Los Angeles economy reels as ICE raids force migrant workers into hiding

Business Standard

21 hours ago

Framers, landscapers, and shop renovators are fleeing job sites as immigration raids intensify, leaving LA developers scrambling to find labour and keep reconstruction projects on track
Bloomberg
Los Angeles was already struggling to revive its fragile economy after the most destructive wildfires in its history erupted six months ago. Now, immigration raids are driving workers crucial to the rebuilding into the shadows.
Framers and landscapers are abandoning job sites. Renovations of retail shops have stopped midway. Real estate developers say they're struggling to find crews to keep projects on track in a sector that relies heavily on immigrant labour.
'We don't have enough people to staff the work and we're scrambling to figure it out,' said Arturo Sneider, chief executive officer of Primestor, a manager of $1.2 billion in shopping centers and 3,000 apartments under development in California and three other states. 'It's triggering delays.'
President Donald Trump's deportation campaign has roiled workplaces and communities from Florida to Illinois and New York. But few places are feeling the shock as acutely as LA, a longtime sanctuary city and home to one of the nation's largest migrant labor forces.
Between June 6 and June 22, immigration agents arrested more than 1,600 people across the LA area — at car washes, construction sites and day-laborer hubs such as Home Depot parking lots. The scope of the crackdown has rattled neighborhoods. Businesses have shuttered, police overtime costs have surged and Fourth of July events in Latino areas were canceled amid fears of apprehensions.
The wave of detentions sparked a week of protests in downtown LA and outlying suburbs, some turning violent. Trump deployed the National Guard and US Marines to protect federal property, dismissing the objections of Democratic Governor Gavin Newsom.
While the demonstrations have largely eased, the Trump administration escalated tensions last week by suing LA over its refusal to cooperate with federal agents. Homeland Security officials argued in the case that the city's sanctuary policies — which limit local cooperation with federal immigration authorities — obstruct enforcement and create instability.
Mayor Karen Bass vowed to fight the lawsuit despite the cost to the city's already stretched budget. The raids are doing 'severe economic damage' and undercutting efforts to rebuild after the fires, she said.
'We know that Los Angeles is the test case, and we will stand strong,' Bass said. 'We do so because the people snatched off city streets and chased through parking lots are our coworkers, our neighbors, our family members, and they are Angelenos.'
A DHS official disputed the link between economic health and immigration enforcement.
'If there was any correlation between rampant illegal immigration and a good economy, Biden would have had a booming economy,' Department of Homeland Security Assistant Secretary Tricia McLaughlin said in an emailed statement.
Imports through the Port of Los Angeles, a key gateway for global commerce, dropped 19 per cent in April from a month earlier as Trump's tariffs disrupted trade flows. Hollywood studios are losing ground to overseas markets, prompting California lawmakers to double film tax incentives to $750 million.
Housing permits, which had already plunged 57 per cent in the city of LA during the first quarter, had just begun to rebound before migrant arrests surged in June, according to real estate consulting firm Hilgard Analytics.
'Papers or not, fear spreads quickly,' Hilgard Founding Principal Joshua Baum said. 'When workers do not feel safe showing up to job sites, it slows down not only the pace of construction but also the willingness to propose new projects in the first place.'
The scale of the reconstruction effort is immense. The wildfires, which erupted Jan. 7, torched more than 16,000 structures across the region, from Pacific Palisades to Altadena.
Rebuilding those areas could require an additional 70,000 workers by mid-2026, according to a report by the Urban Land Institute, University of California at Los Angeles and the University of Southern California. Today's construction workforce in LA County is about 145,000.
Some contractors are taking extraordinary measures to shield workers, said Clare De Briere, founder of LA-based C+C Ventures and a lead author of a post-fire rebuilding report. An example is moving portable toilets from the curbs to backyards so workers won't be visible from the street, she said.
'We're already labor challenged and you're adding unpredictability through the raids, which is only going to increase costs and slow things down,' De Briere said. 'Nothing good related to these projects is going to come from ICE raids.'
Reconstruction is barely getting going. In the Eaton Fire zone east of LA, only 66 building permits have been issued out of more than 900 applications. About 150 scorched lots are up for sale — a number that keeps growing as more owners discover they can't afford to rebuild.
'Already people trying to rebuild have huge gaps in financing, where every dollar counts,' Tim Kawahara, executive director of the Ziman Center for Real Estate at UCLA, said in an interview. 'Increased labor costs will just add to that and potentially make it more challenging to rebuild.'
LA County had about 3.4 million immigrants — a third of its population — including almost 700,000 undocumented residents in 2019, according to a report by the Los Angeles Economic Development Corp., which is preparing a study of the deportation campaign's economic impact. An estimated 14.5 per cent of the construction workforce was undocumented, second only to 17.1 per cent in hospitality, the report said.
The full impact of the immigration enforcement is hard to track because many workers toil in the underground economy. One early indicator: Ridership on LA public transit fell as much as 15 per cent in the two weeks after immigration raids began June 6, the first drop after 30 months of gains, according to LA Metro spokesman Patrick Chandler.
Climate of fear
New social media videos, mostly shot on shaky cellphones, are circulating daily and spreading fear.
They've shown workers handcuffed at the Bubble Bath car wash. A team in military uniforms was recorded blowing open a home in pursuit of a suspect. A blue-vested Walmart employee was taken into custody after trying to protect a colleague. A landscape worker and father of three US Marines was punched repeatedly during a take down.
'The community feels hunted,' said Angelica Salas, executive director of the Coalition for Humane Immigrant Rights of Los Angeles. Her group joined a lawsuit last week accusing federal agencies of targeting people 'on the basis of their skin color and occupation' in mass roundups.
People are scared because the apprehensions are conducted in some cases by agents wearing masks, with little explanation or identification.
'You have a concern about being targeted, because of the way you look,' said Sneider, who said his projects in Arizona and Nevada have been disrupted as well. 'So even people that have full citizenship or status are concerned to just go out.'
Agents detained about 30 people at a Home Depot parking lot in Hollywood on June 19, including a US citizen who recorded an agent smashing a truck window.
A week later, day laborers waited warily for work outside the store, many now keeping their documentation close-at-hand.
'I've got my Real ID here and my passport at home,' said Melvin Maldonado, a native of Guatemala who offered handyman services for $30 an hour. 'We're good people, trying to feed our families.'