Immigration Crackdown to Rock Texas Job Market Fed Study Says
US Border News In-Depth Report
Although Texas job growth outpaces the rest of the nation, new research by the US Federal Reserve Bank of Dallas indicates the job market in Texas may be in for a bumpy ride in the near future due to the Trump Administration’s crackdown on immigration.
The Dallas Fed notes that Texas firms have grown more dependent on foreign-born workers. The February Dallas Fed Texas Business Outlook Surveys (TBOS) found that roughly a quarter of responding Texas businesses relied on workers from outside the country in 2024. This was a large increase from 15 percent just one year prior.
Legal immigration is slowing as processing times by immigration authorities have increased. In addition, the Dallas Fed notes that “authorities have canceled the refugee resettlement program, intensified background checks, increased fees on visa applicants, and travel bans. These measures have affected legal inflows.”
The Dallas Fed report forecasts that these “immigration policy changes will negatively affect the ability to hire and retain foreign-born workers at one in five Texas businesses this year.”
(The extent of the impact on Texas firms is likely understated because the Texas Service Sector Outlook Survey does not include some sectors that heavily rely on immigrant workers, such as construction and agriculture).
The Dallas Fed notes that “more firms reported a worsened ability to retain workers over the prior three months (13 percent) than an improved ability (2 percent), a sharp contrast to responses over the prior year and a half. The shifting sentiment is notable in the manufacturing, service, and retail sectors.
“Among firms affected by immigration policy, about 40 percent indicated employees had missed work due to fear of immigration enforcement. A visitor’s bureau noted, “The hospitality community relies on considerable labor-intensive work—housekeeping, landscape, food and beverage, etc. Workers and contractors are more and more fearful of coming into work in hotels and restaurants.” - Dallas Fed Texas Business Outlook Survey Analysis
Nearly 60 percent of impacted companies reported they were unable to hire qualified workers because such individuals often lack work permits or legal status. Additionally, 49 percent noted difficulty hiring due to fewer foreign-born applicants.
Will existing employees benefit?
Texas firms are taking measures to address the impact. Chief among them is increasing work hours for existing employees. Other responses include planned wage and benefit increases, as well as more hiring of U.S.-born workers, naturalized citizens, or legal permanent residents.
However, the Dallas Fed cautions that this silver lining for existing workers also comes with bad news for the overall economy:
“Less immigration doesn’t necessarily mean higher or lower unemployment, but it will likely result in slower economic growth. The labor market will show this first in the form of less job growth. Lower GDP growth will eventually follow. The U.S.-born workforce cannot make up for reduced immigration due to demographic pressures, including an aging population and low birth rates.”
- Federal Reserve Bank of Dallas report
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Abrazos,
Jack Beavers
