Dallas Fed: Immigration crackdown likely contributing to weak Texas job growth

TEXAS – Although Texas job growth has slowed steadily since the recovery from the pandemic recession in 2021, the growth rate has now dipped further below its long-run trend rate of about 2 percent, in part due to a slower flow of immigration, according to new analysis from the Federal Reserve Bank of Dallas.

The report was authored by the Dallas Fed’s Isabel Brizuela, Emily Kerr, Pia Orrenius and University of North Florida professor of economics Madeline Zavodny.

Recent results from the Dallas Fed’s business surveys suggest immigration enforcement may play an important role curbing labor supply in the region, contributing to weak employment growth.

“Given the decline in immigration inflows, increase in arrests and removals of immigrants already here and the chilling effect, labor supply is clearly being affected,” the authors write.

Key points from the report include:

By some estimates, Texas received at least 10 percent of the border immigration surge from 2021 to 2024—at least 550,000 extra immigrants—and firms grew more dependent on foreign-born workers.

Among Dallas Fed survey respondents over the summer, 20 percent said immigration policy had hampered or is expected this year to hamper their ability to hire and retain foreign-born workers.

Less immigration doesn’t necessarily mean higher or lower unemployment, but it will likely result in slower economic growth.

“Some—but likely not all—of the decline in labor supply will be offset with mechanization, technological innovation (including artificial intelligence) or offshoring,” the authors write. “Nevertheless, it bears noting that by 2031, all growth in the U.S. population is expected to come from immigration. Hence, when officials set immigration policy, they may also be setting the speed limit for the economy.”