Contractors Brace For Higher Costs As Deportation Fears Fester On Work Sites

President Donald Trump returned to the White House with promises to deport up to 20 million people, touching off a wave of intense fear among unauthorized immigrants. On construction sites, where workers without permanent legal status number approximately 1.5 million, the anxiety was palpable, with many people afraid to report for work.

Thus far, there have been limited examples of construction workers being swept up in raids. The initial wave of deportations reached 36,000 people in the first month of Trump’s second term, and workers are largely showing up on-site again, driven by the basic reality of having bills to pay. 

But trepidation among immigrant populations remains. And combined with talk of cutting worker protections, the possibility of expanded raids and a slower rate of immigrants crossing into the U.S. from its southern border, the construction industry is still bracing for impact.

“We have heard from our members who are documented and our staff who were born here, who are afraid of being pulled over randomly because of the color of their skin or their accent,” said Christine Bolaños, communications director at Workers Defense Project. “It's a very scary time to be brown in America, whether you have documentation or not.”

Immigration and Customs Enforcement in the same week arrested a five-person roofing crew in Duluth, Minnesota, and a construction worker in Gilbert, Arizona, who had been in the country for 24 years.

Those individual arrests are far from the mass deportations that builders have been bracing for since Trump made promises on the campaign trail, but there is also a sense that the deportation push is just getting started.

Already facing a shortage of approximately 450,000 workers, the construction industry could be hit even harder if it loses the unauthorized immigrant members of its labor pool, who account for about 15% to 23% of the sector, according to a report by Skanska.

Deporting existing workers and shrinking the pipeline of new ones is likely to increase costs for contractors and developers, according to Trent Cotney, a partner and construction team co-lead for law firm Adams and Reese. He anticipates as much as a 25% increase in labor costs.

“There’s a chilling effect,” Cotney said. “A lot of the people that may be here illegally are leaving, so it is impacting construction.”

'Widespread Worry'

The construction workforce has grown increasingly reliant on foreign-born workers, which in 2023 reached a historic high of 25.5% of the labor pool, up from 24.7% in 2022, according to a report by the National Association of Home Builders.

Those workers are now hesitant to perform basic tasks for fear of being discovered by law enforcement.

“There’s definitely a huge fear out here,” Huntington Estate Properties founder Ramtin Nosrati said of his workforce in California. “A lot of these guys are worried to drive and go pick anything up, worried about if they pass a stop sign, are they getting pulled over, are they getting deported if they don't have the proper documentation?”

Many are skipping things like school drop-off, doctor’s visits or even grocery shopping, said Bolaños, whose organization represents low-wage immigrant workers in Texas.

Ongoing budget negotiations, which may end up with a funding increase for ICE, could set the tone for additional enforcement activities and ramping up of raids, according to Brian Turmail, Associated General Contractors of America vice president of public affairs and workforce.

And that is making companies rethink breaking ground on developments.

“What we are seeing is widespread worry about projects going offline, and the owners are being slow and deliberate, not jumping into completing projects,” said Elizabeth Velez, president of New York-based construction firm the Velez Organization. “Start dates are being extended.”

Private nonresidential construction projects are increasingly delayed, according to ConstructConnect’s project stress index, though labor is just one factor. The index was 12.4% above its 2021 benchmark in February, Construction Dive reported, with private projects put on hold rising by 36.7% year-over-year. Public projects, like infrastructure, are largely staying on track, however.

Velez drives past a Home Depot in the Bronx most days, where she normally sees a line of workers waiting to be picked up for work. The number of laborers looking for a ride to a site hasn’t changed, she said, but conversations she has had with people in different parts of the industry lead her to believe the places workers aren’t showing up are far less likely to be immediately noticed.

“For those small projects, for those builders, smaller contractors that are working in private residences or private offices, they are key,” Velez said.

Protections On The Chopping Block

Other immigration actions by the federal government also threaten to upend worker protections and limit the construction labor pool.

Among these is the potential rollback of the temporary protected status program, which provides work authorization and deportation relief for migrants from crisis-stricken countries. Project 2025, a presidential transition initiative written by Trump allies, many of whom now serve in his Cabinet, advocates for revoking TPS altogether.

Repealing TPS could cause nearly 700,000 immigrants to lose work authorization and face deportation and would eliminate numerous categories of temporary and permanent visas, according to The Leadership Conference on Civil and Human Rights.

On Feb. 20, Homeland Security Secretary Kristi Noem shortened Haiti’s TPS extension from 18 months to 12 months, now ending Aug. 3. This change also limits the registration period for new applicants, which will now remain open until the same date, according to the Federal Register.

Members of other protected classes have also been swept up in increased enforcement, including a Houston construction worker with a special immigrant juvenile classification who was detained last month at the border despite showing documentation.

The potential fallout of ending TPS has grabbed the attention of lobbying groups like the AGC, which is communicating with the executive branch on the subject.

“Because in an environment where independent contractors would say they can't buy up workers, it doesn't make any sense to reduce the number of work authorizations available. That's just going to be counterproductive,” Turmail said.

The disruption comes as communities across the country struggle with housing crises stemming from a lack of affordable housing. Construction worker shortages are a major contributor to the escalating cost of building.

North Carolina state Rep. Maria Cervania, a Democrat who represents fast-growing Wake County, said her district simply can’t build enough apartments. The focus on deportation “considerably affects us.” That’s why she co-introduced House Bill 80 to ban raids on construction and agricultural work sites.

“What you see nationally, what you’re seeing at the state level, is people in business are very reticent to actually speak out,” Cervania said. “But this is your livelihood. This is your bottom line if you lose.”

While uncertainty around the challenging construction labor situation is already here, the long-term impacts of reduced immigration — and a workforce increasingly worried about deportation — remain to be seen. 

Crossings on the southern border reached a low point of 11,709 in February, a fraction of the traffic seen at similar times in recent years. It is likely a sign that new additions to the construction labor pool of unauthorized immigrants will slow or stop, said Madeline Zavodny, a professor of economics at the University of North Florida. 

The nation isn’t getting the inflow of workers that is typically a leading indicator of an economic boom. Cotney said the shutdown of cross-border traffic by 90% or so “has become an issue.”

“I absolutely think there’s going to be a detrimental impact to the construction industry and to the Texas economy and U.S. economy as a whole,” Bolaños said. “You can see that people are already migrating in smaller numbers, which means that it’s going to impact construction industry employers like developers, subcontractors and contractors.”