Disappearing workforce: US immigration crackdown deepens construction’s labour crisis

Since US President Donald Trump’s return to office, the US Immigration and Customs Enforcement (ICE) agency has launched sweeping immigration raids across cities including Tallahassee, San Antonio, New Orleans, and Los Angeles, with daily arrests jumping from 650 to 3,000. Added to it, a 23 June Supreme Court ruling has further cleared the way for rapid deportations.

A new report from UK-based consultancy Oxford Economics warns that this crackdown could cripple construction output, drive up costs, and delay projects nationwide.

But what comes next, and how concerned should US construction be about losing a large chunk of its workforce?

Construction’s labour shortfall to get worse amid deportations

Oxford Economics, in analysis of US Bureau of Labor Statistics data, estimates that undocumented workers make up more than 14% of the total construction workforce – the highest share of any sector in the US economy.

If even half of those workers were removed from job sites, Oxford Economics’ analysis finds sector growth could be halved through 2028, with more than US$55 billion in lost output.

“Removing 14.2% of all construction workers would put the sector under pressure both in terms of price increases and output losses, resulting in delayed and cancelled projects across the country,” Oxford writes.

Added to it, wage pressure is already mounting: the report states construction hourly earnings were up 4.4% year-on-year in Q4 2024, a full point above pre-pandemic averages.

And there’s little expectation among industry leadership that ICE’s activity will slow down.

Brian Turmail, vice president of public affairs and workforce at the Associated General Contractors of America (AGC), says he’s advising the association’s membership to assume strict enforcement policy regarding immigration is here to stay. The contractor and builder trade organisation represents more than 25,000 member firms.

“We have anticipated that it would take the Trump administration about five months to begin organising job site enforcement activities,” Turmail tells Construction Briefing.

That estimate proved accurate, with reports of construction site raids rising in May. He says AGC has already hosted three webinars this year to help members prepare for ICE visits.

The “trickle-up” threat

Ken Simonson, AGC’s chief economist, notes in a video titled “2025 Mid-Year Economic Update” that current ICE activities may also impact documented migrant workers, which means an even larger percentage of construction’s workforce may be less accessible in the short term. This will impact both contractors and owners equally, he adds.

“What’s happening with immigration and deportation policy; there have been increasing numbers of widely publicised cases of so-called ICE raids on job sites or on sites where casual labour gets picked up,” Simonson says. “Workers – even if they themselves are legal – may be concerned about family members or just the risk that they will be picked up even if their papers are in order, so that’s a challenge to firms that are counting on having a given workforce on a certain day.”

Coupled with tariff uncertainty and recession fears, Simonson says more owners are delaying, scaling back, or cancelling projects.

That’s all to say the impact extends beyond the most visible targets. Chris Hoyes, a Partner with Germany-based consultancy Roland Berger, tells Construction Briefing labour disruption will likely “trickle up” the value chain.

“If you remove those undocumented workers from the labour pool, that could be crippling for these businesses, especially the smaller businesses,” Hoyes says.

While large firms and OEMs are less exposed directly, they rely on subcontractors and sub-subcontractors to deliver site-level execution. Hoyes notes that in some lower-skill trades like painting and roofing, undocumented workers make up 20 to 30% of the workforce.

“Even if your own crews are documented, you can’t finish a project if your drywall or roofing subs vanish,” he says.

Oxford Economics warns that construction’s tight margins and reliance on sequential trades make labour losses especially disruptive.

“Delays caused by disruption to the labour supply will lower overall industry output over both the short and long term,” it states. “Trying to replace lost labour will take time, and projects are likely to become unprofitable if labour costs rise too quickly.”

Construction’s workforce contradictions exposed

Turmail also cautions contractors against assuming enforcement would only impact workers involved in criminal activity.

“It is clear that the administration has gone beyond looking for undocumented workers who are engaged in additional criminal activities and/or national security threats,” he says. “Should enforcement activities like what happened in Tallahassee become more common, it will quickly expose the many shortcomings in the current federal approach to workforce development for fields like construction.”

Turmail says that approach has created a structural contradiction.

“For four decades federal officials have under invested in career and technical education programs and established only a very limited number of lawful pathways for foreign-born workers to enter the US construction sector,” he says. “At the same time, we have left the border mostly open and expect to build many things.”

Speaking about Americans broadly, he notes additional ironies that have compounded over time.

“We don’t want our kids to work in construction, we don’t want to let people born in other countries lawfully enter the industry, we let a lot of undocumented people into the country, and we want to build a lot of stuff.

“We should not be surprised that undocumented workers are employed in this sector.”

Enforcement actions are already shaping construction sites

The downstream effects are already becoming visible.

US-based Forbes reports that ICE raids are directly compounding labour shortages on US job sites. According to its report, immigrants (both documented and undocumented) make up 34% of the national construction workforce, with that figure rising to nearly 50% in states like California, Texas, and Florida, according to the Associated General Contractors of America.

Additionally, 61% of plasterers and stucco masons, 61% of drywall installers, 52% of roofers, and more than half of painters are foreign-born.

Meanwhile, major US homebuilder like PulteGroup, Lennar Corporation, and Toll Brothers have each warned that widespread deportations could shrink their subcontractor labour pool, push up costs and delay projects. PulteGroup calls it a “material risk”, while Lennar flagged potential legal exposure if subcontractors violate employment laws.

UK-based The Times reports that Florida’s construction boom may already be contracting. In the report, Jeb Shafer, president at Shafer Construction in Fort Lauderdale, says a February raid saw “between 15 and 20 federal agents” detain two of his three labourers, calling it an “obscenely outrageous show of force”.

Since then, Shafer tells the newspaper what some in the industry already assumed: even documented subcontractors are “afraid of coming to work”, which is slowing projects and pushing costs higher.

And the fear is causing significant problems. Data cited by The Times shows the number of foreign-born people active in Florida’s labour market dropped by about one million between March and May.

All the conditions are leading to project delays and increased costs to entice workers back to the site.

Construction tech not ready for wholesale labour replacement

Oxford Economics argued that while some industries could absorb enforcement shocks through price hikes or minor output reductions, construction is different: its central role in the economy, high industrial interconnectedness, and reliance on physical labour mean the damage could spread quickly and permeate.

“Lower output and higher costs will force smaller firms, especially subcontractors, out of business,” Oxford’s report states.

Hoyes warns, “Construction is also a relatively skilled profession, so replacing such a large proportion of the workforce will take time,” he says. Given construction’s complexity and low automation uptake, today’s construction tech cannot replace skilled labour one-to-one.

Oxford adds, “One classic counterargument is that removing labour will force firms to accelerate innovation through increased automation or more capital spending.

“In the case of construction, we see this as a mitigant at best given the history of low productivity growth in the sector.”

Turmail says the industry should, instead, “boost funding for construction education and training and allow more lawful pathways into the construction sector.”

No silver linings for construction and hardline immigration policy

Enforcement actions increase, headlines multiply, and industry leaders are beginning to speak more forcefully; and what they are saying is: workers need more access to legal work.

Time will tell if the Trump administration listens: Trump himself – in a 12 June social media post – acknowledged backlash from agriculture and hospitality leadership to systemic ICE raids. What resulted was only a brief memo instructing ICE to deprioritise raids targeting workers not suspected of additional crimes.

As Forbes noted, “it isn’t clear what those changes will mean for construction. But the industry, unlike politics, runs on labour, not slogans.”

But if the current trajectory doesn’t change, Oxford Economics and AGC make clear that – without a parallel workforce strategy – hardline immigration policy could stall the sector altogether.