US Immigration Policies to Hit Construction Industry

President Donald Trump’s executive orders, signed shortly after he took office, intensified immigration enforcement, leading to what the White House has called the largest deportation operation in US history. While these policies aim to curb unauthorized immigration, they also pose a major threat to the construction industry — a key pillar of the US economy. With foreign-born workers making up a significant portion of the sector’s labor force, experts warn that mass deportations could exacerbate labor shortages, drive up costs, and delay critical projects nationwide.

Immigration and Customs Enforcement (ICE) and Border Patrol agents were ordered to immediately deport individuals crossing the border without authorization, and conduct expedited removals of undocumented immigrants found within the US interior, reports CBS. Karoline Leavitt, Assistant to the President and White House Press Secretary, confirms that these actions were part of the largest deportation operation in US history. 

While these policies target undocumented immigration, they also have significant economic consequences, particularly for industries heavily reliant on immigrant labor. One of the most affected sectors is construction, a critical pillar of the US economy. In 1Q23, the US construction industry employed about 8 million people across 919,000 establishments, contributing nearly US$2.1 trillion annually to the economy, reports the Associated General Contractors of America (AGC). As of 2024, YCharts states that construction accounted for about 4.5% of the nation’s GDP.

The Labor Shortage Challenge

Despite a growing workforce, the construction industry faces a pressing need for labor. The Associated Builders and Contractors (ABC) estimate that an additional 439,000 workers will be needed in 2025 to meet demand. 

At the same time, historically, foreign-born workers have played a crucial role in filling this gap. In 2023, the US Bureau of Labor Statistics reported that immigrants constituted 18.6% of the civilian labor force, up from 18.1% in 2022. A substantial portion of this workforce is concentrated in construction and related trades.

Foreign-born workers are more likely than their native-born counterparts to be employed in natural resources, construction, and maintenance occupations (13.8% versus 7.8%), according to the US Bureau of Labor Statistics. The disparity is even greater among men, with 22.7% of foreign-born males working in construction compared to just 14.0% of native-born males. The impact is particularly pronounced in key states such as California, Texas, Florida, and New York, which together house more than half of the nation’s three million immigrant construction workers.

The Role of Immigrants in Construction

Immigrants play a crucial role in skilled trades essential for home building. In 2023, the National Association of Home Builders (NAHB) reported that 61% of plasterers and stucco masons were immigrants, as were 52% of roofers, 51% of painters, and 45% of carpet, floor, and tile installers.

In California, Texas, Florida, and New York, immigrants make up an even greater share of the construction workforce — over 40% in some states. For example, in California, 41% of the construction labor force is foreign-born, while Texas and Florida report 38%, and New York follows closely at 37%.

Policy Uncertainty and Economic Consequences

Harsh immigration policies, including mass deportations, pose significant risks to the construction sector. The ASG warns that labor shortages could worsen, leading to higher costs and project delays. Economic growth is expected to continue, but increased policy uncertainty brings additional challenges, such as:

• Higher tariffs raising material costs and disrupting supply chains.

• Labor shortages exacerbated by deportation policies.

• Rising interest rates due to expectations of larger federal deficits.

• Reduced investment in renewable energy projects due to shifting federal priorities.

According to the law firm Berg Hill Greenleaf Ruscitti, unannounced raids can halt work at job sites, leading to potential penalties for contract breaches and financial losses due to project delays. Employers may also face civil and criminal liabilities if found in violation of immigration laws. This includes potential fines for employing unauthorized workers or failing to comply with documentation requirements.

Labor costs are rising by 4%-5% annually, with workforce availability remaining the top challenge for contractors. However, costs could escalate further depending on the extent of immigration crackdowns and tariff policies, states ASG.

Additionally, Trump’s proposed 25% tariff on steel, cement, and wood is expected to disrupt US and Mexican economies, impacting local employment and trade, especially in industries like automotive and construction, as MBN reports.