U.S. workers will be hurt by immigration enforcement overreach

Key takeaways

Inbound immigration strengthens the U.S. economy by growing the population, reinforcing public finances, expanding business creation, and boosting employment in jobs complementary to roles often held by U.S.-born workers.
Evidence shows the Trump administration’s immigration enforcement overreach has already hurt the U.S. economy, slowing growth this year while causing acute harm in communities and industries subject to intensified enforcement, including in foundational industries such as housing construction and health care.
The Secure America Act—the budget reconciliation bill enacted in early June—fast-tracked historically large pots of money to immigration and border enforcement agencies. The nearly $70 billion available to Immigration and Customs Enforcement and Customs and Border Protection through fiscal year 2029 includes specific earmarks for activities that would further the administration’s stated goal to deport millions of immigrants.
What this means for growth: Research indicates that further intensifying indiscriminate immigration enforcement would not only harm working families and targeted communities but also present a threat to the U.S. economy as a whole.

Overview

President Donald Trump last week signed the $70 billion Secure America Act, a budget reconciliation package that boosts funding for immigration and border enforcement agencies while imposing no limits on their authority. This bill is a direct threat to U.S. economic growth. Crackdowns on immigration are harmful to U.S. workers and contractionary for the overall U.S. economy as the labor market weakens and slower population growth drags down demand and public finances.

Immigration has been an essential driver of U.S. economic growth in recent decades, helping buoy an aging domestic labor force and sustain a rapid economic recovery from the COVID-19 recession in 2020. Immigrants, both documented and undocumented, contribute to the U.S. economy by working jobs in construction, hospitality, landscaping, and farming, all of which are often complementary to jobs held by U.S.-born workers. Immigrants also support local communities as consumers and taxpayers and are more likely than their U.S.-born peers to launch small businesses, a fundamental source of U.S. economic dynamism and growth.

Population growth driven by immigration also has been essential in reinforcing public finances and sustaining economic growth by ensuring younger workers pay taxes into social programs such as Social Security and occupy jobs in burdened health care industries. Indeed, between 2019 and 2024, at least one-fifth—or 1.6 percentage points—of U.S. Gross Domestic Product growth could be attributed to the rise in immigration.

A sharp contraction in immigration in 2025 disrupted this key pillar of growth, shaving an estimated 0.8 percent off of U.S. GDP, according to the Dallas Fed. What’s more, economists at the Peterson Institute estimate that GDP could shrink by as much as 2.7 percent if the Trump administration follows through on a low-end scenario of deporting 1.3 million undocumented immigrant workers by the end of 2026. That level of enforcement overreach could lead to an estimated $1 trillion in lost production in the manufacturing and services sectors, and inflation could spike an additional 1.5 percent.

Furthermore, these estimates largely predate the harms to the U.S. macroeconomy from tariff and trade policy uncertainty since April 2025, when the Trump administration first unveiled its steep and sweeping tariffs. So, it is possible that the interaction of immigration enforcement and other macroeconomic factors could have compounding effects and even worse economic outcomes than anticipated.

The economic pain from indiscriminate immigration enforcement would, at least initially, be felt disproportionately in communities and industries that are more reliant on immigrant labor and consumption, but also would likely have large ripple effects across the broader U.S. economy. Impacted industries include the construction, health care, and service sectors that have been among the few areas registering employment growth in recent months. The immigration enforcement operations in Minnesota between December 2025 and April 2026, for example, were particularly harmful to the state’s restaurant industry, contributing to about 4,600 lost jobs and $71 million in lost wages in the first three months of 2026, in addition to costing the city and its residents and businesses an estimated $700 million.

Another study found the Secure Communities immigration enforcement program—associated with the deportation of more than 300,000 undocumented immigrants from 2008 to 2013—resulted in a slowdown in new housing construction and a rise in housing costs of as much as 4.4 percent. A broader deportation effort—like the one the Trump administration is pursuing— would certainly prompt an even steeper decline in housing construction and rise in costs as U.S. consumers confront an already-deepening affordability crisis. Construction industry leaders have for years publicly supported immigration reform that establishes legal pathways for undocumented migrants to become authorized to work in the country.

The premise that deportation “frees up” jobs for U.S. workers is empirically false. The evidence consistently shows the opposite. Decades of research finds that immigration has a close to zero effect on U.S. wages in the short term because U.S.-born workers are protected by differences in skills and specializations. Indeed, jobs typically held by foreign-born workers are complementary to jobs held by U.S.-born workers such that significant job losses among immigrant workers could mean less demand for other work done by U.S.-born workers. In the long run, immigration can actually boost business productivity and wages across industries as entrepreneurial immigrants start new businesses and increase patent output.

Moreover, large immigration enforcement actions are harmful to human capital development as the lives and educational achievements of young people are disrupted. A new working paper, for example, suggests that test scores for U.S.-born Spanish-speaking students fell in Florida following the surge in that state’s immigration enforcement in 2025. This comports with research from the first Trump administration, when negative academic impacts following immigration enforcement actions extended to U.S.-born students with U.S.-born parents. Spillover effects of enforcement actions can affect students’ future workforce outcomes, with one study finding notable reductions in 4-year college enrollment following a large-scale worksite raid in Texas in 2018.

The Secure America Act signed into law on June 10 does not explicitly call for indiscriminate immigration enforcement, but it does provide historically large sums of money to federal immigration enforcement agencies, which could be used to facilitate the administration’s more ambitious policy goals. And the bill specifically earmarks funds to beef up automated surveillance along the border and target immigration enforcement in cities that refuse to cooperate with Immigration and Customs Enforcement. Ultimately, then, the Secure America Act is a fiscal endorsement of the Trump administration’s extreme immigration policy goals, which represent a real threat not only to U.S. working families and the communities they live in but also to the U.S. economy as a whole.

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