October 23, 2025

Texas Economy Faces Uncertain Future Amid Immigration Policy Changes

News Summary

The Texas economy is undergoing significant changes due to strict immigration policies, leading to reduced job growth and challenges for businesses. A decline from a 2% to a 1.2% job growth rate is heavily influenced by fewer foreign workers entering the labor market. With nearly 20% of businesses reporting hiring difficulties and fear of enforcement impacting employee attendance, Texas companies are adapting by increasing hours and wages for current workers. The undocumented workforce, constituting a substantial part of Texas’s labor, raises concerns over potential economic impacts from proposed deportation policies.

Texas is facing economic challenges as a new analysis from the Federal Reserve Bank of Dallas has revealed that federal immigration enforcement is negatively affecting the state’s economy. The research indicates a decline in job growth that could have significant ramifications for local businesses and the wider labor market.

Traditionally averaging an annual job growth rate of approximately 2%, Texas has seen a sharp decline to an estimated growth rate of only 1.2%. This slowdown in job creation is being linked to a decrease in the number of immigrants available in the labor supply, a consequence of recent changes in immigration policy.

The report, conducted by Dallas Fed economists Isabel Brizuela, Emily Kerr, Pia Orrenius, and Madeline Zavodyn, highlights the state’s historical reliance on both domestic and international migration as a key driver of job growth that has surpassed national averages.

Presently, heightened border enforcement measures have resulted in slower processing times and a reduction in immigration entries into the United States. The analysis points to the revocation of work permits and humanitarian protections, along with an increase in arrests by Immigration and Customs Enforcement (ICE), which have collectively impacted immigrant communities in Texas.

A notable chilling effect has emerged among these communities, leading to increased absences from work and school, and a reluctance to engage in local economic activities. About 20% of surveyed Texas businesses reported difficulties in hiring and retaining foreign-born workers due to the recent policy shifts.

Additionally, the survey indicates that approximately 3% of businesses are already feeling negative repercussions as a direct result of these immigration policies. Fear surrounding enforcement actions has also contributed to employment issues, with 40% of affected businesses reporting that employees are missing work due to concerns over their immigration status.

More broadly, nearly 60% of these businesses are struggling to hire qualified candidates because of immigration status issues, while 49% have cited a decrease in applications from foreign-born individuals as a further challenge. Companies facing labor shortages have responded by increasing employee work hours (at 48% of firms), raising wages and benefits (reported by 38%), and hiring more U.S.-born and naturalized workers (by 33%).

Texas is home to one of the largest undocumented populations in the U.S., with an estimated 7% of its workforce falling under this category. It is estimated that Texas has more than 2 million undocumented immigrants, comprising approximately 9% of the state’s workforce. A study conducted in 2006 concluded that undocumented immigrants in Texas contributed more in taxes than the state expended on their behalf.

The agriculture sector is particularly reliant on immigrant labor, with 27% of its workforce being undocumented. The construction and manufacturing sectors also exhibit significant figures, with 17% and 11% of their respective workforces being undocumented. Notably, failed legislation aimed at mandating annual studies on the economic impacts of undocumented workers limits the availability of pertinent data.

Experts have cautioned about the financial burden that could result from mass deportations. It has been estimated that deporting one million undocumented immigrants could incur an annual cost of approximately $88 billion. Moreover, the energy sector could also face severe ramifications, as 4% of energy workers in Texas are undocumented.

With these economic challenges compounded by trade tariffs, the potential for rising prices on goods and services in Texas looms large. In the wake of increasing enforcement measures, businesses are being urged to prepare for impending workplace audits and potential ICE raids.

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Author: STAFF HERE GEORGETOWN

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