A study warns that stricter immigration enforcement could cost California up to $278 billion in GDP

A new analysis says tougher federal enforcement could hurt the industries that power California’s $4 trillion economy, as it is dependent on immigrant workers.

Researchers identify agriculture, construction, and hospitality as the most exposed if immigrant workers depart. The stakes reach across California, whose economy on its own ranks fourth worldwide, behind the United States, China, and Germany.

A June review by the Bay Area Economic Institute and UC Merced estimates that roughly one in five of the state’s 10.6 million foreign-born residents lack legal status.

If broad removals coincide with ending temporary protected status for thousands and tighter border rules, the study projects California could see as much as $278 billion shaved from gross domestic product.

With fewer births and an aging population, immigrants have stepped into essential roles, said Abby Raisz, research director at the Bay Area Economic Institute.

“These are the workers that are keeping our economy afloat. They’re keeping businesses open,” Raisz told CNBC.

California farms rely heavily on immigrant labor

That dependence is most obvious in the fields where crops are planted, tended, and picked, according to researchers and advocates. Farming generates about $49 billion a year in California and, among state industries, employs the highest share of immigrant and undocumented labor.

The Bay Area Council report finds that 63% of farmworkers are immigrants and 24% are undocumented. “Without them, we wouldn’t have any food available,” said Joe Garcia, president of the California Farmworker Association and CEO of Jaguar Labor Contracting, which connects workers with growers.

“The lettuce, the strawberries, all the wine we drink on a daily basis, fruit juices– everything that a farmworker picks, packs, pre-harvest– they do the jobs all year round that put food on your table,” he said.

Garcia said many tasks resist automation and that U.S.-born workers rarely seek strenuous, lower-paid outdoor jobs.

Trump prioritizes citizen jobs over immigrant labor

The White House says the labor market can handle a smaller immigrant workforce and that its priority is jobs for citizens.

“Over one in ten young adults in America are neither employed, in higher education, nor pursuing some sort of vocational training,” said White House spokeswoman Abigail Jackson in response to an inquiry about potential effects on California and its key industries.

He added, “There is no shortage of American minds and hands to grow our labor force, and President Trump’s agenda to create jobs for American workers represents this Administration’s commitment to capitalizing on that untapped potential while delivering on our mandate to enforce our immigration laws.”

In downtown Los Angeles, business owners reported ripple effects beginning in June and continuing afterward. They cite highly publicized ICE operations, protests, and National Guard deployments that unsettled staff and customers and reinforced worries about safety.

Labor shortages predate recent policy debates. In California, immigrants make up more than 60% of construction workers, and about one-quarter lack legal status, the Bay Area Council report notes.

“There are profound skill shortages in these production industries, construction, manufacturing, because culturally, we have not created enough of these workers,” said Anirban Basu, chief economist at Associated Builders and Contractors.

Basu said some contractors think the administration’s plan will bring more investment and jobs. Others worry about higher costs and unclear rules. Even so, California’s housing shortage means builders are still needed. “Even during tough economic times, it’s in the midst of transformation,” he said.

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