America can’t afford to lose its immigrants
ICE raids at workplaces have been paused—not because of the protests, but because of the markets
As protesters took to the streets for No Kings Day, Donald Trump abruptly pulled back from his aggressive push to deport undocumented immigrants. According to the New York Times, the administration ordered Immigration and Customs Enforcement (ICE) to pause workplace raids.
What changed? Did Trump suddenly have a crisis of conscience—seeing in the protests a sign that he’d crossed a line?
The protests—and before them, the abuses by ICE and the hardline strategy pushed by White House Chief of Staff Stephen Miller—clearly took a toll on Trump’s approval ratings.
Support for his immigration agenda, usually one of his strongest issues with voters, dropped sharply as the demonstrations spread.
According to Nate Silver, who tracks issue-specific approval based on weighted national polling averages, Trump’s numbers on immigration have fallen significantly—while approval on the economy, inflation, and tariffs was already scraping bottom.
And yet, Trump’s overall approval hasn’t collapsed—though it remains among the lowest ever recorded for a newly elected president. He’s already made it clear he doesn’t care much about public disapproval, showing a troubling indifference to future elections, as if he’s convinced he won’t have to face them.
As is often the case, the deeper motivations behind political decisions are economic. Caution is warranted—this walk-back may be temporary and designed to throw off the media—but it’s likely that the White House has realized just how much harm its aggressive deportation drive is doing to the U.S. economy, especially in sectors that make up core parts of Trump’s electoral base.
Recent estimates suggest that over ten million unauthorized immigrants work in the United States, accounting for roughly 6% of the total labor force. These undocumented workers are heavily concentrated in sectors like construction, agriculture, hospitality, and food processing—often under precarious conditions and for very low pay.
The mass deportation of these workers would have devastating consequences. And it gets worse: ICE raids rarely target only the undocumented. They often sweep up coworkers with legal status too, as the operations tend to prioritize speed over precision.
Deportations, wages, employment, and inflation
Empirical evidence suggests that low-skilled immigrant workers aren’t easily replaced by native-born labor. They don’t compete head-to-head with U.S. workers—instead, they tend to fill complementary roles. Most Americans are simply unwilling to take on the hardest, lowest-paid jobs that undocumented workers do.
So what happens if those workers are suddenly removed? Labor supply shrinks, wages rise, production costs go up—and so do prices for consumers.
The housing sector would be particularly exposed. A sudden shortage of construction workers would create a supply shock in a market where housing demand is expected to remain relatively stable. This would likely lead to a rise in home prices, with the sharpest impact falling on low-income households.
Wage increases following mass deportations should not be mistaken for signs of a healthier labor market. They would instead reflect a severe imbalance between labor supply and demand. Immigrant and native-born workers are not interchangeable; they typically perform different and complementary tasks. In the absence of a workforce to replace those deported, businesses are often left with little choice but to restructure production processes, usually by accelerating automation.
This process has negative implications for employment. Immigrants are not replaced by native workers earning higher wages, but by machines. This change requires investments that raise production costs and extends to sectors where the workforce is not predominantly immigrant, affecting other categories of low-skilled workers regardless of their legal status or nationality.
The immediate effect is a further decline in employment, which reinforces a vicious cycle: rising unemployment weakens aggregate demand, discourages investment, and puts downward pressure on the overall economy.
Over time, wages tend to return to their original levels, except in sectors where immigrant labor is particularly difficult to replace. In those segments, wages may rise substantially, reinforcing labor market segmentation and contributing to price increases in areas like food and housing—both essential to the wellbeing of low-income households.
Because these are typically low–value-added sectors, wage distortions caused by deportations risk distorting incentives for human capital investment. This may discourage workers from training for more productive roles that are more beneficial to long-term economic growth and development.
The result is a combination of wage stagnation and rising prices—a dynamic that could further exacerbate the stagflationary pressures already triggered by Trump’s tariffs.
For example, a study by Chloe East found that during the Obama administration, every eleven deportations of undocumented immigrants were associated with the loss of at least one job held by a U.S. citizen. The Peterson Institute for International Economics has estimated that if even a quarter of the deportations pledged by Trump were actually implemented, permanent employment in the U.S. would decline by 0.6%.
Another economic consequence of mass deportations is a contraction in aggregate consumption. Although undocumented immigrants are excluded from most forms of social protection, they still contribute to demand for goods and services through their daily spending. A sharp drop in this consumption would reduce demand for production inputs—including labor—even in sectors that are not heavily dependent on immigrant workers.
Trump always chickens out in front of markets
Epilogue: does this mean deportations are over? Not at all. Stephen Miller’s strategy—the workplace raids designed to provoke unrest in blue states—has likely been set aside in favor of tactics that are just as authoritarian but less damaging to the economy.
We can still expect to see immigrants in handcuffs and unlawful deportations, accompanied by waves of propaganda portraying victims as threats to public safety. Workplace raids may become less common, but Trump has every incentive to escalate clashes with protesters—to stoke polarization and justify emergency powers.
New raids are expected in major cities—especially in blue states—but likely outside the workplace. In a “Truth” post—which is itself a striking reminder of how this president bypasses official channels to issue directives to federal agencies—Trump ordered ICE to ramp up operations in Chicago and New York.
If it’s true that the president always backs down (hence the nickname he reportedly loathes: TACO, short for Trump Always Chickens Out) when confronted with a stronger force, then the retreat on workplace raids is revealing.
His authoritarian and racist project hasn’t gone away. But the force that pushed him back this time wasn’t the protest movement—which Trump is eager to suppress with force—it was, once again, the markets.
P.S. This post has focused on why the U.S. economy can’t afford to lose the kinds of immigrants targeted by recent ICE raids. These have included not only undocumented workers, but also legal residents—and in some cases, even U.S. citizens caught up in rushed operations. But there are many other reasons why immigration is essential to America’s prosperity—especially immigrants’ creative contributions, entrepreneurial drive, and their role in science and innovation. I’ll return to those in future posts.