7 Ways Anticipated ICE Raids, Mass Deportations Could Ripple Through Arizona’s Economy
With anticipated U.S. Immigration and Customs Enforcement (ICE) raids and stepped-up immigration enforcement in the Phoenix metro area soon, Arizona could face immediate and long-term economic disruptions. Federal enforcement actions play out locally — affecting workers, employers, families, and small businesses across the state.
These actions are not just about numbers or labor statistics. ICE raids and large-scale deportations can destabilize families, workplaces, and entire communities as people face sudden detention, separation, and fear of removal. At the same time, the economic consequences ripple outward, touching nearly every corner of Arizona’s economy.
Below are seven ways anticipated ICE raids and mass deportations could affect Arizona’s economy — and the people who make it work.
- Agriculture labor losses could threaten food supply and prices
Arizona is among the top states for sales of vegetables, melons, potatoes, and sweet potatoes, coming in fifth among all states. Arizona’s agricultural economy depends heavily on immigrant labor. Nationally, workers of agricultural farms include 1 million hired workers, and nearly two-thirds (66%) are noncitizen immigrants, including 18% of whom report having work authorization. ICE raids or increased enforcement could increase fear of working and reduce the number of workers supporting our nation’s food supply.
When workers disappear, crops can go unharvested, leading to lost farm revenue and disruptions throughout food processing and distribution. These labor shortages don’t stay on the farm — they can drive higher food prices for consumers statewide, at a time when many Arizona families are already struggling with rising costs and worsening affordability.
- Construction workforce disruptions could slow housing and infrastructure
Immigrants make up a substantial share of Arizona’s construction workforce. About 27% of construction workers are foreign-born, meaning more than 1 in 4 workers in the sector come from immigrant communities.
In Phoenix, where housing demand already far exceeds supply, ICE raids could abruptly reduce the number of available construction crews. That could delay housing developments and infrastructure projects, raise construction costs, and slow progress toward addressing Arizona’s housing shortage — pressures that ultimately get passed on to renters and homebuyers.
- Care economy disruptions could reduce families’ ability to work
Arizona relies on immigrant workers to support its care economy. The state has roughly 31,900 home health care jobs, many filled by immigrant workers who assist older adults and people with disabilities. Nationally, nearly 40% of these jobs are filled by immigrant workers. Demand is only growing: Arizona will need more than 190,000 direct-care workers over the next five years, according to one survey.
National research suggests mass-deportation policies could eliminate nearly 400,000 direct-care jobs nationwide. In Arizona, fewer caregivers could mean longer waitlists for services, families forced to cut back work hours or leave jobs to provide care, and increased strain on hospitals, nursing facilities, and emergency care systems.
- Labor force contraction could slow overall economic growth
Large-scale deportations shrink the labor force, and when fewer people are working, the economy produces less. Analysis by the Peterson Institute for International Economics finds that deporting 1.3 million unauthorized immigrants could leave real GDP 1.2% below baseline by 2028, while deporting 8.3 million could reduce GDP 7.4% below baseline.
For Arizona, this could translate into fewer workers producing goods and services, lower business output, and slower overall economic growth. In practical terms, it means roughly $1 less in economic output for every $100 the economy would otherwise generate.
- Lost immigrant tax contributions could strain state and local budgets
Immigrants without permanent legal status contribute significantly to Arizona’s public finances. Each year, they pay an estimated $704 million in state and local taxes, including nearly $422 million in sales and excise taxes. Undocumented residents pay an effective state and local tax rate of 8.4%, compared with 5.0% paid by the top 1% of Arizona households.
Mass deportations could put hundreds of millions of dollars in annual revenue at risk, shifting the tax burden onto other residents or forcing cuts to public services that communities rely on.
- Wage growth in immigrant-exposed occupations could continue to slow
Despite claims that reducing immigration boosts wages, the data tell a different story. Median real wage growth in 2025 has slowed to about half the pace of 2023 and 2024, with the sharpest slowdowns in lower-wage occupations where immigrant workers are concentrated.
In jobs like drywall installation and janitorial services, wage gains have fallen below the overall average, even as migration declines. Continued labor instability could leave workers with smaller raises while everyday costs from housing to groceries continue to rise.
- Reduced consumer spending could weaken Phoenix-area small businesses
Immigrant-led households are a major driver of Arizona’s economy, with an estimated $33.1 billion in spending power that supports restaurants, retail, housing, and transportation. ICE raids can reduce household stability overnight, cutting income and suppressing spending across entire neighborhoods.
For small and local businesses, this can mean fewer customers, slower sales, reduced hiring, and neighborhood-level economic slowdowns.
Bottom line
Anticipated ICE raids and mass deportations could ripple far beyond individual households— separating families, destabilizing workers’ lives, and creating widespread fear — while also disrupting Arizona’s workforce, slowing housing and infrastructure development, straining caregiving systems, reducing tax revenue, and weakening local economies, especially in Phoenix.
As Arizona grapples with rising costs, housing shortages, and workforce needs, policies that remove workers and destabilize communities risk making these challenges even harder to solve.
