The Trump administration’s intensifying immigration crackdown led to to Texas reporting its worst job-growth numbers since the outset of the COVID-19 pandemic, new research by the Federal Reserve Bank of Dallas shows.
One in five Texas businesses reported that they’re having a hard time hiring and keeping foreign-born workers in the wake of the White House’s policies, according to the Dallas Fed’s latest Texas Business Outlook Survey. Further, 13% said they’re experiencing a “negative impact” from the federal crackdown.
Indeed, Texas’ job growth so far this year plummeted to 1.2%, its lowest rate since 2020, when the pandemic shut down much of the economy, Dallas Fed economists found. This year’s job growth also is first time since at least 2018 that the state has dropped below its long-run trend rate of about 2%.
“Since the immigration enforcement changes began in mid-2024, U.S. and Texas job growth have fallen well below their respective long-run trends,” the report states. “Given the decline in immigration inflows, increase in arrests and removals of immigrants already here and the chilling effect, labor supply is clearly being affected.”
The negative impact on Texas businesses is likely underrepresented in the numbers since the Dallas Fed survey doesn’t include some of the sectors most dependent on immigrant labor, namely construction and agriculture, according to the report.
Further, fear spread in immigrant communities by the administration’s increasingly aggressive enforcement actions has also harmed Texas businesses in other ways, the document states.
“[We have experienced] reduced sales to foreign-born customers, and customer counts [have been] down periodically due to raids by ICE in the area,” one retailer said in the survey.
While employers could offset some of the labor problems with automation and AI, the Dallas Fed cautions that neither can completely make up the difference. That’s especially the case because, by 2031, all U.S. population growth is expected to come from immigration.
“Hence, when officials set immigration policy, they may also be setting the speed limit for the economy,” the report states.
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