Business has noticeably slowed in East San Jose, California — a predominantly Hispanic neighborhood — and Lupe Lopez sees the difference every day.
“More and more people are either staying close to home or not coming out at all,” said Lopez, 69, whose family runs nine Arteagas Food Center supermarkets, including one in East San Jose.
Younger shoppers are now buying groceries in bulk, she explained, because their parents fear leaving the house — worried they could be detained by immigration authorities. “We’re witnessing a shift in how families shop,” said Lopez, who also co-founded Avanzando, a nonprofit organization that helps Latino communities advance through education.
While the Trump administration prepares to intensify immigration enforcement nationwide, the early impact in California is already rippling through local economies, according to recent research and on-the-ground reports.
A recent study suggests the potential financial blow to California — the fourth-largest economy in the world — could reach $275 billion.
“It’s an enormous number that honestly surprised us,” said Abby Raisz, Research Director at the Bay Area Council Economic Institute and lead author of the nonprofit’s June report. “We expected the role of undocumented workers to be substantial, but the scope of their contribution to California’s economy is even more profound than we imagined.”
Immigration Raids Are Shrinking California’s Labor Force
Since the release of the report, immigration enforcement actions have widened to include many individuals without criminal records.
According to the Department of Homeland Security, nearly 2,800 undocumented immigrants have been arrested in Greater Los Angeles, with many of those arrests occurring between June 6 and June 22.
The raids have triggered a sharp decline in the workforce. During the week of June 8, approximately 465,000 California workers exited the labor market as immigration agents swept through worksites around the Los Angeles area, according to a July study from the University of California, Merced.
That week, private-sector employment in California fell by 3.1% — a drop not seen since the COVID-19 pandemic, the study noted. It remains unclear whether these departures were temporary or permanent.
California Lieutenant Governor Eleni Kounalakis emphasized the significance of immigrants to the state’s economy.
“They are the workers who feed us, the caretakers who support us, the entrepreneurs who drive innovation, and the neighbors who strengthen our communities,” Kounalakis said in a statement. “The ripple effects of mass deportation in California would be felt nationwide and beyond.”
Report: California’s Economy Deeply Dependent on Undocumented Workers
Of California’s 10.6 million immigrants, an estimated 2.3 million are undocumented, according to the Pew Research Center. These individuals make up 8% of the state’s entire workforce.
Undocumented immigrants are also more likely to be employed than native-born Californians, said Raisz, with 72% of them participating in the workforce compared to 67% of U.S.-born residents.
These workers are concentrated in key sectors and regions. The report found that more than 60% of California’s agricultural labor force are immigrants, with nearly 26% of them undocumented. Similarly, 41% of construction workers are immigrants, with 14% undocumented.
Many of these laborers work in densely populated coastal cities like those in the Bay Area and Greater Los Angeles, or in the agricultural heartlands of the Central Valley.
“These areas are major economic engines,” the report emphasized, “and assessing the economic fallout of mass deportations is more urgent now than ever.”
Even the official figures are likely undercounts, said Darlene Tenes, executive director of Farmworker Caravan, a San Jose-based nonprofit that supports farmworkers with essential needs.
“It’s extremely difficult to account for people who live in the shadows,” Tenes told USA TODAY. “Almost every industry in California employs undocumented labor in some way.”
Impact on Agriculture and Construction Could Be Devastating
According to Raisz, the economic contribution of undocumented immigrants is deeply woven into the fabric of California’s communities.
“Roughly two-thirds of them have been in the state for over 10 years, and about a third are homeowners — so they contribute to both income and property tax revenues,” she noted.
Without undocumented workers, California’s agricultural output could decline by 14%, and the construction industry would shrink by 16%, Raisz warned. Both sectors are already grappling with labor shortages that would worsen under intensified immigration crackdowns.
Tenes underscored the global implications of a diminished agricultural workforce.
“Without them, we don’t eat — plain and simple,” she said. “Everything from strawberries and grapes to lettuce and cereal starts in the ground. And guess who’s out there harvesting?”
Nationwide, about half of the 4.3 million construction workers are Hispanic, and up to 1 million may be undocumented, said George Carillo, CEO of the Hispanic Construction Council.
Many of these laborers are in California, and their skills will be urgently needed, Carillo noted, especially as the country faces a shortfall of 4.5 million homes — and Los Angeles begins to rebuild after this year’s deadly wildfires.
“Who do you think is going to help rebuild those homes that were lost?” Carillo asked.
