because of
ICE enforcement. This is in part because many migrant
workers now face heightened risks in simply showing up
to work. Even if a small proportion of the total migrant
population gets arrested, the cost of getting arrested is
severe. For many workers, the lost wage is far less costly
than being placed in an ICE detention facility. For firms
that depend on these workers for construction projects,
that translates into a loss of productivity. This goes to
show that the cost of ICE isn’t just limited to migrant
workers, but its economic impact is borne by firms as
well.

Impact on Government Revenues

Beyond the labor market, ICE enforcement carries a
direct fiscal cost to American taxpayers. Americans pay
for ICE directly through increased spending and
decreased revenue. A 4-year policy would increase
primary deficits by about $270 billion while a 10-year
policy would cost about $862 billion (Davis et al., 2024).
At the same time, there is a loss in government tax
revenue from deported migrants. As taxpayers,
undocumented immigrants make great contributions to
public finances. In 2022, they paid 26.1% of their
income in taxes, a rate nearly identical to the amount
paid by the median U.S. household (26.4%) (Davis et al.,
2024). This contribution is especially significant because
undocumented immigrants generally have limited access
to public benefits despite paying into the system. For
instance, spending on emergency Medicaid for
undocumented immigrants accounted for less than 1%
of overall Medicaid spending between fiscal years 2017
and 2023 (JAMA Research Letter, 2025). In other words,
mass deportation is a costly fiscal choice that asks
taxpayers to fund expanded enforcement while forfeiting
billions in existing tax contributions.

Further Discussion

Throughout this discussion of labor force participation,
fear is a driving factor. This fear does not discriminate
cleanly between the documented and undocumented. As
ICE operations have expanded, reports of people being
stopped or detained based on appearance rather than
verified status has caused even documented immigrants
and legal residents in immigrant communities to reduce
their public activity.

According to a KFF report published in November
2025, about three in ten immigrants report avoiding
traveling, seeking medical care, or going to work or other
public spaces (Valdes et al., 2025). Workers are
withdrawing from the labor market, and we observe
decreased labor-force participation in the short run.
During the week of June 8th–14th, California’s labor
force participation rate fell by 3.1% as ICE carried out
large-scale raids in Los Angeles and elsewhere in the
state, even as participation in the rest of the country rose
by 0.5% (Flores et al., 2025). At a national level, the U.S.
foreign-born labor force declined by 1.2 million from
January to July 2025 (Anderson, 2025). Although the
evidence is indirect, it suggests potential disruptions in
the labor market, since immigrants have contributed
more than half of U.S. labor force growth in each of the
last three decades.

Summary

In summary, undocumented immigrants strengthen the
U.S. economy as consumers, taxpayers, and workers.
Their spending supports local businesses. Their tax
contributions benefit public budgets. Their labor
increases productivity and reduces prices for producers.
This in effect points to one reality: the cost of ICE is far
more than just its budget. Large-scale deportations have
rapidly restructured major US industries, state and local
revenue, and consumer spending. For both domestic
firms and migrant communities, migratory labor is
rapidly changing in response to ICE. Thus any policy
that overlooks these economic interdependencies risks
undermining the very stability it attempts to protect.

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