Immigration Enforcement and its Economic Ripple Effects

Across the country, community leaders, employers, and policymakers are confronting a worsening workforce shortage. A recent report from the Brookings Institution found that fewer people are coming to the United States, while others are being deported or leaving on their own. This means fewer workers, less consumer spending, and slower economic growth.

These latest demographic changes will exacerbate the workforce shortage already affecting small businesses, increasing the cost of living, and reducing access to health care and other essential services. Recent economic data from the National Foundation for American Policy show that U.S.-born workers are negatively impacted by reduced immigration—the unemployment rate for U.S.-born workers increased from 4.3 percent in January 2025 to 4.7 percent in January 2026. Further straining the labor market are federal policies aimed at immigrant workers—including the termination of work authorization and enforcement actions that result in mass deportations.

To build a stronger economy, the U.S. needs policies that protect the workforce and foster its growth, including recognizing immigrant workers as vital contributors and reversing current approaches that remove workers from critical industries.

The Stakes

According to the Pew Research Center, nearly one in five U.S. workers is an immigrant, yet restrictive policies are removing thousands of individuals from jobs that employers struggle to fill. Key drivers include:

• Loss of work authorization or legal status previously granted to individuals who arrived through pathways such as Temporary Protected Status and humanitarian parole
• Disruptions to legal immigration processes, including long pauses, higher fees, and detentions during routine appointments
• Widespread fear preventing even legally authorized workers from showing up at work due to interior enforcement actions

These policies limit the country’s ability to meet labor needs, threatening businesses across sectors—from senior care and construction to food systems and local retail.

Sectors Most at Risk

Nearly every area of the economy will be affected by the widening workforce gaps.

Manufacturing

Government data show that more than 20 percent of manufacturing workers are immigrants, many of whom have specialized skills that will take years to replace. A 2025 enforcement action at a Hyundai facility in Georgia detained 475 workers—over 300 of them from Korea—disrupting construction of the state’s largest economic development project, according to The Current. Many workers left the state, and nearby small businesses suffered major revenue losses or went bankrupt. Local economies eager to expand domestic manufacturing and attract foreign investment will fail without the needed labor force.

Construction

The construction industry is already facing a shortfall of 500,000 workers, according to Harvard research. Nearly 29 percent of construction workers are immigrants, and ongoing policy changes create uncertainty and risk further labor losses. These workforce gaps are slowing or halting projects nationwide, worsening the housing shortage and raising prices for families.

Agriculture

According to the American Immigration Council, two‑thirds of agricultural workers and many meat processing workers are immigrants. Policy changes that ended work authorization for thousands of these workers have already reduced the available labor force. Deportation raids leave crops unharvested, disrupt supply chains, and increase grocery prices—costing the economy billions.

Health Care

KFF reports that roughly 1.2 million immigrants work in health care, including more than 25 percent of physicians, 16 percent of nurses, and 28 percent of home health aides. Gaps in staffing already force many facilities to turn patients away; in 2023, 84 percent of nursing homes reported moderate to severe shortages. Removing workers from this strained system, the Bipartisan Policy Center notes, will extend hospital stays, reduce access to care, and increase costs for patients and providers.

Hospitality

Finally, immigrants make up nearly 20 percent of the hospitality workforce. Unite Here, a union representing 300,000 workers across the hospitality, food, and tourism industries in the U.S. and Canada, recently told the Guardian that some of its members are afraid to come to work. With the $1 trillion hospitality industry already facing significant staffing gaps, workforce losses threaten business operations and local tourism economies.

The Path Forward

Immigrants are a key part of the U.S. workforce, and as neighbors, colleagues, small business owners, and customers, support economic prosperity for all. Preserving and expanding legal work authorization where possible and halting the mass deportations of individuals—the vast majority of whom do not have a criminal history and contribute positively to their communities—is a first step in rebalancing the workforce. But long‑term solutions must also strengthen career pathways and reduce barriers that leave many immigrants underemployed. Federal and state leaders must commit to a strategy that integrates immigration policy and workforce development. States and localities are laboratories of innovation, developing practical pathways that address local workforce needs and enhance community vitality. WES research and partnerships highlight effective strategies, including:

• Expanding international credential recognition would unlock the potential of 2 million underemployed, college‑educated immigrants. Enabling these professionals to resume careers in the U.S. that match their qualifications will fill critical skill gaps across sectors.
• Establishing Offices of New Americans in additional states to partner with community colleges, connect internationally trained professionals with employers facing shortages, and coordinate workforce development across multiple agencies, as ONAs do currently in 24 states.
• Accelerating professional licensure reform to assess and recognize international education and experience, particularly in health care; 20 states have already proved licensure reform works.
• Removing residency requirements for licensure so that U.S.-trained professionals, like DACA recipients, can obtain licenses, and internationally trained professionals can adjust their status and obtain work authorization.
• Looking to integration of immigrants as a workforce and economic development strategy that brings together community colleges, workforce boards, and employers to scale career pathway development.
• Building national strength from local solutions by elevating locally designed innovations as durable pathways to national resilience.
• Expanding data-driven policy that tracks program outcomes to monitor program effectiveness, including employment placement rates, wage progression, and regional economic impact.

While these strategies alone cannot offset the harm experienced by affected communities and employers when essential workers are removed, they remain critical to building strong local economies and expanding opportunity for immigrant workers nationwide.

WES stands ready to support partners across sectors in implementing these evidence‑based proposals. Visit U.S. Public Policy to learn more and contact us.

Alexander Bybee