From citrus farms in the Central Valley to construction sites where homes and businesses are being rebuilt after devastating wildfires in Pacific Palisades, California relies heavily on immigrant workers and entrepreneurs.
As the Trump administration continues to ramp up immigration enforcement, industries key to the state’s $4 trillion economy like agriculture, construction and hospitality could be among those hardest hit by the loss of California’s immigrant workforce, according to new research.
At stake are billions of dollars that fuel businesses large and small across the state, whose standalone economy is the fourth largest in the world after the United States, China and Germany.
Approximately one-fifth of the state’s 10.6 million immigrants are undocumented, according to a June study from the nonpartisan Bay Area Economic Institute and the University of California, Merced.
If mass deportations were to be combined with the end of temporary protected status for thousands of immigrants and stricter border policies, the joint study estimated that California would be at risk of losing as much as $278 billion from its gross domestic product.
Immigrant workers have been essential in bolstering the state’s economy given declining birthrates and an aging population, said Abby Raisz, research director at the Bay Area Economic Institute.
“These are the workers that are keeping our economy afloat. They’re keeping businesses open,” Raisz told CNBC.
One of the places that is most evident is in the fields where food is grown and harvested, researchers and advocates say.
Agriculture, a $49 billion industry for the state, has the highest concentration of immigrant and undocumented immigrant workers in California, with 63% of them immigrants and 24% of farm workers undocumented, the Bay Area Council report found.
“Without them, we wouldn’t have any food available,” said Joe Garcia, president of the California Farmworker Association and CEO of Jaguar Labor Contracting, which connects farmworkers to growers.
“The lettuce, the strawberries, all the wine we drink on a daily basis, fruit juices– everything that a farmworker picks, packs, pre-harvest– they do the jobs all year round that put food on your table,” he said.
Garcia added that automation isn’t an option for many of these positions, and American-born workers are not interested in taking on these jobs, which are often strenuous, low-paid and outdoors.
The Trump administration insists that the domestic labor market can withstand a shortage of immigrant labor, and says its focus is on creating jobs for U.S. citizens.
“Over one in ten young adults in America are neither employed, in higher education, nor pursuing some sort of vocational training,” said White House spokeswoman Abigail Jackson in response to an inquiry from CNBC about the potential impact of mass deportations on California and its key industries.
“There is no shortage of American minds and hands to grow our labor force, and President Trump’s agenda to create jobs for American workers represents this Administration’s commitment to capitalizing on that untapped potential while delivering on our mandate to enforce our immigration laws.”
ICE impacts
In downtown Los Angeles, businesses have felt waves of impact in June and beyond due to high-profile ICE raids, accompanying protests and National Guard Deployment, owners and advocates said, exacerbating a public perception issue that downtown Los Angeles is not safe.
The Independent Hospitality Coalition, which represents some 900 local businesses and workers in the Los Angeles Area, said the raids struck fear into the immigrant workforce and created a challenging atmosphere for businesses that were already faced with several years of uphill battles.
“COVID, it was an international emergency that we were all dealing with. Here in California, especially here in Los Angeles, with the recent Palisades and Altadena fires… now it’s immigration situation that we’re dealing with. It’s more like a localized COVID all over again,” said Eddie Navarette, executive director of the hospitality commission.
Courtney Kaplan owns three Los Angeles restaurants, including Camelia in the downtown Arts District. She saw a 70 percent drop in sales in June alone, she told CNBC, due to closures and curfews, even though she is not in close proximity to where protests or the National Guard deployments took place.
Her staff continue to come to work, but the uncertainty around both immigration and trade policy, as she relies on imported wines and sake, weigh on her. Data from OpenTable show a drop in dining reservations for all of Los Angeles were down from June 7th through the 21st by 3% year on year.
“The biggest challenge for us, aside from the lost revenue and the decrease in business, has been the uncertainty of every day. It’s been so unpredictable. It’s been chaotic,” Kaplan told CNBC in July.
“We’re still in the very early days of these changes to immigration policy, so it’s hard to even predict what’s coming. It just is a cause of concern that perhaps that down the line, the situation for us will change with our team members’ comfort levels.”
Worker shortages
Sectors like construction and farming are staring down worker shortages that predate any change to immigration policy. In California, more than sixty percent of construction workers are immigrants and a quarter of them are undocumented, the Bay Area Council report found.
“There are profound skill shortages in these production industries, construction, manufacturing, because culturally, we have not created enough of these workers,” said Anirban Basu, chief economist at Associated Builders and Contractors, a trade group.
“The way we’ve dealt with this over time has been immigration. Other cultures, cultures associated with other countries have different characteristics. Many more people there have been willing and wanting to be in the skilled trades, and we import that talent to improve our built environment.”
Contractors largely fall into two camps, he told CNBC. Some of them express confidence and support for Trump, believing the president’s strategy will spur domestic manufacturing, investment and hiring. Others are pessimistic, as costs and uncertainty have risen.
Regardless of contractors’ outlooks, said Basu, the nature of California’s economy and its longstanding housing shortage mean that the state is constantly in need of construction workers.
“Even during tough economic times, it’s in the midst of transformation,” he said.
