Mass Deportations Would Take a Major Toll on California Economy, Report Finds

As the federal government continues to crack down on immigration, a new report by the Bay Area Council Economic Institute suggests that mass deportations pose a significant threat to California’s economy.

The study released Tuesday details the degree to which immigrants are critical to the state’s economic health. Undocumented residents make up 8% of the California workforce, according to the report, which found that federal policies focused on deportations could cost the state’s gross domestic product output $275 billion in wages and “other direct and indirect economic activity.”

“This pretty astronomical amount really surprised us. We knew it would be big, but I don’t think we realized how far-reaching the role undocumented workers play in sustaining the economy in California would be,” said Abby Raisz, research director at the Economic Institute and an author of the report.

The scale of the worst-case deportation scenario is so significant that it would drop California’s global economic ranking two places, putting the state behind the United Kingdom and India, according to the study.

The findings point to several industries, such as construction and agriculture, that would suffer greatly from a dramatic drop in immigrant workers. Without undocumented labor, GDP generated by California’s construction industry would shrink by 16%, and agriculture would take a 14% hit.

“We’re talking about workers who are essential to our agricultural industry in our country, who have been working in agriculture for decades. This is not the way we need to treat this workforce,” said Teresa Romero, the first Latina and first immigrant woman to serve as president of the national United Farm Workers union. “Without this workforce … small farms are going to go out of business.”

The White House has recently taken note of the toll that increased immigration raids and arrests have had on several sectors. President Donald Trump signaled that the federal government would pause raids at hotels, restaurants and farms, acknowledging that the agriculture and hospitality industries rely heavily on immigrant workers.

“It’s a welcome move, but just making the exception for farm workers, hotel workers, or folks at restaurants isn’t enough. The reality is immigrants are a central part of California and the United States,” said Masih Fouladi, executive director of the California Immigrant Policy Center, an immigrant rights advocacy organization.

“Let’s be mindful of the folks being targeted who are in the grocery stores that make sure that we can buy those produce from farms,” Fouladi said. “The folks who make sure that we are safe in hospitals and clinics are being targeted.”

The Bay Area Council’s report shows that 63% of the state’s agricultural workers are immigrants, and almost 26% are undocumented. In construction, 41% of workers are immigrants and 14% are undocumented.

“In the case of the Bay Area, a lot of that would be concentrated in industries that are really already struggling to find workers, especially in a post-COVID environment where we’re seeing sales tax revenue at an all-time low,” Raisz said. “We’re still struggling to recoup the pre-pandemic economic activity and foot traffic that we experienced before COVID hit.”

In addition to labor impacts, the study finds that the average undocumented immigrant pays $7,000 in state, local and federal taxes. Loss of tax revenue from mass deportations would cost local, state and federal budgets a combined $23 billion annually.

In addition to a variety of data sources, the report drew on direct interviews with dozens of employers, workers, trade groups and elected officials. They urged continued advocacy to oppose mass deportation efforts, increased state protections and eventually federal reforms that would create pathways to citizenship.

“There needs to be a lot of comprehensive immigration reform, and right now, we’re in a crisis moment, and how do we make sure that we don’t fall into a total state of disarray and destabilize all of our industries that keep the state, and frankly, the country, running,” Raisz said.