MEMO: 7 Ways Anticipated ICE Raids, Mass Deportations Could Ripple Through Arizona’s Economy
The Arizona Center for Economic Progress denounces the killing of Renee Nicole Good by ICE on Wednesday in Minneapolis, and we offer our condolences to her family and the entire Minneapolis community, including immigrant communities who are experiencing profound fear and grief during this dark period in American history.
Why this matters now: With anticipated U.S. Immigration and Customs Enforcement raids and stepped-up immigration enforcement likely in the Phoenix metro area this week and weekend, Arizona could face immediate and longer-term economic disruptions. Federal enforcement actions play out locally — affecting workers, employers, families, and small businesses across the state.
Below are seven ways ICE raids and large-scale deportations could affect Arizona’s economy — while also destabilizing families, workplaces, and communities as people face sudden detention, separation, and fear of removal.
1. Agriculture labor losses could threaten food supply and prices
Arizona’s agricultural economy depends heavily on immigrant labor. In 2024, the state employed temporary-protected-status workers in the agriculture/food security sector, and nearly 26,000 undocumented and half of all U.S. agricultural workers are undocumented. ICE raids or increased enforcement could remove experienced workers from the fields with little warning.
Economic ripple effects could include:
- Crops left unharvested and lost farm revenue
- Disruptions in food processing and distribution
- Upward pressure on food prices for consumers statewide while overall affordability is becoming worse
2. Construction workforce disruptions could slow housing and infrastructure
About 27% of Arizona’s construction workforce is foreign-born, meaning more than 1 in 4 construction workers come from immigrant communities. In Phoenix where housing demand already exceeds supply, ICE raids could abruptly reduce the number of available crews.
Economic ripple effects could include:
- Delayed housing developments and infrastructure projects
- Higher construction costs passed on to renters and homebuyers
- Slower progress on addressing Arizona’s housing shortage
3. Care economy disruptions could reduce families’ ability to work
Arizona has roughly 31,900 home health care jobs, many filled by immigrant workers who assist older adults and people with disabilities. The state will need more than 190,000 direct care workers in the next five years, one survey shows. National research suggests mass-deportation policies could eliminate nearly 400,000 direct-care jobs nationwide.
Economic ripple effects could include:
- Fewer caregivers and longer waitlists for services 400,000 direct-care jobs nationwide.
- Family members forced to reduce work hours or leave jobs
- Increased strain on hospitals, nursing facilities, and emergency care
4. Labor force contraction could slow overall economic growth
Large-scale deportations shrink the labor force and reduce economic output. 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.
What that could mean for Arizona:
- Fewer workers producing goods and services
- Lower business output and slower growth
- Roughly $1 less in economic activity for every $100 the economy would otherwise generate
5. Lost immigrant tax contributions could strain state and local budgets
Arizonans without permanent legal status contribute an estimated nearly $704 million each year in state and local taxes, including $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.
Economic ripple effects could include:
- Hundreds of millions of dollars in lost annual revenue
- Greater tax burden shifted onto other residents
- Reduced funding for local services relied on by communities
6. Wage growth in immigrant-exposed occupations could continue to slow
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.
Key takeaway: Reducing immigration has not translated into higher wages, and continued labor instability could leave workers with smaller raises while everyday costs keep rising.
7. Reduced consumer spending could weaken Phoenix-area small businesses
Immigrant-led households in Arizona have an estimated $33.1 billion in spending power, supporting restaurants, retail, housing, and transportation. ICE raids could reduce household stability overnight, cutting spending and increasing fear across entire neighborhoods.
Economic ripple effects could include:
- Lower customer traffic for small and local businesses
- Slower sales and hiring
- Neighborhood-level economic slowdowns, particularly in immigrant-dense areas of Phoenix
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.
