Photo: Associated Press
ICE Deportations Reshape Texas Economy: Industries Face Labor Crisis
Since the beginning of 2025, Immigration and Customs Enforcement operations across Texas have sent shockwaves through the state’s economy, disrupting critical industries and threatening the Lone Star State’s economic foundation. With immigrants comprising approximately 8% of Texas’s workforce, the impact of intensified deportations and detentions extends far beyond individual families—it’s reshaping entire sectors.
Construction: Housing Crisis Deepens
The construction industry has been hit particularly hard by immigration enforcement. In South Texas, business leaders report double-digit sales declines as workers stay home out of fear. More than 380 construction professionals gathered in August at the Brookhaven Event Center in Pharr to discuss how ICE arrests have paralyzed their operations.
“Business is down significantly,” said Ronnie Cavazos, president of the South Texas Builders Association. “If we continue on this trajectory, we will see a lot of businesses fail.” Lumber suppliers report struggling to move product as construction sites sit idle, fearing ICE raids at any moment.
The timing couldn’t be worse—Texas faces a severe housing shortage, and economists warn that labor shortages will drive construction costs higher. Research from the University of Wisconsin-Madison showed that during previous deportation programs between 2008-2013, new construction decreased by 5.7% while home prices increased 4.4%. With current enforcement levels even more aggressive, experts predict worse outcomes ahead.
Agriculture: Food Security at Risk
Texas agriculture faces an existential threat. Reports indicate up to 75% of farm workers in some Rio Grande Valley regions have stopped reporting to work following ICE enforcement actions. With 42% of U.S. farm workers undocumented according to USDA data, the labor shortage has left crops rotting in fields across Texas and threatened food production capacity.
“We don’t have enough workforce in the United States to do manual work,” explained Alexandra Sossa, CEO of the Farmworker and Landscaper Advocacy Project. The produce import-export business in the Rio Grande Valley exemplifies the crisis—one business owner who relies on undocumented workers stated plainly: “We wouldn’t survive and we’ll have to close.”
Restaurants and Hospitality: Service Sector Struggles
Texas’s vibrant restaurant scene, from Austin’s award-winning establishments to neighborhood taco trucks, has faced significant disruption. Award-winning Austin chef Adam Orman reported losing multiple employees to ICE detentions within weeks. Industry observers note that immigrants work across all restaurant types—from taco trucks to upscale Italian restaurants—making the impact widespread.
The hospitality sector, which includes hotels and restaurants, employs 22% immigrant workers statewide. As enforcement actions intensified, many restaurants participated in “A Day Without Immigrants” protests to demonstrate the economic contributions of immigrant labor.
Trucking and Transportation: Supply Chain Concerns
Long-haul trucking has emerged as another vulnerable sector. Many immigrants found employment in transportation jobs, helping move goods across Texas’s vast distances. The American Immigration Council estimates that mass deportations could remove 461,000 workers from the transportation and warehousing sector nationally, with Texas bearing a disproportionate share given its role as a logistics hub.
Manufacturing and Beyond
Texas manufacturing, particularly meat processing plants, faces similar disruptions. The state hosts nearly 500 meat and food processing facilities dependent on immigrant labor. When ICE raided an Omaha slaughterhouse, arresting 80 workers, it illustrated the vulnerability of food processing operations.
The administrative and support services sector also struggles to navigate complex temporary visa programs while fearing employee poaching. One executive noted that temporary work-based visas are “almost virtually impossible to navigate and are expensive.”
Economic Ripple Effects
The broader economic impact is substantial. A 2006 Texas Comptroller study estimated that losing the state’s undocumented population would cost $17.7 billion in gross state product.
With enforcement levels far exceeding those historical benchmarks, current losses may be significantly higher. Immigrants in Texas contribute more than $192 billion in personal income annually and paid roughly $58 billion in state and local taxes in 2023.
As Texas grapples with these labor shortages, businesses report increasing work hours for existing employees, raising wages, and struggling to fill positions. Yet the fundamental challenge remains: many industries face structural labor shortages that cannot be solved simply by hiring U.S.-born workers for jobs they historically have not sought.
The question facing Texas is no longer whether ICE enforcement affects the economy—it’s whether the state can maintain its economic growth trajectory while navigating the largest disruption to its immigrant workforce in generations.
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A blend of desert beauty and vibrant city life awaits you in Palm Springs! 🌵🏢@SouthwestAir’s new nonstop service starts March 7. Book today: https://t.co/e0DSglO1PD pic.twitter.com/W8d232dqzG
— Austin-Bergstrom International Airport (@AustinAirport) December 22, 2025
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